Agency Should Not Act Before Knowing How Much Rates Will Rise
PITTSBURGH, March 19, 2018 – The American Cable Association believes the Federal Communications Commission should not permit greater TV station consolidation before conferring with its newly created Office of Economics and Analytics to examine the costs and benefits of such consolidation, including the extent to which such action would increase cable bills.
“ACA has repeatedly observed that broadcast consolidation increases a broadcaster’s leverage in retransmission consent negotiations, leading to higher rates paid by pay-TV subscribers and other harms to the public. Both economic theory and the best empirical evidence available to the FCC suggest that increasing the national cap beyond its current level will harm pay-TV subscribers,” ACA President and CEO Matthew M. Polka said.
ACA set forth its views in a filing Monday in connection with the FCC’s review of whether to allow a single entity to own enough TV stations sufficient to reach more than 39% of TV households nationally. By relaxing the rule, the FCC would allow TV stations to gain even more bargaining leverage than they already possess. This would allow them to impose more harmful signal blackouts on cable operators and demand excessive increases in retransmission consent fees, which inevitably find their way into consumers’ monthly bills.
The FCC and the Department of Justice already know that ownership or effective control of multiple stations within the same market results in these harms. The best evidence suggests that similar harms would occur if a single entity can own stations beyond the existing 39% cap. In particular, two econometric studies submitted by DISH in connection with the Sinclair-Tribune merger proceeding confirmed that TV stations that reach the most pay-TV subscribers command the highest retransmission consent fees.
ACA urged the FCC to consult with the new Office of Economics and Analytics and seek an econometric analysis based at least in part on DISH’s Sinclair-Tribune merger analyses. It argued that such an analysis is necessary for the FCC to understand the benefits and harms of relaxing the cap.
Moreover, broadcasters seeking to relax the national cap possess the data necessary for such an analysis and the FCC should require them to produce it.
The data necessary to conduct such analyses (meaning retransmission consent agreements) are held by both broadcasters and MVPDs. Historically, broadcasters have gone to great lengths to keep this data secret. Yet the responsibility for providing this data to the Economics Office should fall upon broadcasters, in all fairness, subject to appropriate confidentiality protections.
“If broadcasters seek to change the FCC’s rules to their benefit, they should provide the data to support their request,” Polka said.
About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 750 smaller and medium-sized, independent cable, phone and broadband companies who provide broadband services for nearly 8 million 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/