Operator's Advice to Nets: Consult Us More

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To the Editor:

R Thomas Umstead's article "TNT: Pay New, 'Fair' Rates Or Lose Some Programming" [Feb. 18] has motivated me to publicly encourage cable program networks to create something I have been privately requesting for many years: affiliate advisory boards.

I am sure that the program networks will cringe at the thought. However, there are obvious, serious problems with the network-affiliate relationship in our industry.

I think it is very important for networks to understand that their interests and the interests of their affiliates can be very different on matters of programming. The concept of what is "fair" varies greatly based on these differing interests.

Programs that a network considers very valuable may hold little value to the affiliate. Based on this most recent incident, it appears that the networks do not understand this difference. Or, if they do, they are completely ignoring it.

[Turner Broadcasting System Inc. president of domestic distribution] Andy Heller's statements might not be labeled "veiled threats" if he met with a group of cable operators to discuss the network's programming on a regular basis.

Networks would not appear as dictatorial and operators would not feel as abused if they knew that a respected group of their contemporaries had been consulted and, more importantly, seriously considered before the programming direction of a network changed or expensive "marquee" programming was acquired. The network would be more confident of affiliate support.

Perhaps, in the long term, networks and affiliates could develop a viable cost-allocation methodology.

For example, Turner Network Television seems very pleased with the fact that they now have rights to Law & Order. The series does well with viewers. However, affiliates will be less than pleased if the acquisition of Law & Order
results in a rate increase. The reason is simple. That program already appears on our systems on A&E.

TNT reportedly paid a great deal more for Law & Order
than A&E. Who benefits from TNT's acquisition? The viewers do not. They were just as happy with it on A&E as TNT. It is the same show regardless of where it appears. Fans will find it.

Cable operators do not benefit. We experience no lift in basic-cable subscriptions. In fact, we receive complaints. "Do you have to show Law & Order
all the time? Can't you show something else?" Theoretically, local advertisers could switch from one network to the other, but that does not represent net new business, only a shift.

However, TNT does benefit. They successfully capture "eyeballs" from A&E. Since the benefit falls only to TNT, it should make sure that the increased revenue from national ad sales covers the cost. The network should not shift the burden of their competition for A&E's viewers to the affiliates. Cable operators are concerned about the cost to the viewer, not the ratings race between TNT and A&E.

We should ask the same questions about other programming.

Do the recent TNT and ESPN deals with the NBA result in any net new programming for the viewers? Are the networks truly increasing the value of the service to viewers with new, incremental programming or just stealing viewers from one another in expensive bidding wars? Do these program rights contracts hold any benefit to cable operators? Are affiliates being asked (or told) to pay for the competition among networks for the eyes of viewers and wallets of advertisers?

Perhaps the best recent example of this phenomenon is Fox Sports Ohio's recent acquisition of baseball rights for the Cleveland Indians. The games used to be split 50/50 with a local broadcast affiliate.

Last year, the Indians (under new owner Larry Dolan) severed a decades-long relationship with the broadcast station and sold 100 percent of the games to Fox Sports. The Indians told their fans that this was a financial decision. They needed more money this in order to preserve the quality of their product. However, they didn't raise ticket prices. They increased the television rights fees instead.

Of course, Fox Sports Ohio needs to increase rates significantly to pay for these new games and the cable operators have the responsibility to collect it.

Who benefits? The viewers do not benefit. Let's face it, the viewers don't care where they see a baseball game, only that they can see it. There will be no new games. They just move from one channel to another. However, viewers do care a great deal when their cable rates increase, especially if there is nothing new to show for it (and there is nothing new about baseball on TV).

The cable operators do not benefit. Sure, we might be able to sell some additional advertising, but not enough to cover the increased rights fees. We won't add enough basic customers to make up the difference either. In fact, you could argue that we probably will lose more subscribers (due to higher basic rates) than we will gain. I assume Fox Sports Ohio will benefit.

If they won't, why did they buy the new rights? The reason I don't know for certain is that they did not tell us. They did not "share" any information about the business model they employed to justify this program decision. More importantly, they did not consult us before they started bidding with our money (more correctly our subscriber's money).

The same sort of logic should be applied to NASCAR [National Association for Stock Car Auto Racing] or the current fad of "repurposed" programs.

Did ABC ever ask affiliates if they wanted an "ABC instant re-run" channel in place of Fox Family? For that matter, did Fox ever ask affiliates if they wanted to add sports, etc. to the established programs on The Family Channel? Would they have avoided some of the recent acrimony with their affiliates (including EchoStar Communications Corp.) if they had? It is time for cable program networks to seriously explore affiliate advisory boards before the ill will created by recent events grows more severe and invites legislative or regulatory attention.

Bob Gessner

President

Massillon Cable TV Inc.

Massillon, Ohio

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