Cable companies and corporate broadcasters recently concluded their latest round of retransmission consent negotiations in December, but don’t let the absence of many high-profile blackouts and screaming headlines fool you. Once again, corporate media conglomerates have walked away from the negotiating table and will line their pockets with consumers’ hard-earned cash while cable companies take the heat for broadcasters’ greed. The system created by federal law about 25 years ago is undeniably broken and is only getting worse. It’s time for Washington to step in and fix it.
It’s tempting to think that just because cable companies reached TV station carriage deals with broadcasters that the negotiations and their results are satisfactory to those involved. Make no mistake: These are not fair negotiations – in some cases, they’re not negotiations at all.
We recently surveyed our small and mid-sized cable operator members, who serve rural America and urban markets as competition to larger operators, to get their take on the “retrans” process. Seventy-six percent of those surveyed expressed concern that broadcasters employ a “take it or leave it” approach to retrans negotiations. “…This is essentially not a negotiation – it is an agreement forced on us,” offered one member. Another characterized retransmission consent negotiations as “extreme bullying and take it or leave it attitude.”
The broadcast industry has gone corporate, meaning local cable operators are more often forced to negotiate with regional and national companies that aren’t based in the communities our members serve. These mega-corporations don’t have a stake in these communities and use their size and market power to extract increasingly high fees from cable operators, making up for lost advertising revenue as a result of a steady decline in viewership.
Though deals get signed, the outcome is anything but fair. Local cable companies capitulate and agree to huge fee increases because they want to continue providing the service their customers have come to expect, even if it’s at a ridiculous price. As the recent negotiations came to a close, our members reported fee increases as high as 288 percent, 328 percent, and 350 percent, respectively, for 2018, 2019, and 2020.
Unfortunately, this is not new behavior. Broadcasters generally extract the highest per-subscriber fees from the smallest cable operators and their customers, and TV station owners’ demands keep escalating. SNL Kagan projects that retrans fees will cost U.S. consumers and satellite and cable TV operators $11.6 billion by 2022, up from $8.6 billion in 2017, a 35 percent increase in just five years. In fact, retrans fees are the fastest growing part of consumers’ monthly cable bills.
Still, some small and mid-sized cable companies can’t or won’t pay these staggering prices. In January, consumers in markets such Atlanta, Cheyenne, and Wichita experienced blackouts and were unable to access local news, sports, and entertainment programming because broadcast corporations such as Meredith took the drastic step of pulling TV station signals to force unacceptable terms in their retrans negotiations.
Blackouts are a well-established and growing ploy by these media companies. The American Television Alliance (ATVA) reports that in 2017 broadcasters set the record for the most TV blackouts in a calendar year by taking down their signals from cable and satellite customers 213 times, representing a 107 percent increase over the prior year.
For corporate broadcasters, this is business as usual, but for cable companies, it’s damaging to their businesses and harming consumers. These trends are unsustainable and would not be tolerated in any other industry in America. Yet, thanks to outdated federal retransmission consent laws and regulations, these greedy broadcasters are able to exploit legislative loopholes to their advantage.
When we asked our members what they’d like their U.S. representatives, senators and the FCC to know about retransmission consent negotiations, they said the current policy is bad for consumers and is killing the cable industry. “The entire process of retransmission consent gives broadcasters all of the power and is anti-competitive. They are hurting consumers and putting jobs at risk as small cable fights to survive,” said one member. “This is unsustainable and consumers will lose in the end,” noted another.
Now is the time for Congress and the FCC to revisit provisions of the 1992 Cable Act that enable ongoing and increasingly abusive behavior toward consumers and cable companies at the hands of corporate broadcasters. Memo to Washington: Consumers shouldn’t have to pay the price for broadcasters’ greed.