State Laws/Franchising

NCTA: Big Four’s Retransmission-Consent Study Flawed

8/01/2007 9:40 AM Eastern

A recent study sponsored by ABC, CBS, NBC and Fox that showed a minimal connection between retransmission-consent fees and rising cable rates was based on “erroneous assumptions” that led to inaccurate results, the National Cable & Telecommunications Association said in a July 30 filing at the Federal Communications Commission.

The Big Four study said cable operators pay about 85 cents per month, per subscriber to local TV stations in exchange for the right to distribute those signals. The report concluded that retransmission consent thus could not be responsible for the steady increase in nominal cable rates. David Leach, a former aide to House Energy and Commerce Committee chairman John Dingell (D-Mich.), drafted the Big Four report.

In the letter to the FCC, NCTA senior vice president of law and regulatory policy Daniel Brenner said the Big Four’s study neglected to take into account that retransmission consent involves more than just the payment of fees to carry local TV signals -- it also includes the carriage of Big Four-affiliated cable networks for which MSOs need to pay license fees.

To understand the full economic impact of retransmission consent, the study should have examined the economic burden associated with the carriage of local TV signals and commonly owned cable networks, Brenner added.

“Leach is wrong to urge the FCC to conclude that retransmission consent’s only effect relates to the fees assigned to broadcast channels,” Brenner said. “Instead, the FCC should conclude that retransmission-consent fees may be paid as part of an overall arrangement that also includes licenses for networks on the expanded-basic tier and other forms of consideration.”

Leach’s study said retransmission-consent fees were less than 2% of a monthly bill. His study came in response to a cable coalition’s claims that retransmission consent broadly was hiking cable rates. The Coalition for Retransmission Consent Reform includes Bright House Networks, Insight Communications, Suddenlink Communications, Oxygen Media and Hallmark Channel.

"Having missed the point of the CRCR filing, Leach focuses on the wrong exercise, attempting to minimize retransmission-consent costs to those attributable to the broadcast-station carriage only," Brenner said.