Policy

Cash-for-Retrans Push Heats Up

2/06/2005 7:00 PM Eastern

Cable operators and broadcasters alike continue revving up for looming retransmission-consent negotiations, while last week Cox Communications Inc. engineered a maneuver that spared it from losing carriage of two more TV stations — at least for now.

On the cable side, a lawyer for the American Cable Association last week prepped small cable operators about getting ready for the testy talks with TV stations that will get underway in nine months.

On the broadcast side, the Sinclair Broadcast Group Inc. is telling viewers it wants a 50-cent license fee from cable operators for its digital signals.

Amidst those developments, the ongoing retransmission-consent battle between Cox and Nexstar Broadcasting Group Inc., which is seeking 30 cents for its stations, reached a new stage.

Nexstar is set to file a reply to Cox’s complaint against it at the Federal Communications Commission.

Out in San Antonio, Texas, small operators were tutored on retransmission-consent strategy.

Chris Cinnamon, outside counsel for the lobbying ACA, told National Cable Television Cooperative members that by planning ahead — like determining the position their companies will take on cash compensation or on dropping a TV station — they will be able “to avoid the traps, to anticipate the crises, and when all is going to heck, keep your cool.”

Cinnamon also told the NCTC’s Winter Educational Conference to be prepared for the argument — “and not a bad one” — from TV stations that since they are being paid for carriage by the direct-broadcast satellite providers they expect the same cash from cable systems.

“If EchoStar is paying, why not?” is the kind of logic that cable operators can expect to hear, according to Cinnamon.

He’s drafting a “template” of a retransmission-consent proposal that NCTC members can use and send to local broadcasters.

Cinnamon advised small operators to study their markets and adjacent DMAs, with an eye to possibly importing out-of-market signals rather than paying cash for in-market stations.

He also told operators to watch out for troublesome provisions in retransmission-consent agreements, including clauses that allow stations to terminate deals with 60-days notice; most-favored nation clauses; requirements that disputes be resolved in a court of the broadcaster’s choosing; and restrictions on program guides, like barring ads on them.

Cable companies aren’t the only ones gearing up for potential retransmission-consent disputes. Sinclair, which has more than 60 stations, posted a letter on its Web site regarding “cable HDTV negotiation status.”

Arguing for cash-compensation from cable systems, Sinclair said it “is looking for no more than 50 cents per subscriber, per month, a very small percentage of the average cable bill” for its digital signals. Sinclair officials couldn’t be reached for comment last week.

Cinnamon, at the NCTC conference, read from Cox’s FCC complaint against Nexstar that claims the broadcaster isn’t negotiating in good faith. Nexstar wants 30-cent license fees from Cox and Cable One Inc. Both MSOs had to drop several Nexstar stations Jan. 1 due to the dispute.

Cox was also set to have retransmission consent expire last week for two more Nexstar stations that several Missouri systems carry.

Instead, Cox shifted those Missouri systems to another division, from Cox Middle America to Cox Kansas, Cox spokesman David Grabert said.

Now those Missouri system are covered by Cox Kansas retransmission-consent deals with Nexstar that extend until the end of the year.

Thus, Cox was able to keep NBC affiliate KSNF and ABC affiliate KODE on its lineup.

Nexstar wasn’t amused.

“We’re still studying our options,” said Duane Lammers, Nexstar’s chief operating officer. “It’s kind of a shell game. … It’s amazing to me the lengths they will go to keep these stations on their systems, and yet they won’t assign any value to the stations. This little maneuver of theirs in Missouri, that’s going to be in our reply to the FCC. That’s not good faith.”

Nexstar wants a master retransmission-consent agreement for all its stations and the ones it manages for Mission Broadcasting, a total of 46, Lammers said.

September