By Matthew M. Polka
President and CEO, American Cable Association
Broadcast consolidation threatens to extract even more money from pay-TV subscribers who rely on their cable TV connection to see “free TV.” The behavior of Nexstar Media Group – poised to become the largest TV station owner in the country – illustrates the problem almost perfectly. Nexstar recently blacked out its signals to two smaller, rural video providers who would not agree to huge rate increases. It has now asked a local government to pressure one of these providers into accepting its demands for higher rates. Of course, this request is preposterous. We do, however, think that Nexstar is on the right track when it seeks government oversight of retransmission consent. Such oversight should begin with a full examination of Nexstar’s conduct in connection with its proposed record-setting acquisition of Tribune and include a broader discussion of retransmission consent issues when Congress renews key satellite legislation.
On December 31, Nexstar pulled its signals from two providers. Because these providers felt they could not in good conscience ask subscribers to pay much higher prices for programming with declining ratings, Nexstar has blocked the providers’ subscribers from both network programming (including the NFL playoffs) and local programming (including severe weather alerts). These blackouts continue today, threatening access to the Super Bowl and the Oscars.
Worse yet, Nexstar’s specific behavior can only be described as egregious. Reports indicate that, among other things, Nexstar has insisted that subscribers from one of the providers – TDS Telecom – pay high rates even for stations that lose network affiliation and do not have top rated programming. As a result, if a Nexstar station replaces CBS programming (including the Super Bowl and the Grammy Awards) with infomercials, reruns, and filler programming, it now expects subscribers to continue paying rates akin with highly rated programming. Nexstar even shut down a translator antenna in New Mexico, preventing subscribers from accessing Nexstar’s signals over-the-air.
Nexstar now seeks the government’s help. It has asked a local city council to pressure one of the providers into acquiescing to Nexstar’s demand, citing the station’s importance to public safety. In other words, Nexstar wants elected officials to pressure a private company to raise cable bills for their constituents. Of course, no responsible government official would ever do such a thing.
Yet Nexstar is right about one thing. Precisely because broadcast stations do “a great deal to keep [their] communit[ies] safe,” government officials should be concerned when broadcasters abuse the public trust. And they should intervene when such abuse threatens subscribers.
One place to start is with the pending Nexstar-Tribune merger. Nexstar seeks regulatory approval to create the largest television broadcaster in history. If approved, Nexstar would control 216 stations in 118 markets reaching 72 percent of all U.S. households. Regulated entities (like television stations) tend to be on their best behavior when seeking merger approval. If this is Nexstar’s best behavior, imagine what it would do if it were given more leverage by being allowed to grow even bigger! On this record, we do not see how a regulator could in good conscience approve Nexstar’s merger plans.
Nexstar’s actions also confirm our longstanding view that something is fundamentally wrong in the retransmission consent marketplace more generally. As Congress renews key satellite television legislation this year, it should consider Nexstar’s behavior – and commonsense reform to protect the public from such behavior.