Last updated: May 19, 2010 - 1:06pm
The American Cable Association called on the Federal Communications Commission to assert its authority and protect consumers by creating new retransmission consent rules designed to prevent broadcasters from charging discriminatory fees and creating joint negotiating entities in order to further maximize their economic leverage over small cable providers.
In comments filed with the FCC, ACA documented that price discrimination by broadcasters against small cable operators continues unabated, based on market analyses performed at ACA's request by Dr. William Rogerson, Professor of Economics at Northwestern University and former FCC Chief Economist from 1998-99. In studying the relevant available data, Dr. Rogerson determined that small cable operators pay at least twice as much for retransmission consent per-subscriber as larger pay-TV providers, and that the difference in the prices paid has no basis in the broadcasters' cost of delivering the signal to cable headends. Small cable and its customers end up paying far more for access to the affiliate and owned-and-operated signals of ABC, CBS, NBC and FOX stations primarily because these broadcasters have significant bargaining power over ACA members, Dr. Rogerson concluded.
ACA also called on the FCC to crack down on local broadcasters that have joined forces to negotiate retransmission consent deals in an effort to more pressure on small cable to overpay for their signals. Although FCC rules generally ban the common owners of two Big Four network stations in the same market, many broadcasters have avoided scrutiny by fashioning alliances not normally reviewable by the FCC, such as local marketing and shared services agreements. Through these duopoly-style arrangements, one entity is allowed to conduct retransmission consent negotiations on behalf of two "must have" affiliates, resulting in small cable operators paying substantially more for retransmission consent than if the two affiliates had to negotiate separate deals. ACA cited evidence provided by cable operator Suddenlink Communications showing that these broadcaster negotiating alliances drive up the cost of retransmission consent by about 21%. ACA has identified at least 93 sharing agreements or duopolies in 78 television markets, affecting more than 37% of the 210 DMAs and with the heaviest concentration found in smaller markets served by ACA members.
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