Cable's Billion-Dollar Question Needs An Answer

The cable industry is facing a billion-dollar question. Broadcasters, led by CBS, are closing deals with operators that will put CBS on course to achieve its goal of getting $250 million cash for retransmitting its signals. But so lofty a goal carries a related issue: That tab will have to get paid somehow. And therein lies the question -- or questions. Will these retrans dollars -- estimated to hit $1.3 billion by 2012, according to SNL Kagan -- come out of distributor profits? Will cable networks take cuts or smaller increases in their monthly subscriber fees? Will customers pay through the nose with skyrocketing cable bills? Or will spiraling programming costs lead to a change in the way cable channels are bundled and sold to subscribers, as distributors brace for new video challenges from Apple, Google and Amazon?

It is, as everyone in the business knows, a relatively new dilemma. Not long ago, cable operators were tough, tight-fisted negotiators, vowing not to pay cash for retransmission consent as laid out in the Communications Act of 1992. But in recent years, broadcasters have been cashing in. Last week, Time Warner Cable and The Walt Disney Co. were able to come to a settlement on a new retransmission consent deal that included at least 50 cents per subscriber for ABC's owned stations, higher fees for Disney's cable channels and carriage of several new services. Even though the deal appeared to be settled much more peaceably than a slew of divisive deals of late, it was clear the cable operator felt that the rules surrounding retrans gave broadcasters an unfair advantage at the bargaining table.