Buying Group Rules Have Helped Smaller Operators to Some Degree, But Fundamental Problems Remain
PITTSBURGH, February 4, 2022 – In comments filed yesterday with the Federal Communications Commission (FCC), ACA Connects reported that video subscribers, especially in small towns and rural communities, continue to pay too much for local broadcast stations because of the broken retransmission consent regime. Large broadcasters, who keep bulking up, continue to exploit their unfair leverage over smaller cable operators to extract high fees and demand substantial fee increases each year for the right to deliver “free” TV. When operators resist these demands, broadcasters often black out signals to bring them – and their subscribers – in line.
“ACA Members and their customers have long been concerned about high and rising retrans fees,” said ACA Connects President and CEO Matthew M. Polka. “The FCC’s own data reveals that smaller cable operators pay unreasonably high fees to carry local broadcast stations – far more than their larger counterparts. Moreover, smaller operators face a Hobson’s Choice – either meet the broadcaster’s unconscionable demand or get cut off from carrying the station. And, the real losers are video subscribers, especially those in smaller and more rural markets, who must foot the bill.”
As the comments noted, cable operators paid $5.5 billion in retransmission consent fees in 2019. This represented a 11.2% increase over total fees (and a 17.8% increase in per subscriber fees) paid the previous year. Moreover, the FCC reported in 2020 that small cable operators paid on average at least 43% more than larger operators for retransmission consent. That figure likely understates the disparity, which continues to grow.
In its comments, ACA Connects addressed the impact of FCC rules adopted under the Television Viewer Protection Act of 2019 (TVPA) that granted small cable operators the right to negotiate with large station groups for retransmission consent through “buying groups.” As the comments explained, the National Cable Television Cooperative (NCTC) is the primary buying group representing such operators.
“The buying group rules have served their purpose, but they can only go so far,” said Polka. “NCTC has been able to negotiate deals with most of the large station groups on behalf of small operators, reducing transaction costs and likely resulting in better rates than most operators could get through individual deals. But the terms and conditions of these ‘buying group’ deals were by no means great for operators. Broadcasters still possess tremendous leverage over our Members and they continue to use it, whether negotiating with individual companies or with the buying group. The need to reform the retransmission consent rules remains.”
ACA Connects’ comments also addressed the implementation of cable video “truth-in-billing requirements” enacted as part of the TVPA. As explained in the comments, ACA Connects Members have made the extensive changes to their systems and practices that were necessary to implement the requirements. More than one year later, ACA Connects Members report that the requirements have been fully incorporated into their business operations and have fulfilled their purpose.
“Our Members were already committed to transparency in their sales and billing practices before Congress passed the TVPA,” said Polka. “The new requirements did not fundamentally change the way our Members do business. So, it not surprising that the impact of these requirements on the customer experience appears to have been modest.”