(Editor's note: The threatened blackout described below was averted when the parties involved reached an 11th hour agreement late on Nov. 29, 2012.)
Charter Cable customers accustomed to viewing Channel 8 (WOOD-TV) and Channel 15 (WTVS) in Michigan’s Kent County viewing vicinity may find the two stations blacked out if a broadcast retransmission dispute isn’t resolved this week. The dispute arose when LIN Media, the stations’ owner, announced it was seeking a 150 percent increase in retransmission-consent fees received from Charter Communications.
The retransmission clash between Charter and LIN, a holding company that owns 43 local broadcast stations throughout the United States, also concerns stations in Alabama, Wisconsin, North Carolina, Oregon and New England. The initial deadline for resolution of the conflict was Nov. 29, but a phone conversation with a WOOD spokesperson revealed that the dispute remains ongoing.
In Michigan, Charter pays LIN for the retransmission rights to Grand Rapids stations WOOD and WTVS, which carry, respectively, NBC and My Network TV programming, as well as syndicated shows and local news and information telecasts. Broadcasts from the stations are transmitted either over-the-air for free reception by residential television antennas, through a cable operator licensed in the area — in this instance, Charter — or other multichannel video programming delivery systems such as satellite dish providers.
Retransmission disagreements have resulted in 84 television blackouts in the United States thus far this year, according to the American Television Alliance, an advocacy organization consisting of consumer groups, independent programmers and satellite and cable companies, that aims to ensure negotiations between broadcasters and local cable carriers don’t result in blackouts. The ATVA contends the source of the issue is the outdated Cable Act, which was passed by the U.S. Congress in 1992, overturning a veto by President George H.W. Bush.
The 1992 Cable Act requires cable companies that carry more than 12 programs reserve no less than four local commercial stations, which forces Charter to carry WOOD and WTVS to its Grand Rapids and Kent County customers. The ATVA notes that most cable companies operated unchallenged in local markets under franchise agreements with local governments in 1992, which predates the advent of Internet and satellite broadcasting as well as more recent multichannel video programming delivery technologies such as Verizon’s FiOS and AT&T’s U-Verse systems. In many American markets, viewers have two, three or even four choices for pay television.
“Our stations are important assets to the local community,” reads a LIN press statement. “Without a fair agreement, we will not be able to provide the premiere news, sports, entertainment, weather, traffic updates, political coverage and other local and national programming that is most important to you.”
As proscribed by the Cable Act, broadcasters either declare their programming “must carry,” which requires them to provide their content to MVPDs for free, or opt to negotiate a fee with cable companies based on the number of subscribers reached. The 1992 retransmission consent rules enable broadcasters to negotiate more favorable deals for content.
Because MVPD revenues depend on providing programming viewers want, broadcasters wield a distinct advantage in negotiating fees for retransmission consent, especially for programming as potentially lucrative as the Super Bowl, the Academy Awards or the highly anticipated final episode of a hit television series. Whereas MVPDs have to invest a huge amount of money in their transmission infrastructure, broadcasters get the most important part of theirs for free, courtesy of Congress — the broadcast spectrum is allocated to them free of charge. In addition, the evolution of wireless, fiber optics, the Internet and satellite options for local content providers enables them to withhold access to their content from cable companies on a case-by-case basis and negotiate with other outlets.
The cable companies are also at a distinct disadvantage because any blackouts or increases in rates will more than likely result in customer irritation being directed toward them.
“American innovation and progress have been the hallmark of the last two decades, but not when it comes to TV rules,” reads a press statement on the ATVA website. “Broadcasters only have to dust off the 1992 Cable Act and slam it down on the negotiating table to support their demands for more money. That’s wrong…. [C]onsumers know it’s wrong and the FCC [Federal Communications Commission] and Congress know it’s wrong.”
Stay tuned, this could get interesting.