Some small cable operators within television markets where The Walt Disney Co. owns the ABC affiliate will be able to carry the signal for free for the next three years, Disney announced last Tuesday.
Disney owns 10 ABC stations, including outlets in New York, Philadelphia and Houston. Under the proposal, 91 out of 113 cable operators with systems inside those 10 owned-and-operated markets will get free access to the ABC signal.
Disney intends to make the ABC signal available to “truly small” cable operators but not to big MSOs such as Comcast, Time Warner Cable and Cox Communications, a Disney official said.
The company would not disclose its criteria for determining truly small cable systems.
Disney’s offer includes cable systems with “about 60,000 subscribers” in the 10 markets combined, said Matt Polka, president of the American Cable Association, a consortium of small cable operators serving about 8 million subscribers nationally.
Disney, Polka said, needed to broaden the scope of its own offer and demand that its independent ABC affiliates around the country embrace free carriage for small systems.
He also urged Disney to base its proposal on a cable system’s pay TV market share within an ABC designated market area (DMA), not on the total number of subscribers the company serves nationally.
“The definition on small should be based on global TV-market penetration in Disney’s markets, not total subs per company,” Polka said.
Preston Padden, Disney’s executive vice president of worldwide government relations, suggested that Polka was trying to get free access to the ABC signal for ACA members that don’t fit a mom-and-pop description, such as Mediacom Communications, Suddenlink Communications and Cable One.
“It appears that ACA is tying the wants of its big members to the needs of its little members. Maybe we need an a la carte rule for ACA,” Padden quipped.
Starting Oct. 1, local TV stations need to decide whether to demand cable carriage or negotiate a retransmission consent deal for compensation, including cash and carriage of affiliated cable networks.
Disney will make ABC available to eligible small operators for free for the three-year period that begins Jan. 1, 2009.
Disney’s offer comes as Federal Communications Commission chairman Kevin Martin has the agency considering rules that would force programmers like Disney, NBC Universal and News Corp. to provide wholesale access to their TV stations and cable networks on an unbundled or a la carte basis.
The ACA has been urging the FCC to regulate the wholesale programming market, claiming that small operators are forced by entities with market power to distribute more channels than they want, putting upward pressure on retail cable rates.
The National Cable & Telecommunications Association has not endorsed the ACA’s a la carte lobbying.
“We applaud Disney’s announcement and believe that operators and broadcasters should continue to address these complex business issues through private marketplace negotiations,” NCTA spokesman Brian Dietz said.
In response to Disney’s announcement, Polka said, “a major programmer has finally admitted that the retransmission-consent market is broken and does not work the way Congress intended.”
Polka went on to say that “in Disney’s mind, today’s announcement may be an olive branch to smaller operators, but this is far too little relief for far too few operators.”
“There should be no mistake — Disney’s offer does little to change the broken retransmission consent regulations,” he said.
ACA is supporting an idea Martin floated that would allow cable companies to exclude from their most popular cable programming tiers any channel that demands a wholesale price of 75 cents per month, per subscriber — a direct threat to Disney’s ESPN franchise.
The ACA last Tuesday also asked the FCC to support a “quiet period” that would bar broadcasters from removing their signals from cable systems after many retransmission-consent agreements expire on Dec. 31, 2008.
It cited the additional confusion that would result if stations are dropped around the time of the transition to all-digital broadcasting next Feb. 17.