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Small-System Station Drops on the Rise

2/09/2003 7:00 PM Eastern

Small cable systems are being forced to drop TV stations because of retransmission-consent abuses by media conglomerates, and these skirmishes hurt consumers in rural areas, the American Cable Association charged in a filing with federal officials last week.

The ACA leveled its latest round of charges against a handful of media companies — The Walt Disney Co., Hearst-Argyle Television Inc., Cox Enterprises Inc, Fox Television Stations Inc. and the Gannett Broadcasting Group — in reply comments it submitted in response to a federal review of broadcast-ownership rules.

Cash demands

The ACA, which represents small systems with 7.5 million homes, told the Federal Communications Commission that broadcasters this year have demanded cash-for-carriage for their TV stations, creating a flurry of standoffs in which a number of small systems — such as Country Cable TV in Pennsylvania — are, for the first time, being forced to drop broadcast signals.

Small systems have "lost access" to stations owned by Cox, Gannett and Hearst-Argyle as a result, according to the ACA.

Cash-for-carriage carries a potential cost to rural consumers of more than $172 million a year for what was once "free" TV, the ACA claims.

"In short, retransmission consent has become a scheme for media conglomerates to transfer wealth from rural consumers and small companies to corporate headquarters in New York, Los Angeles and Atlanta," the ACA said in its papers.

The lobbying group for small operators wants the FCC to probe alleged retransmission-consent abuses and to change "archaic" market-protection rules — namely network nonduplication and syndicated-exclusivity regulations.
"For smaller cable operators and smaller-market consumers, retransmission consent has become a vise," the ACA charged in its most recent filing. "On one side of the vise are a handful of media conglomerates — Disney, Fox, Hearst-Argyle, Gannett and a few others — with ever-increasing demands. Squeezed in the middle are smaller cable operators and consumers."

Several drops

The ACA listed a number of instances in which small cable systems have had to drop TV stations because they are unwilling to pay the broadcasters license fees, ranging from 15 cents to $1 a month per subscriber, for carriage.

Both Country Cable and TeleMedia removed NBC affiliate WJAC-TV of Johnston, Pa., from their channel lineup, according to the ACA. WJAC is owned by Cox Broadcasting, which requested that the cable systems either carry its regional cable-news service, Pittsburgh Cable News Channel, or pay cash license fees for the NBC affiliate.

Lee Dorman, Country Cable's owner, last week said he's is still talking to WJAC to work out an agreement. But with that station currently deleted, he said, Country plans to run a crawl in WJAC's former channel slot, explaining what is going on and why his system no longer carries the broadcaster.

Community Cablevision, a rural Oklahoma operator, has dropped Hearst-Argyle-owned ABC affiliate KOCO, rather than pay cash to carry the station, according to another case listed by the ACA.

The ACA cited what it described as "take-it-or-leave-it" tying arrangements, claiming that in some instances, Hearst-Argyle has linked consent for its TV stations to carriage of Lifetime Television and Lifetime Movie Network, for example.

Hearst-Argyle officials declined to comment last week. But a Gannett spokeswoman said her company is simply asking for fair compensation for the programming its TV stations carry.

"We'd like cable companies to understand that we're providing popular content," she said. "We're making a fair and reasonable request to be paid for the content we're providing."

Fox: We're flexible

A Fox Cable Networks Group spokesman noted that the company had offered cable operators multiple retransmission options. Officials at Cox and Disney couldn't be reached for comment.

The ACA argues that changes in network nonduplication and syndicated-exclusivity rules are also in order.

"In a nutshell, these regulations entitle a media conglomerate to withhold a local network signal from a cable operators and prevent that cable operator from bringing in a substitute network signal," the ACA said in its filing. "Put another way, because of these regulations, no market can exist for network signals on cable. This is precisely how Disney, Fox, Gannett and the other get the leverage to exploit retransmission consent."

 

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