Small cable operators want the major broadcast networks and some affiliate group owners to be investigated for allegedly using retransmission consent as a hammer to secure carriage for their cable networks under unfair terms and conditions.
The American Cable Association, which represents hundreds of small operators across the U.S., asked the FCC to launch an inquiry into the bargaining practices of The Walt Disney Co., General Electric Co., and News Corp. — all of which own TV networks, TV stations and numerous cable networks.
ACA's chief accusation is that the broadcast powerhouses refuse to allow cable carriage of their local over-the-air TV stations unless the cable operators agree to carry their cable networks — and pay prices the operators consider too high. The broadcasters' bundling power, ACA charged, is producing higher cable rates and crowding out networks that aren't affiliated with the broadcasters.
"These tying arrangements harm smaller cable companies and their customers by increasing basic cable costs and decreasing programming choices," the Pittsburgh-based ACA said in the 16-page filing.
ACA deliberately picked Oct. 1 to file with the FCC. That's also the first day of the current round of retransmission-consent negotiations, which occur every three years and last for three months, unless the parties agree to extensions.
"The upcoming round of retransmission consent is imminent. ACA members fear the worst," the ACA's filing said.
Preston Padden, Disney's executive vice president of worldwide government relations, said the company does not insist that access to an ABC station must be linked to the purchase of a Disney-owned cable network, such as ESPN.
"We always offer the option of a stand-alone cash retransmission deal for ABC, and the packages of other services are offered as a convenience for those cable operators who don't wish to pay cash for ABC," Padden said.
Padden said the practice of carrying a broadcaster's cable network in lieu of a straight cash deal for the station originated with the cable industry a decade ago.
The four major networks — ABC (owned by Disney), CBS (Viacom Inc.), NBC (GE), and Fox (News Corp.) — have developed into cable-programming giants. According to the National Cable & Telecommunications Association, the four majors or their parent companies have an ownership interest in at least 70 cable networks.
TV stations won the right to demand cash and other types of carriage compensation from cable operators in the 1992 Cable Act.