N.Y. BATTLE DRAWS D.C.’S GAZE

Congress, Regulators Express Ire Over Cablevision-WABC Retrans Dispute

By Mike Farrell -- Multichannel News, 3/8/2010 6:39:00 AM

While no one dares guess the end of the nasty carriage dispute between cable giant Cablevision Systems and entertainment juggernaut Th e Walt Disney Co. over retransmission-consent fees, one thing is certain: It’s already drawing fi re from regulators in Washington. A fierce public- relations campaign by both sides has drawn massive media attention around the country — it was even discussed on ABC’s Th e View — largely because it involves WABC-TV, one of the largest broadcast-TV stations in the U.S. WABC serves metropolitan New York, the heart of the media world.

But unlike Cablevision’s last programming dust-up — an ordeal with Scripps Networks Interactive that included Scripps pulling its HGTV and Food Network from the Bethpage, N.Y.- based operator for about three weeks — this latest dispute has higher stakes. According to some analysts, this and other recent retransmission-consent scuffl es have a common thread — distributors have been successful in attaching monetary figures to these negotiations and have successfully drawn Washington into the argument.

Th at could have an impact on two fronts. By insinuating dollar values on channels, cable operators may also be planting seeds for a limited a la carte offering or, at the least, smaller programming tiers. And by drawing politicians into the fi ght, they draw attention to other hot topics — the revamping of the 1992 Cable Act, which created retransmission consent in the fi rst place, or creating regulations that require broadcasters and distributors to enter into binding arbitration if they are unable to reach a deal on their own.

Cable operators have been calling for a repeal of retransmission consent for years. While they may never get that, they could be gaining traction on other fronts. The Federal Communications Commission could enforce arbitration rules (possibly good for cable and consumers) upon jammed negotiations, said Miller Tabak media analyst David Joyce. And the latest battles might also put operators in a better light in customers’ eyes, “as they have been the beating post on programming expense increases” because of their direct relationship with customers, Joyce added.

Washington is definitely beginning to pay attention. During the Time Warner Cable dispute with Fox — which included stations in New York, Los Angeles and Dallas — politicians such as Sen. John Kerry (D-Mass.) and Rep. Steven Israel (D-N.Y.) issued statements calling for a quick end to the dispute.

During the Cablevision-ABC spat, more than 60 state, local and federal representatives — including Kerry, Rep. Rick Boucher (RVa.), Rep. Joe Barton (R-Tex.) and Rep. Eliot Engel (D-N.Y.) — all issued statements ranging from let the market decide the outcome (Barton and Boucher) to let this “game of chicken” come to an end (Kerry). Engel, however, may have come closer to cable’s ultimate goal, calling for regulatory reform in a letter to FCC chairman Julius Genachowski.

Engel invoked a pair of December stand-offs — one between Time Warner Cable and Fox, and a second involving Sinclair Broadcast Group and Mediacom Communications — in pointing out that a “previous dispute” had threatened broadcasts of college Bowl Championship Series games.

“This situation is unacceptable. We cannot continue to allow constituents to be held hostage during business negotiations over retransmission consent,” he said, echoing Kerry, who has also suggested the retransmission-consent system needs fixing.

“I respectfully request that the Federal Communications Commission investigate the current system and provide a regulatory fix which will allow broadcasters to receive fair compensation for their product while not charging cable and satellite providers or my constituents outrageously high rates,” Engel said. “Th e current situation is harmful to cable and satellite providers, harmful to broadcasters and, most of all, harmful to my constituents.”

In the meantime, Cablevision and Disney continue to slug it out in the media caldron of New York City. ABC fired the first shot last Monday, warning viewers that it could fall from Cablevision’s lineup at midnight on March 7. ABC viewers in parts of New York (Westchester County, the Bronx and Brooklyn) as well as areas in New Jersey and Connecticut could miss the March 7 telecast of the 82nd Annual Academy Awards, scheduled for 8 p.m. (ET).

Cablevision quickly countered, claiming that ABC parent Disney was demanding a $40 million fee increase for the network (or about $1 per month per subscriber), a figure that ABC has disputed. Cablevision, which has about 3.1 million customers in the New York area, also claims that it pays Disney about $200 million for its cable networks, including ESPN and the Disney Channel.

What followed was a flurry of ads in local newspapers and on television, each of which essentially accuses the other of being greedy. Whether the dispute would be resolved by the March 7 deadline was uncertain at presstime.

Verizon Communications wasn’t shy about exploiting the dispute in its advertising, reminding consumers that its FiOS TV would continue to carry WABC. On the satellite front, neither Dish Network nor DirecTV said they planned dispute-related ads — yet — though DirecTV spokesman Robert Mercer said the company would be “monitoring the situation.”

Th e two companies appear to be talking — Cablevision CEO James Dolan said at an industry conference last week said that he and chief operating officer Tom Rutledge had met with Disney CEO BobIger and Disney Media Networks co-chairs George Bodenheimer and Anne Sweeney during the prior week.

And many analysts believe that a compromise will be reached. Collins Stewart media analyst Tom Eagan predicted in a research note that the two would agree on a fee of 50 cents per subscriber per month.

In the meantime, the battle rages on.