MSOs: ‘Big Four’ Nets Abusing Power3/02/2005 2:48 AM Eastern
Three major cable operators are accusing the “Big Four” broadcast networks of abusing their power to force carriage of unwanted programming, swelling the size of expanded basic and driving up rates for that tier of programming.
The harsh blows were landed late Tuesday in a lengthy Federal Communications Commission filing by Cox Communications Inc., Advance/Newhouse Communications and Insight Communications Co. Inc.
“The Big Four have become the dominant video-programming suppliers to [cable and direct-broadcast satellite], and Big Four channels have been the source of most of the growth on the basic and expanded-basic tiers of programming. This, in turn, has contributed substantially to the rise in cable rates,” the MSOs said.
The MSOs said the Big Four have used retransmission consent to move from marginal to dominant players in the cable-programming market through their present control of 57% of national cable networks. In 1993, the Big Four controlled 18% of national networks.
The operators added that FCC data demonstrated that the Big Four are responsible for higher cable rates.
Expanded-basic rates rose 88% from 1997-2004. During the same period, the license fees charged by the top 40 cable networks climbed 78%. But the license fees of Big Four-affiliated cable networks rose 92%, while the license fees of non-broadcast-affiliated networks went up 49%.
“It is apparent from the data that exercise of retransmission consent by the Big Four was a significant driver of increases in cable rates between 1997 and 2004,” the MSOs said.
The filing represented a broad indictment of the business practices of the corporate parents of ABC, CBS, NBC and Fox. The MSO complained that the networks withhold “must-have” local-TV stations unless cable operators agree to unfair carriage terms of Big Four-owned cable networks.
However, the MSOs did not call for repeal of retransmission consent. They asked the FCC to report to Congress that the bargaining practices of the Big Four have fueled “the continued expansion of the size and price of the most popular tier of [cable] service.”
The operators also stated that the congressional goal of bolstering local broadcasting has not been attained through retransmission consent. The Big Four, the MSOs said, have used retransmission consent to invest in cable networks, not in high-quality primetime programming beneficial to their affiliates.