Once again, retransmission consent negotiations gone bad generated many news headlines over the last six weeks. Yet, ACA Connects President/CEO Matthew M. Polka notes, those talks have mostly concluded.
Not surprisingly, he says, the results “were consistent with what was expected as broadcasters continued to impose unconscionable rate hikes on consumers for what they call ‘free TV.’”
Oh, boy … What else does Polka have to say about retransmission consent — still a sore subject for Suddenlink and Cox Media Group, and for Frontier Communications and Gray Television?
“In addition to big rate hikes, we’ve also seen more than a few TV station-initiated blackouts without much warning and a lot of miffed customers,” Polka opines in commentary distributed Wednesday (1/13) by the pro-small MVPD lobbying group.
The only bright side, Polka says: “It could have been even worse for many smaller cable operators had the door not been opened for buying groups to enter the picture.”
How so? Polka explains, “The FCC just released a report showing, in 2019, that cable operators paid more than $5.5 billion dollars in retransmission consent fees — once again, for the right to deliver ‘free’ over-the-air television stations. This represented a 19.2% increase over fees paid the previous year at a time when the general rate of inflation, as measured by the Consumer Price Index, was 2.5%.”
The report, Polka adds, showed that smaller cable operators were “disproportionately harmed” financially by retransmission consent. Small cable operators paid on average $178.13 per subscriber, per year in retransmission consent payments, while large cable operators paid on average $124.67 per subscriber, per year, he says. “In other words, small cable operators paid on average at least 43% more than larger operators,” Polka says. “And, according to the FCC, the disparity between small and large cable systems is getting only bigger.”
Polka also shares that in 2019 there were 219 instances of “blackouts,” a number likely tied to an individual channel’s prevention, by law, from reaching MVPD subscribers without a retrans consent pact in place.
What about 2020? “[All] the anecdotal evidence we have seen suggests that the magnitude of rate increases has gotten only worse in last year’s negotiations,” Polka believes.
Among the ACA Connects members that refuse to accept new agreements as suggested by broadcast TV stations, many of whom have increased value for their properties thanks to investment in local news operations across a pandemic, are BOYCOM Vision, NNTV, Mediacom, TDS, GCI, Shentel, WOW! and Cable One/Sparklight.
As Polka sees it, the MVPDs have done nothing wrong in their negotiation process, putting all of the blame on a two-sided arrangements on broadcasters and their “unreasonable demands for higher fees.”
While the blame game will likely continue for months, if not into 2022, Polka is pleased that 2020 saw the implementation of the first set of retransmission consent negotiations conducted after passage of the Television Viewer Protection Act of 2019 — a law that ACA Connects and its members “fought hard to pass.”
The TVPA requires large TV station ownership groups to negotiate retrans in good faith with buying groups like the National Cable Television Cooperative (NCTC).
Polka’s not entirely pleased with the TVPA’s results, but he’s more than satisfied.
“Make no mistake, the broadcasters still have an incredible amount of leverage and the terms and conditions of these deals were not great for the small cable operators opting into them,” Polka says. “But those deals involved lower transaction costs than individual negotiations would have had. And, hopefully, they resulted in lower rates than individual negotiations would have produced.”
The bottom line for Polka: “Most of what’s awful about retransmission consent stayed the same, and it’s getting worse for consumers,” he says. “The old and outdated federal retrans rules from the 1990’s need to be reformed or, better yet, thrown out. Change through laws like the TVPA is a terrific start, and ACA Connects will continue to fight for reform — just as it successfully did with the TVPA.”
