Retrans Doesn't Need Fixing - Multichannel

Retrans Doesn't Need Fixing

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When the U.S. Congress established the retransmission consent process, it did so with the express intention of enabling broadcasters to be paid by cable operators that carry broadcast stations.

The Senate report approving the 1992 Cable Act stated: “Cable television is now an established service. Cable operators pay for the cable programming services they offer to their customers; the committee believes that programming services which originate on a broadcast channel should not be treated differently.”

In effect, Congress determined that broadcasters' use of public airwaves and the public's ability to receive broadcast-TV signals for free was irrelevant when it came to carriage of such signals by cable companies.

Congress attempted to realize its goal, not by providing broadcasters who chose to negotiate for retransmission consent with any special rights, but by eliminating cable's right to carry broadcast stations without their owners' consent. Congress believed that by leveling the playing field, through the elimination of this cable company benefit, broadcasters could successfully demand payment due to the value of the broadcast stations to cable's efforts to attract and retain subscribers. Congress simply wanted retransmission consent negotiations to occur consistently with ordinary-course, commercial transactions.

Unfortunately, for many years the combination of cable's monopoly power and the historical practice of cable operators carrying broadcast stations without paying for that right thwarted Congressional intent. Ratings clearly indicate the value of broadcast stations to cable, but history and monopoly power formed artificial barriers to the proper operation of the free market. Only with the passage of almost 15 years and the diminution of cable's power due to the entrance of competition (which started with satellite's launch of local into local and continues with the telephone companies' emergence as video providers) are broadcasters finally starting to be paid by cable operators.

Certain cable operators, however, are not satisfied with the free ride they enjoyed for so many years. Mediacom Communications CEO Rocco Commisso, for example, has offered a set of “prescriptions” to fix the problems he sees with retransmission consent (“Rx for Retransmission,” Feb. 12, 2007, page 27). Although Mr. Commisso offers eight so called “prescriptions,” in the end he really has just one: more government intervention to perpetuate cable's ability to profit from an asset for which it doesn't pay. Each of his proposals simply represents a different iteration of the same concept, namely his anti-free market desire for artificial barriers to bolster cable's diminishing leverage.

Interestingly, the very nature of Mr. Commisso's call for governmental help demonstrates he understands how valuable the carriage of broadcast signals is to cable companies' success. He understands free market negotiations without artificial impediments will result in cable operators having to pay to carry programming which is far and away the most popular offered by cable. The only thing that he appears not to understand is that allowing broadcasters to be paid for this valuable asset, was precisely the reason for enacting the current laws.

Perhaps all Mr. Commisso really wants to “fix” is his profits. After all, the great irony in his proposals is that he has offered them not when the process is broken, but rather precisely when market forces are finally causing it to be fixed.

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