Coinciding with the 25th anniversary of the 1992 Cable Act, which launched the retransmission consent process for local broadcast channels, the American Cable Association (ACA) has put an interesting spin on the very painful process – ransom. Their TV Ransom campaign aims to highlight the impact of rising retransmission consent fees.
Retransmission consent is the process by which pay-TV providers gain carriage for local broadcast channels – ABC, CBS, FOX, and NBC being the most popular. The retransmission consent process, which is now underway in many markets, is a well-documented struggle, especially for the small independent cable operators, which make up ACA’s membership of 750 independent providers, who collectively reach about 7 million consumers.
These small operators lack any significant scale, due to relatively small subscriber counts, and therefore lack leverage in negotiations. Local broadcast channels, which are often owned by media conglomerates (Comcast owns 28 local NBC affiliates for example), sway unfair market power and thus aren’t fair negotiators, the ACA claims.
“Retransmission consent should be a straight-forward business negotiation, but, unfortunately, these corporate broadcasters abuse their market power to extract outrageous fees from cable customers,” said Matthew M. Polka, President and CEO of the American Cable Association in a press release announcing the TV Ransom campaign.
Retransmission consent fees have risen 30 times in the past decade, with fees forecasted to reach $11.6 billion in 2022, up from $8.6 billion in 2017, the ACA cites from SNL Kagan and Nielsen data.
The demand for higher fees by local broadcasters often leads to blackouts, where local channels are temporarily removed from a pay-TV operator’s channel line-up. ACA cited a few extreme examples where local broadcasters removed their signals, including during local emergencies:
- As Hurricane Irma targeted the Gulf Coast, Hearst Television took down its signal for two markets in the path of the storm – Orlando and New Orleans – even as broadcasters touted on Capitol Hill their commitment to the public during extreme weather events.
- For a month in early 2017, Northwest Broadcasting simultaneously blacked out ABC, CBS, NBC and FOX signals in two Mississippi communities served by Cable ONE.
- Shortly after acquiring an NBC affiliate station in Toledo, Ohio, Sinclair Broadcast Group demanded that Buckeye Broadband pay significantly higher fees to access the station’s signal. That demand led to Sinclair taking the station off the air for 212 days before an agreement could be reached.
While local broadcasters get much of the blame from ACA and others, they are also somewhat caught up in this process, due to rising programming fees charged to them from their affiliate networks – ABC, CBS, FOX, and NBC. Local broadcasters pass those fees on to pay-TV providers, with their own mark-up, all of which eventually gets paid by end consumers through their monthly cable TV bill.
ACA’s TV Ransom campaign has three key objectives, including: 1) illustrate how corporate broadcasters use their market power to take advantage of retransmission consent negotiations to extract escalating fees from cable customers; 2) expose corporate broadcasters’ weak business models, which lead to their aggressive negotiation tactics designed to make money off the backs of consumers; and 3) demonstrate how consolidation of broadcast and media companies is taking local TV station ownership corporate, so that local news is no longer local, and “free TV” is no longer free.
The campaign will include heavy media and digital tactics and will also include an informational toolkit of print and digital resources for ACA members to individually use as they see fit, explaining the facts and origin of retransmission consent, how it works, and how consumers are adversely affected, according to an ACA spokesperson.
“ACA’s work on TV Ransom is consistent with its long history of support for its members, customers and communities on the harm of retransmission consent, and its advocacy to bring meaningful reform to a broken retransmission consent system,” said Polka in a statement to Telecompetitor. “That said, because of the unrelenting and escalating harm caused by broadcasters in their retransmission consent negotiations this year, ACA took this unique step to put the true blame of retransmission consent at the feet of the so-called ‘free and local’ broadcasters.”
I applaud the effort. customers need to know why bills keep going up, but its hard to explain and make them understand. wish there was a way to make the broadcasters bill the consumer directly, and get us out of the middle.
The 1992 Cable Act MUST be repealed! I know the industry would say that will never happen but let’s look at the alternative. Overall, cable and satellite providers are steadily losing subscribers at an alarming rate. The steadily rising monthly fee is driving more and more customers to “cut the cord” AND blame the service provider!
Prior to the 1992 Cable Act, the local market tv stations derived their income solely from the sale of advertising spots. That model had worked extremely well for decades. As a retired Broadcast Engineer we were taught that when a broadcast signal left the transmitting tower, it was “free” to anyone able to receive it.
Our Congress was heavily lobbied into passing this bad legislation that is clearly NOT in the public interest. Without repeal, the smaller cable companies will be the first to go out of business followed by larger ones. Directv and Dish Network are vulnerable do to their high overhead costs.
At the end of the day, this country will revert back to an era when every rooftop had a tv antenna on it. Cable tv channels, which have some of the best programming will go bankrupt without viewers any longer.
In my view, OTT Streaming will be the next target of these local market tv stations. For the present, filing a formal complaint with the FCC against the renewal of a local station’s license might motivate a station to halt further rate hikes.
At this point, we have nothing to lose.
