News

Take the Gloves Off

10/18/2010 7:07 PM Eastern

Take the gloves off. Let the fur fly. Go crazy on each other.

That’s the best advice for Fox Networks and Cablevision Systems as they ramp up the venom and vitriol in their battle over retransmission of Rupert Murdoch’s beloved Fox broadcast network on the Dolan family’s Cablevision cable system. Cablevision has taken its message of self-righteous indignation to the dark channel once occupied by Fox. Fox has countered by accusing Cablevision’s of “posturing” and denying subscribers access to the its content on the Web.

This is great!

Staging the ugliest, nastiest public battle possible may be the cable industry’s last best chance to learn how utterly self-defeating these high-profile fights really are.

Cablevision will carry Fox, make no mistake. It may be another day or another week, but both companies have far too much to lose to let the spat run on. And the battle won’t end until the audiences of both companies have begun to question the value of both parties’ services.

Part of the reason for the timing in this fight is due to the confluence of a bad economy, the sea change in media distribution and with the broadcasters’ maturing request to “carry my cable channel,” all of which has station owners demanding a lot more money.

Remember, Congress amended the Communications Act in 1992 to give local broadcast stations a choice of “must-carry” or insisting that cable operators pay for a station’s consent to retransmit the signal in the local market. At first, broadcasters used retransmission consent to get carriage for cable networks. Now they want cold, hard cash.

Cable operators are calling for retransmission reform in the form of forced arbitration and standstills, while both parties negotiate. But that’s simply asking the government to stay in the fight (only more on cable’s side).

You want real retransmission reform? Kill must-carry/retransmission consent and turn these negotiations over to the marketplace. Of course, this would mean that some weaker stations don’t get carried, but isn’t that the marketplace working, too?

If ESPN is worth more than $4 per subscriber, isn’t a broadcast net worth a lot more than the 50 cents or 75 or whatever it gets now? And if Cablevision doesn’t want to pay that price, shouldn’t it be allowed to sell Fox a la carte?

Here’s what I can’t get my arms around: Are cable subscribers who watch over-the-air broadcasts a protected class that must be guaranteed access? Aren’t there enough alternatives that we can assume they will get out of the way of a flood or tornado without cable being required to carry broadcast stations?

Let’s be honest: This isn’t about giving citizens up to date emergency information. This isn’t about tornados, as much as it is about Hurricanes, as in Miami Hurricanes. Sports remain the must-have, no-substitute programming that gets Congress up in arms. Are we really asking the government to step in to ensure our uninterrupted New York Giants schedule?

A new wrinkle, and something Fox may regret, was bringing online into the equation, though perhaps that was unavoidable. Fox Broadcasting Co., a subsidiary of News Corp., blocked, if only briefly, Cablevision high-speed Internet customers from accessing content on Fox.com and Hulu. Fox’s actions raise far bigger questions about the future of the online video market and the public-interest obligations of broadcasters.

Already, public-interest groups are sounding the alarms. “This move is also an example of a major user of public spectrum abusing the public interest,” said Free Press research director S. Derek Turner. “Fox’s willingness to harm Internet users as a side effect of their dispute with Cablevision over broadcasting content is a disturbing escalation of the retransmission battles, one where consumers are caught in the middle.”

And from Public Knowledge: “It’s bad enough that millions of consumers in New York and Philadelphia are being deprived of programming distributed by cable. Blocking websites, however, is totally out of bounds in a dispute like this.

“This case shows the dangers of unchecked media consolidation and of a retransmission consent regime badly in need of reform.”

Regardless of whether or not the retransmission laws are changed now, cable operators and broadcasters are unwittingly begging the government to insert itself in their business even more.

If access to online starts becoming part of the retransmission equation, it will, without doubt, force the government - the FCC - to step into this mess. Senate Communications Subcommittee chairman John Kerry (D-Mass.) said Saturday he will introduce legislation that would keep TV station signals on cable systems during retrans impasses, and would make the Federal Communications Commission a referee.

Shake hands and come out fighting.

March