Broadcasters Keep Upper Hand in Disputes

A recent spate of TV blackouts and the lack of government intervention suggests that broadcasters have the upper hand over TV signal providers when it comes to negotiating fees, at least until Congress decides to act.

The law at the center of the debates is the Cable Television Consumer Protection and Competition Act of 1992. It allows broadcasters like Fox, ABC, CBS and NBC to choose between forcing a TV signal distributor like Cablevision to carry its local TV station, thus boosting its audience, or bargaining for the best rate it can for so-called "retransmission consent." Because broadcasters bought the rights to such high-demand programming like football, baseball and the Oscars, they have chosen to bargain and have recently been pressing for higher fees. The law heavily favors broadcasters in such negotiations because they have the ability to black out signals and subscribers are hard to win back if they switch TV signal providers.

David Bank, an analyst with RBC Capital Markets, said it was in the best interests of the Federal Communications Commission to keep the balance tipped in broadcasters' favor. The FCC regulates the airwaves and it has authority over what broadcasters can send out over them. There are rules over obscenity and local content that don't apply to pay cable channels, which escape the FCC's grasp. "That's what the FCC really cares about: minority voices on air, localism, childhood early education initiatives, obscenity," Bank said. If the balance of power were shifted to distributors, media giants could pull back from the broadcast model and move to an all-cable channel lineup. TV stations might disappear and the FCC would "lose the ability to regulate all that," Bank said.

The American Cable Association, a grouping of smaller cable operators representing 7.6 million subscribers, argued that the fight to change an 18-year-old law wasn't over and it said it remains within the FCC's powers to adopt regulations to prevent signal blackouts now. "Despite these deals being done, retransmission consent needs to change," its president Matthew Polka, said.