Syracuse UPN Outlet Raps Time Warner1/06/2002 7:00 PM Eastern
Last year, after months without access to UPN programming in the Syracuse, N.Y., market, Time Warner Cable had a decision to make.
The cable company had at least three options: It could do nothing; carry WAWA, a low-power TV station about to sign an affiliation deal with Viacom Inc.'s UPN; or import that network's programming from Viacom-owned, Boston-based superstation WSBK.
Time Warner opted to import WSBK.
Officials at WAWA thought the move strange since carrying WSBK would require Time Warner to pay copyright royalties. WAWA said it lost out even though it offered to compensate Time Warner for carriage.
Rather than take its lumps, WAWA is seeking help from the Federal Communications Commission in its clash with Time Warner.
In October, WAWA asked the FCC to adopt a rule that would grant it the right to require Time Warner to black out WSBK's UPN primetime lineup, which includes Buffy the Vampire Slayer, WWF Smackdown, and Enterprise.
The cable company is fighting WAWA's petition. Time Warner contends that by granting the broadcast station's request, the FCC would effectively mandate the carriage of a low-power TV station.
Except in rare circumstances, low-power TV stations may not demand cable carriage. The United States has about 2,600 low-power stations, compared with about 1,300 full-power stations that are vested with must-carry rights.
Time Warner said that if it were forced to black out WSBK's UPN programming, it would no longer have a reason to import the station, which it is permitted to do without WSBK's permission. That would leave Time Warner only one source of UPN programming in Syracuse: WAWA.
The MSO told the FCC on Dec. 19 that WAWA's blackout proposal was a "thinly veiled attempt to achieve back door must-carry status in a situation where Congress has expressly determined that such a requirement should not be imposed on the cable operator."
The turmoil in Syracuse seems to run counter to basic economic theory. Why would a profit-maximizing entity pay to gain access to programming when it could arrange to be paid for the same programming?
Paul Koplin, president of Venture Technologies Group LLC, which owns WAWA, claimed Time Warner has decided to avoid dealing with his station because it felt carriage would increase competition in the local ad market.
Syracuse is the No. 76 TV market in the country with about 370,000 TV households. Time Warner has about 75-percent penetration. Because WAWA's signal reaches about 60 percent of the market, cable carriage would boost the station's local audience reach.
"I think having a new entrant in the local advertising market is troublesome, especially when they are creating new local channels regarding news," Koplin said. Time Warner has said it plans to launch a local cable news channel in Syracuse.
In its filing, Time Warner said that WAWA was attempting to have the FCC rewrite rules with potentially broad ramifications over a business dispute in one market.
Time Warner also said it had ample reason to prefer WSBK to WAWA. The MSO complained that WAWA allocated two-thirds of its broadcast day to infomercials and home shopping, while WSBK filled its non-primetime schedule with popular syndicated shows, such as Wheel of Fortune, Jeopardy, and Judge Judy.
WAWA's signal, Time Warner added, was "so low as to be essentially unusable," yet WSBK's signal was strong and reliable.
Mike Luftman, spokesman for Time Warner Cable, said he was aware of this dispute, but declined to comment. "We are going to stick to what's in the filing and let it speak for itself," Luftman said.
Koplin, a former cable industry executive who launched the California Channel, a public affairs network similar to C-SPAN, said he promised Time Warner to scale back on home shopping after securing cable carriage.
"We told Time Warner that we planned on expanding our programming as soon as we get on cable," Koplin said. He added that he disagreed with Time Warner's position that the station's signal was too weak for cable distribution.
Time Warner said if WAWA prevailed, the impact of the decision could be quite broad, possibly requiring the FCC to impose the same blackout rules on the direct-broadcast satellite industry.
The MSO added that a decision in favor of WAWA might also affect the agency's television ownership rules.
Because low-power TV stations are not covered by the FCC's 35 percent national-audience-reach cap, station owners might be inclined to buy low-power stations to skirt the cap, especially if they can use network non-duplication rules against cable operators to secure carriage.
"Indeed, [WAWA] might well have such a strategy in mind," Time Warner said.
VTG owns 15 low-power stations.
Koplin said those arguments missed the mark. His company was only interested in protecting the exclusivity of UPN programming in Syracuse.
"This is a contractual issue regarding program rights," Koplin said. "If Time Warner Cable is able to take a signal from another market without permission from the content holder . . . does that give us or anyone else the right to take HBO without Time Warner's permission just because of our status as a distributor?"
For years, low-power TV stations have been lobbying Congress to award them mandatory cable carriage over the objections of the cable industry.
Most recently, at least one low-power station sought the help of one U.S. senator in adding a must-carry requirement to last year's Department of Defense spending bill, according to a cable industry source.
That effort — which would have been restricted to about 400 so-called Class A low-power stations — failed.
It is likely that Congress will take another look at the issue sometime this year.
For now, Koplin said his goal is to gain exclusivity protection for UPN programming in Syracuse and is not lobbying for must-carry on Capitol Hill at the moment.
"I am not supportive of that right now," he said. "I think this is the next issue."