When Sen. John McCain (R-Ariz.) stepped up his oversight of cable rates last year, Michael Pandzik, president and CEO of the National Cable Television Cooperative, dashed off a letter to the lawmaker to explain why nominal cable rates continue to rise.
"Applying political pressure to the cable operators alone will not solve the problem, as the engine for these steady increases lies with the cable programmers," Pandzik wrote in a three-page letter that outlined the escalating license-fee demands of basic networks.
Pandzik's letter did not mention that sometimes NCTC members fail to use their own combined buying power as a weapon against programmers.
The NCTC, founded in 1984 by 10 cable companies in the Midwest, today includes more than 1,000 companies serving more than 14 million subscribers.
Were the co-op a single MSO, it would be the second-largest pay-TV distributor in the country, after Comcast Corp.'s 21.3 million subscribers.
But the NCTC rarely gets the rate card of a 14 million subscriber MSO, because the group cannot guarantee distribution.
"The biggest difference is that we don't own and control these systems," said NCTC spokesman Dan Mulvenon. "We can't make carriage decisions for members."
If the NCTC can't guarantee access to all 14 million subscribers, its members won't get the best license-fee deal possible.
"Some operators choose not to carry the network for a variety of reasons.," Mulvenon said. "They just may not feel it is appropriate for their market, or it may just be that the cost is out of line with what they want," Mulvenon said.
NCTC's next newsletter to members is going to repeat that buying cooperative is most effective when everyone sticks together.
"That phrase is exactly one we have used with our members," Mulvenon said, adding that the message is starting to show results. "I think it is getting better and better. You are seeing more and more participation in deals."