Small Ops Told: Head to D.C.


Chicago -- Small cable operators, facing one of the most “hostile” environments in more than a decade at the Federal Communications Commission, need to get active and plead their case in Washington, lobbyists told a conference of small cable companies Monday.

During a panel at The Independent Show here, the American Cable Association and one of its lawyers basically warned its members -- which serve 10 million subscribers -- that there will be no help coming from the FCC on hot-button issues such as retransmission consent and digital-multicast must-carry under the watch of chairman Kevin Martin.

“Small and medium-sized cable companies face a hostile environment at the FCC on the key issues,” said panelist Chris Cinnamon, a lawyer who represents independent operators. “It is the worst regulatory environment since 1994.”

Therefore, it is “paramount” that small cable companies step up their grassroots efforts and “out-local” their broadcast rivals by taking their case directly to their representatives in Washington, according to ACA president Matt Polka.

Deregulation would help cable “because then the broadcasters would not have the regulatory tools and weapons they have … a fair and open market would probably be to your advantage,” said Rhod Shaw, president of Alpine Group, a consultant that works for the ACA.

Gearing up for what it predicted will be a difficult round of retransmission-consent negotiations in 2008, the ACA argued that if broadcasters demand cash for carriage, cable operators will have to raise their rates, ultimately hurting consumers, so that makes retransmission consent is a populist issue.

“We have to make this a significant, major political problem for members of Congress,” Polka said.

Polka and Cinnamon met last week with Martin’s office, and Martin controls the FCC’s agenda.

“And basically, the message from the FCC is this: Retransmission consent is working just fine, and who are we to say it isn’t working any way other than Congress has intended?”

Polka said.

“We wanted to bring that message to you directly from the chairman’s office that the marketplace is working just fine, despite what you have seen in your marketplace, despite what you have seen in the headlines, despite the egregious demands that we know have taken place all over the country, most recently in West Virginia, with the Sinclair Broadcast [Group] problem,” he added, referring to Suddenlink Communications’ dispute with the TV-station owner over payment for its outlets.

In March 2005, the ACA petitioned the FCC seeking one of its solutions for retransmission-consent problems: waivers for broadcast exclusivity rules, so that a cable system can import an out-of-market TV station if an in-market station seeks cash payment for retransmission consent. But there has been no action from the federal regulatory body on the ACA’s petition.

Supporting Polka’s argument in favor of a loosening of exclusivity, a cable operator in the audience said that since he has two CBS affiliates in his market -- Charleston, W. Va. -- one opted for must-carry and the other one agreed to be carried free-of-charge. Because they are competing, neither one has asked for cash.

The ACA also supported the end of a requirement that cable subscribers must buy a broadcast-basic tier with their local TV stations before getting any cable networks.

During Monday’s panel, Polka also made reference to an informal roundtable his group had July 19 with lawmakers including House Energy and Commerce Committee chairman Joe Barton (R-Texas) on the impact of retransmission consent on small cable companies.

“There has been a movement in Washington toward bringing more competition to our marketplace … that allowing the Bell companies as new entrants to the video marketplace will somehow help to spur competition, provide relief to consumers and either control or lower prices and provide benefits to all,” Polka said.

“[But] having more competitors to a market is not going to help if Congress does not on the other hand deal with the significant retransmission-consent and programming-carriage issues that exist in our marketplace,” he added.

A group of 19 independent cable networks is also looking at the retransmission-consent issue and planning to take a position.

The Independent Show is the joint meeting of the ACA and the National Cable Television Cooperative.