Retrans Fights Are Risky Business

By Kent Gibbons -- Multichannel News, 3/8/2010 9:55:00 AM

If nothing else, TV programmers and distributors have their war rooms in gear.

In New York last week, it was hard to avoid the new dispute between The Walt Disney Co.’s local ABC ownedand- operated station and Cablevision Systems, a major cable distributor in the city and suburbs.

ABC captured the backseat beachfront in cabs, running a commercial on Taxi TV with clips from Lost and Desperate Housewives informing viewers that Cablevision customers might be losing WABC the day the network airs the Oscars ceremony.

Sports radio fans were treated to Disney’s comparison of what Cablevision has offered to pay per subscriber to retain WABC-TV to what Cablevision pays for Sundance Channel, which it owns (about 25 cents). Ouch.

Cablevision commandeered its own customers’ set-tops, which when powered on defaulted to a channel where Cablevision ran an appeal to customers that Disney wants too much money ($40 million, a figure WABC disputes) on top of what Cablevision already pays Disney ($200 million). This escalates a tactic Cablevision employed when two Scripps Networks Interactive-owned channels went off its air in a fee dispute in January. Then, the cabler ran its austerity message on the blank HGTV and Food Network channels.

Naturally, Web sites and Facebook pages are dueling away, and newspapers are cashing in with full-page ads.

All this for a dispute most observers believe will dissipate before this column is published on Monday.

Disney pulling its signal on the day of the Oscars would be a public-relations nightmare, and Cablevision can’t afford to lose ABC shows. CEO James Dolan made his point with Scripps in January, holding out three weeks before agreeing on a compromise. Handicappers on Wall Street assume Cablevision will agree to a fee of 50 cents or so per subscriber.

What’s the point of the P.R. blitz, then, other than to demonstrate these are deals that can’t get settled quietly and to force consumers to choose between two big corporations that have big megaphones?

To get leverage in Washington, where these disputes might ultimately be decided or, in the future, prevented.

More politicians have gotten involved than usual this time around. Sen. John Kerry (D-Mass.), as is his wont, deplored the situation and said government needs to revisit the retransmission-consent regime.

He had an adversary this time, Rep. Joe Barton (R-Texas), who said the FCC shouldn’t intervene in a private business matter.

Broadcasters like ABC need to be compensated for what is still the most-watched programming on cable and satellite, and subscribers realize that programming is worth something.

Distributors need to contain programming costs — or give subscribers more leeway to drop services they don’t want to pay for. The back and forth over who charges how much for what programming could lead to more disclosure of programming terms, and more leeway for distributors to pick and choose among bundled networks.

That’s an outcome that would benefit Cablevision.

It’s a risky move though, given the regulatory regime that benefits cable companies and their profitable broadband “side businesses.”

As Kyle McSlarrow (and any other cable lobbyist you can name) has said, beware unintended consequences.