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Network Affiliates Defend Cable Retransmission Fees

As the Senate prepares for hearings, broadcasters claim the fees help support news and other public affairs programming

CBS and NBC TV affiliates told federal lawmakers Friday that regulations permitting broadcasters to charge cable and satellite TV operators for retransmitting broadcast shows are in the public’s interest because the fees support news and other public affairs programming.

The broadcasters are presenting their best arguments for retransmission consent because the Senate Commerce Committee has scheduled a hearing starting Tuesday to review key cable TV regulations. Sen. Jay Rockefeller of West Virginia, (below left) the committee's chairman, has made it clear that he is particularly concerned that retransmission consent disputes have been resulting in programming blackouts that hurt consumers.

Also read: Senate Panel to Probe Broadcast, Cable Programming Feud

“The current system allows free-market negotiations between broadcasters and other content owners on one side of the table and satellite and cable distributors on the other,” the NBC Television Affiliates Board wrote in a letter Friday to Rockefeller.

"Without fair compensation for the content broadcasters have created or acquired, local television stations will be fundamentally impaired in their efforts to innovate,” the CBS Television Network Affiliates Association, said in a letter to members of the panel.

In another letter on Friday, the ABC Television Affiliates Association told committee members in a letter that affiliates wouldn’t be able to afford top-notch programming without retransmission consent fees because they now have to compensate their networks for network programming.

 “If affiliates are financially unable to pay a competitive market-based rate for those programs, the networks will place them on a local fee-based platform, i.e., cable, satellite, or the Internet,” the ABC affiliates said.

 “To compete for the most popular national programming with cable and satellite fee-based and advertiser-based revenue streams, local television stations, of necessity, must now charge fees to their competitors for the retransmission and resale of their signals,” the ABC affiliates said.  

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Among the key arguments that the affiliates presented in their letters today is that without retransmission consent rules, pay TV distributors would not have to pay broadcasters a fair share of the fees that cable and satellite operators collect from subscribers.

“Retransmission consent fees have increased, but cable systems still pay almost 15 times more in fees for carriage of the Top 4 most expensive cable networks and approximately 10 times more for carriage of the Top 4 most heavily viewed cable networks than they pay in retransmission consent fees for carriage of the Big 4 broadcast network affiliates, despite the far greater ratings obtained by local network affiliates,” the CBS affiliates said in their letter.

The affiliates also said that a key argument of cable and satellite operators for ending retransmission consent is that negotiations over the payments sometimes result in impasses and programming blackouts.

“One cannot help but notice that whenever the pay-TV industry senses the possibility that Congress or the FCC might undercut the retransmission consent principle, the number of bargaining impasses increases,” the NBC affiliates said. “This is because the MVPDs (multichannel video programming distributors) may want to cite service disruptions to bolster their case for government intervention,” the NBC affiliates added.

Two of the more prominent recent programming blackouts—affecting DirecTV and Time Warner Cable viewers—have just been resolved. DirecTV and Viacom announced a deal Friday clearing the way for the satellite operator to resume carriage of  Viacom networks, which include Comedy Central, Nickelodeon and MTV. Hearst Television announced Thursday that it had reached a retransmission consent agreement clearing the way for Time Warner Cable to resume carrying Hearst TV affiliates.  

The National Cable & Telecommunications Association had no comment on the network affiliate letters, according to a spokesman.