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ACA: Broadcasters raking in money on retransmission deals

Thu, 09/18/2008 - 8:30am
Mike Robuck

The American Cable Association (ACA), seeking to bolster its case that retransmission fees charged by broadcasters are especially onerous to small- and medium-size cable operators, released information in regard to how much revenue broadcasters are making from retransmission agreements.

In the second quarter of fiscal year 2008, Sinclair reported a 27 percent increase in retransmission consent revenue, to $18.7 million, compared with the second quarter of 2007. Over the same period of time, Belo reported a 36 percent increase, to $7.6 million; Hearst-Argyle a 26 percent increase, to $6.8 million; and LIN TV a 97 percent increase, to $6.7 million. Since 2005, broadcasters have increased revenues generated from retransmission consent by about 75 percent, according to the ACA.

“The numbers are in, and once again cable customers lose as broadcasters squeeze every last penny out of operators – simply because outdated federal rules allow them to do so,” said Matthew Polka, ACA president and CEO. “With thousands of retransmission consent contracts set to expire in the coming months, we expect broadcasters to continue to exploit their government-enhanced market power, which will very likely raise prices for pay television customers across the country next year.”

The ACA maintains that federal retransmission consent and network non-duplication rules give broadcasters unrestrained leverage to demand unfair rates, terms and conditions for retransmission consent, particularly from small- and medium-size operators. Broadcasters often discriminate against smaller operators by unjustifiably demanding higher per-subscriber fees than other operators in the same market, according to the ACA.

“Broadcasters are increasingly taking advantage of the opportunity to use customers of cable operators as ATM machines,” Polka continued. “ACA members report that many broadcasters are exponentially increasing per-subscriber fees without care or concern as to how it will impact consumer bills.”

Earlier this week, the ACA and the National Cable & Telecommunications Association (NCTA) urged a Congress committee to enact a “quit period” in front of next year’s transition to digital signals on Feb. 17 (story here). The ACA and NCTA are concerned that retransmission negotiations could cause further consumer confusion when broadcasters switch from analog to digital signals.

The ACA has also filed comments with the FCC in regard to program access and retransmission consent rules.

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