High Fees, Bundling, Penetration Requirements Hurt Consumers, Retard Broadband Growth
LAKE BUENA VISTA, FL., July 26, 2016 – TV station-led blackouts and their huge rate increases will continue to plague consumers in the aftermath of Federal Communications Commission Chairman Tom Wheeler’s decision two weeks ago to halt the agency’s review of how broadcasters and Multichannel Video Programming Distributors (MVPDs) negotiate distribution contracts formally known as retransmission consent.
“We are seeing [retransmission consent] increases that are absurd,” said Karl Skroban, Vice President of Media Content for Comporium, a small MVPD in South Carolina. “We need some relief. We are sitting under outdated, antiquated rules that are hurting us, hurting the consumer. I was shocked the FCC turned a blind eye to that.”
Skroban expressed his concerns while on an Independent Show panel discussion here on the key issues and challenges confronting both independent MVPDs and programmers. Joining Skroban were Chris Kyle, Vice President of Industry Relations and Regulatory for Shentel; Mark Kang, Senior Vice President of Worldwide Distribution for INSP; and John Malkin, Executive Vice President of Content Distribution for Ovation.
Panel moderator was Mark Robichaux, Editorial Director, Television Group, NewBay Media. Full audio of the panel is here.
Wheeler’s decision on retransmission consent came despite new projections by SNL Kagan that retrans payments will hit $11.6 billion in 2021, up from $7.21 billion in 2016.
Shentel’s Kyle said smaller MVPDs had to get started now to educate consumers and regulators about TV stations’ escalating fee demands ahead of next fall’s new round of retransmission consent negotiations and “to show the FCC what a complete mistake they made by turning a blind eye.”
Speaking from the audience, ACA President and CEO Matthew M. Polka said the retransmission consent issue wasn’t going away.
“There will be more blackouts. There will be more price gouging by broadcasters. Government will have no choice but to enter this discussion whether they like it or not and we’re going to make sure that happens,” Polka said.
Although retransmission consent ranks high as a problem for independent cable operators and programmers, it is not the only one. Other problems include channel bundling by media conglomerates that results in higher prices, unwanted programming forced on consumers, and a shortfall in
capital spending earmarked for broadband to support surging consumer demand for Over the Top (OTT) content on mobile devices.
Ovation’s Malkin said his company visits federal offices in Washington, D.C., frequently to describe the obstacles in the art-and-culture programmer’s path – most recently about the FCC’s plan to overhaul the MVPD set-top box market.
“We’re in front of the FCC, we’re in front of the DOJ (Department of Justice), we’re in front of [the] Commerce [Department]. They are absolutely listening.” Malkin said.
Given the pace of innovation in the pay-TV and online video markets, Malkin urged content owners and distributors to find ways to resolve their differences because the alternatives were so unpalatable.
“We don’t want Washington to dictate our business,” Malkin said.
Kang of INSP said independent programmers have trouble gaining carriage because distributors have to devote so much of their programming budget to retransmission consent and to networks that consumers don’t want to watch but content owners force distributors to carry nonetheless.
“The biggest challenge is retransmission [consent] and the bundles. It affects independent cable networks big time,” Kang said.
The Independent Show is being held at Walt Disney World’s award-winning Swan and Dolphin Resort in Lake Buena Vista, Fl. The show is an annual forum created to focus attention on the key public policy issues facing independent cable operators. ACA co-hosts the event with the National Cable Television Cooperative (NCTC), a Lenexa, Kansas-based group that buys programming and equipment for U.S. cable operators. Please find show news on Twitter at #TIS16.
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 companies who provide broadband services for nearly 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/