It’s hardly a secret to broadcast television station owners that when it comes to retransmission consent and carriage negotiations that are particularly tough and result in an impasse, the MVPD — companies that offer cable TV services — is quick to blame over-the-air station owners for asking too much in the way of compensation.
With “blackouts” and carriage agreements now a FCC concern, the nation’s chief advocacy group on Capitol Hill for small and rural cable TV service providers has taken a moment to share how its members are “disproportionally” harmed by “the broken video market.”
In addition to addressing broadband competition, in which ACA Connects argues that “fixed broadband has thrived” and, as such, the FCC “must not stifle success,” the organization led by Grant Spellmeyer submitted comments urging the FCC to abandon mandates disproportionally harming small and rural MVPDs. “The Commission should instead address the root causes of the broken multichannel video market, including with retransmission consent reforms,” ACA Connects said in response to the Commission’s Office of Economics and Analytics request for comment on the state of competition in the communications marketplace to help inform the FCC’s biannual Communications Marketplace Report.
In the filing, ACA Connects argues, “New Commission regulations adopted or proposed for cable video service have only made the situation worse. As smaller cable operators face the prospect of devoting their scarce resources to comply with costly new mandates, they are increasingly likely to consider extricating themselves from the cable business altogether.”
Pointing to rising retransmission consent and other programming fees keep rising, “even as more customers ‘cut the cord’ and migrate to online video streaming services,” ACA Connects assailed broadcasters and other large programmers for continuing to impose “bundling, tiering and penetration requirements that make it impossible to offer customized cable packages to meet consumer needs.”
Retransmission consent fees are perhaps the most contentious subject in the television industry. For some publicly traded companies, revenue growth from carriage fees is higher than that for core advertising. As such, retransmission revenue has significantly aided in keeping broadcast television a profitable business.
But, how much growth is too much? As ACA Connects points out, an approximately
6,710% increase in annual total retransmission fee revenues has been seen since 2006, when it was $21 million. Citing BIA Advisory Services data, annual retransmission consent revenues are projected to reach $15.6 billion by 2027.
In conclusion, ACA Connects VP/Regulatory Affairs Max Staloff and Chief Regulatory Counsel Brian Hurley state, “Retransmission consent fees, rapidly growing due to asymmetrical bargaining power between programmers and distributors, have caused MVPDs’ prices for cable video to drastically rise without any offsetting consumer benefit. As MVPDs — especially smaller ones — increasingly consider exit from this marketplace, heavy-handed regulations imposed on cable operators will only hasten that trend.