Word has it the networks are working on a technology to encrypt the over the air broadcast and at some point anticipate networks charging a fee even for the over air reception because millennials have found this "new technology" where they can get free locals. Not sure of current laws regarding this but I can easily foresee this happening.
I don’t believe current Congressional law on the books will allow encrypting of the OTA broadcast signal. Their is the “public safety” issue that would have to be dwelt with. Nevertheless, with our current do nothing Congress, anything is possible.
Building subscription decoding technology into televisions would certainly increase the cost of them.
Commercial breaks during tv programs now have more ads than ever before! Plenty of money is being made now but apparently it is never enough.
Since OTT streaming is becoming so popular these days, it would be the obvious next target for encryption in my view. In fact, I remember when Hulu was mostly FREE with the option to subscribe.
When the dust finally settles, the viewer will be the ultimate loser!
The broadcast license granted by the FCC mandates that the transmission is free and unencrypted.
Our company let a Gray Communications owned ABC affiliate station to go dark on 09/30/17 as we were unwilling to meet their demands for a 102% increase in fees. Especially in light of:
https://www.bizjournals.com/atlanta/news/2017/01/…
We are involved in 5 DMA's and anticipate troubles with other stations owners as well.
I really feel sorry for small cable companies. They provide a valuable service to their communities. The greed of the local market tv station knows no boundaries. As you already know, they will do whatever it takes, to force you to sign that next carriage contract, even if it ultimately puts you out of business!
Our Congress needs to address these important issues, NOW!
Good Luck
How do we get Congress to repeal this 1992 Act…Is there any way to make this happen?
Why are they doing this now when the games are on. We are paying for these channels. I think we should get them..
If we all dropped dish I think something would happen a dish rep told me that the cost to me fro fox was about 27 cents a month. the rest was for the other 250 channels that I do not want. But to cancel they want $300.00. Dish will not sent me a copy of my contract. I am beginning to wonder who is at fault here.
1hey Helen, I agree why wait until the sports season for CFB comes around I was so bummed all day because my games were on channels I couldn’t watch. I have been a Dish customer since 1992 I think I am ready to give it up……
fox channel is one I watch a lot and it runs my football team every sunday and I am ready to go to direct tv or somewhere where I can get fox. as much as I pay for dish I should be able to get all the channels. I don’t appreciate dish taking fox off the air
Dish’s negotiating style is horrendous. It is agree to what I want to pay, or we will drop you. So long as Dish has us under a multi-year agreement, they think they can do whatever the hell they want. Once my service agreement is over, I WILL NEVER USE A DISH PRODUCT be it Dish, Sling, (they are buying Boost – Virgin Mobile from Sprint) WONT USE THEM EITHER.
Duh! You have no idea what you are talking about. Dish, or any other re-broadcaster, has never dropped a station by their own accord.. They cannot re-broadcast a station if the station owner will not give them permission. This is due to congress and the FCC passing a bad law for consumers. By the way this was passed by a Republican controlled congress.
I am calling dish tomorrow to see what my service agreement is and when it expires. As soon as that happens, we are switching to direct TV. The way I see it, they have a contract with me too. I signed up expecting to get certain channels and they are in breech.
Again, another person who has no idea of what is going on. Dish has no control over this, and Direct TV is a victim of these blackouts every year also. The re-broadcasters are not the problem. They are trying to keep "your" bill lower.
it's a bun ch of crap
I pay Dish for a service. That service has been taken from me, even though I am supposed to pay the same amount monthly. They offered me a $ 3 a month discount because I am not getting Fox. What a bunch of garbage. They want to blame it on Fox. I pay Dish for a service, not Fox, so to me it is Dish's responsibility. Dish get your shit together. Hello direct TV
I'm a big sports nut, so it is extremely frustrating not to be able to see any of my local pro teams (Lions, Tigers, Red Wings and Pistons) games. I was pleased when the Big Ten network and the ESPN channels were restored so that I could watch the college games but, now that the Pro season is in full tilt, I feel abandoned by DISH. I just entered into a new 2 year agreement with DISH and now feel trapped into paying my new higher rate (not reduced at all by the loss of my FSDN channels). I assume DISH no longer is paying Disney for these lost channels. Has DISH given up on us in this fight? Very little word is forthcoming. Now, to see a game I must drive 25 miles to a bar that is showing the game and buy a meal to justify my being there. Come on DISH–give us some hope !! It's been over six months without service.
fox sport southwest is only 10% of dish business model , dish doesn't care about the 10% that's just not in their business model , they say they want to keep prices low , the fact is we pay more than ever on useless programing nobody watches , I have to pay for local channels , I live in Oklahoma about 35 miles from Arkansas the local channel that I pay for are from Arkansas , they cover very little about Oklahoma , I get very little Oklahoma news , but we still have to pay for these services or go totally without any local news , Dish is not trying too hard to settle this dispute with fox after all were just 10% of their business model and they are willing to give it up altogether, if this is not true they would have settled it already.