Price Gouging By TV Stations Hits Unconscionable Levels
PITTSBURGH, May 21, 2009 – TV stations are recklessly exploiting retransmission consent to obtain massive rate hikes from small cable operators, resulting in higher cable bills for consumers and injuring operators’ ability to provide advanced services actually in demand, according to survey results submitted Wednesday to the Federal Communications Commission by the American Cable Association.
“This survey shows that TV stations flagrantly use their market power to charge excessively large retransmission consent fees, demand carriage of affiliated programming over cable operator objections and insist that operators set aside channels for programming still on the drawing board and not even close to being ready for distribution,” ACA president and CEO Matthew M. Polka said.
At the very least, the ACA member survey demonstrated that small and medium-sized cable operators can’t secure retransmission consent on fair and reasonable terms. For instance, survey respondents reported that since the beginning of 2009, their cash retransmission consent payments leaped an incredible 271%. Small systems with 1,000 subscribers or fewer got hit with increases that were 200% higher than the increases experienced by systems with 25,000 subscribers or more.
The survey also found that the burden of retransmission consent relative to all programming costs is growing rapidly. In 2008, retransmission consent represented 2.40% of all programming costs, compared to 8.03% in 2009.
The survey, conducted by Clarus Research Group (CRG) in Washington, D.C., included responses from about 25% of ACA members, a robust sample indicative of the shock felt by small cable operators as TV stations drive their retransmission consent demands to unconscionable levels. ACA submitted CRG’s findings for inclusion in the FCC’s annual video competition report to Congress.
In recent years, ACA has called on Congress to reform retransmission consent by leveling the playing field between small and medium-sized cable operators and TV stations that have the ability and incentive to abuse their market power.
Recognizing that Congress isn’t prepared to address retransmission consent in the reauthorization of the Satellite Home Viewer Act (SHVA), ACA will continue to report on market developments in preparation for the time when Capitol Hill is ready to engage the subject.
“The retransmission consent process is broken. ACA firmly believes that TV stations’ refusal to bargain in good faith will inspire lawmakers to search for a new solution to bring relief to millions of cable consumers,” Polka added.
As the survey showed, TV stations don’t demand just cash in exchange for access to their signals. ACA survey respondents documented that TV stations routinely demand carriage of affiliated cable channels and multicast broadcast services. Some demand that cable operators reserve channels for future use by the TV stations, and some TV stations demand that the cable company buy advertising time from them.
Unable to meet these exorbitant demands, about 35% of ACA survey respondents said they were forced to drop TV signals permanently and another 25% said they had to do so temporarily. Other cable operators had to raise their monthly rates to recover the cost of retransmission consent, postpone launching more HD channels and delay upgrading their broadband Internet access service.
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Based in Pittsburgh, the American Cable Association is a trade organization representing more than 900 smaller and medium-sized, independent cable companies who provide broadband services for more than 7 million cable subscribers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA’s members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit https://acaconnects.org/