Sunday, August 9, 2009

Broadcast station retransmission fees - Congress needs to step in

Nowadays, network executives are as likely to be plotting to extract “retransmission consent” fees from cable operators as they are to be gathering around their magnetic scheduling boards and shifting shows from slot to slot. - from "Don't Touch That Dial", a 2006 book review by Tad Friend in the New Yorker

The time has come for Congress to deal with the absurdity of the retransmission fee issue for broadcast network TV.

The problem is simple. Local broadcast TV stations owners want a significant source of non-advertising revenue as their commitment to producing local programming, including local news, ceases. The national broadcast network executives, whose programming is carried on those stations, also appear to want a significant source of non-advertising revenue. Both have determined that the source will be "retransmission fees."

When Congress originally established licensing for local TV stations it was to benefit the public. Now that the stations have gone digital as required by Congress, each one of those stations has been given at no extra licensing competition cost the potential to broadcast two to four discrete signals known as subchannels. Those licenses are for broadcasting signals that are free to anyone who has a tuner within the stations Designated Marketing Area (DMA) in return for the right to broadcast owned content exclusively, including national network content for those affiliated with such networks.

The problem is that "free" has been interpreted as meaning, "well, not really free for most of the people watching the station." You see, most of us watch TV via cable or satellite and the stations and the networks have already started seeking significant per-customer fees from the cable and satellite carriers. Ultimately, that fee is passed on to the viewer.

Now I have no problem with ABC, CBS, Fox, MyNetworkTV, NBC, PBS, and The CW charging carriers for their program as does TNT or The Discovery Channel. Just so long as the "must carry" rule requiring cable and satellite carriers to carry local channels is eliminated and the national broadcast networks provide a direct signal for all their programming to the carriers like TNT and The Discovery Channel do - no middleman such as a local station.

For satellite carriers particularly, the cost of bandwidth to carry all those broadcast network stations is very expensive. If they could provide broadcast network programming to all their customers, perhaps with an East and West feed like many of the cable channels, without paying fees to local stations then the issue of whether local stations constitute a local public service could finally be acknowledged honestly. Two in each DMA could be carried for the local emergency broadcast system, two for redundancy. And the ones that have the most to offer viewers would likely be carried because of viewer demand. The rest could go bankrupt if they can't attract off-the-air viewers which they should. Just how many stations offering reruns of "Friends" do people really need?

Why bring this up now? It appears from a MediaPost article by Wayne Friedman on Friday that the networks are starting to sniff around retransmission fees again stating:

If you were to ask broadcast executives where the big new stream of revenue will come from in the coming years, you might guess wrong.

Digital ad revenue? Subscription fees from new online services? Video on demand? One senior broadcast TV executive told me plainly: "It is retransmission fees, pure and simple."

Since the networks don't provide the signal, exactly what are they looking for? Why should we TV signal carrier customers pay the networks and also pay the local stations whose signal we should be getting for free?

There is an inherent anti-public-interest attitude in all this. It's time for Congress to explain to the networks that they can depend on "off the air" federally licensed local stations or they can depend on cable/satellite carriers for revenue. But only one fee source is going to be allowed.