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Retrans rules are killing small operators

Tue, 08/01/2006 - 7:36am
Brian Santo, CED

CHICAGO - Small and mid-sized cable companies are facing a government environment that is not just indifferent, but in many cases, openly hostile, the worst situation in well over 10 years, consultants told the audience here at the first annual Independent Show.

There will be no relief on retransmission consent, the biggest issue in the past year for the members of the show's two sponsors, the American Cable Association (ACA) and the National Cable Television Cooperative  (NCTC).

With retrans, the basic problem is that broadcasters are continuously demanding more money from small- and mid-sized cable operators that must carry the channels but cannot pass along the rising costs for competitive reasons. By raising prices, broadcasters are deliberately trying to drive their cable rivals out of the business, according to Matt Polka, president of the ACA.

Polka said he'd met with FCC Chairman Kevin Martin this past week. Martin may be only one of five commissioners, but as chairman he sets the FCC's agenda, and "he is not interested in your concerns," Polka reported.

Martin believes the system is working as Congress intended, and is working well, Polka said. "Well it's not a market that is working," Polka countered. "It's a market that's broken, and it's one created by Congress."

Another issue is Emergency Alert System (EAS) transmission waivers. The ACA is filing a petition with the FCC today (Aug. 1) to reconsider its new position. Previously, the FCC would grant waivers if a cable operator could demonstrate it was unable to comply due to financial hardship. Now the FCC will grant waivers only to companies with fewer than 100 subscribers, no exceptions. Now, if a company cannot afford to comply, it is subject to fines and potential forfeiture, Christopher Cinnamon, managing partner of the Cinnamon Mueller law firm, explained.

Polka and fellow panelists Cinnamon, and Rhod Shaw, president of the Alpine Group consultancy, urged ACA and NCTC members to call their representatives and let them know precisely what, if any, problems they are having with retrans rules and other issues.

"We're making progress," said Shaw, referring to ACA's lobbying, "but members of Congress need to know what's happening in their states, in their districts. Contacting us is fine, but contacting your representative is critical."

"We're 1,100 companies in all 50 states with thousands of employees and 10 million subs," Polka said. "That's major in Washington. Activism will make a difference."

As for the future, the three panelists were careful to issue no political endorsements, but they made it clear that should control of the Congress (and the White House in 2008) pass to the Democrats, small- and medium-sized cable operators would find a much more hospitable atmosphere in Washington.

"This is not a regulatory issue," Polka said, referring to the federal government's positions vis-a-vis small and medium-sized cable companies. "This is a political issue," he said.

Congress is considering several bills that concern telecom and cable, but as a practical matter, the panelists said, none are likely to be enacted, with only 20 business days left before the election and deep divisions between the two arms of Congress on telecom priorities, which include the likes of national video franchising for the telcos, digital simulcast, retransmission rights, indecency concerns and network neutrality.

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