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ACA: Big broadcasters ‘extorting’ retrans fees from smaller operators

Tue, 04/08/2008 - 9:00am
Mike Robuck

The American Cable Association said today that large broadcasters were “extorting retransmission fees from small cable operators in record amounts.”

The ACA cited information released in annual reports from five large broadcasters to bolster its claim that the fees are too high.

 In fiscal year 2007, the Hearst ArgyleSinclairLIN TVGray Television, and Nexstar broadcast groups reported an average increase of more than 43 percent in “retransmission revenue” paid by television operators – a total of more than $115 million.

Since 2005, broadcasters have increased the revenues generated from distributions by more than 70 percent, most notably from independent cable operators who provide small and rural communities with video service.  

“Retransmission consent is a government-created rule that must be addressed by the government for the sake of the industry and our customers,” ACA President and CEO Matthew M. Polka said. “The record revenues reported by these multimillion dollar broadcast groups at the expense of small cable operators should be all the evidence anyone could need to see that the system is broken. The skyrocketing price of doing business for independent operators is putting their future at risk, and will ultimately be passed on to the small and rural communities they service.”

The ACA has filed comments with the Federal Communications Commission as part of the ongoing Further Notice of Proposed Rulemaking addressing the broadcasters and programmers’ price discrimination and tying and bundling practices against smaller, independent cable operators while urging the FCC “to make moderate changes to existing rules and regulations.”

“The Commission is rightly working to address rising cable costs for average Americans and to bridge the digital divide that separates far too many communities from broadband access,” Polka said. “Putting an end to the extortionist practices of broadcasters regarding retransmission fees negotiations would advance both of those goals. Money unfairly paid out to broadcasters cannot be used to invest in broadband deployment in the small and rural communities that only ACA members serve, and those independent operators will be faced with the choice of raising rates to cover expenses or shutting down their system.”

Large cable operators have also been battling broadcasters over increased retransmission fees. Last year Cox Communications and Sinclair entered into protracted retransmission negotiations before finally agreeing upon a four-year deal that included HD programming.

More Broadband Direct:

• FCC, small cable ops find dual must-carry compromise 

• ACA: Big broadcasters ‘extorting’ retrans fees from smaller operators 

• Harmonic debuts new decoding module, deploys with Eenadu Television 

• Comcast SportsNet Atlantic chooses Platformic for enterprise Web technology 

• Motorola forced to back two Icahn board members 

• GridNetworks upgrades GridCasting platform 

• Cable Center gearing up for second edition of Cable Days 

• Broadband Briefs for 4/08/08

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