Spiraling Retrans, Sports Programming Fees Take Big Consumer Toll

For members of the American Cable Association (ACA), reform of retransmission consent will remain a high priority in 2012. Our trade organization, which represents nearly 1,000 small and mid-size cable operators, is equally troubled by the soaring cost of sports programming, the bulk of which will be shouldered by nearly all pay-TV subscribers, including those with absolutely no interest in viewing televised sporting events.

Twenty years ago, Congress passed the 1992 Cable Act with retransmission consent included. This law along with Federal Communications Commission rules implementing it is broken, and it needs to be replaced as soon as possible.

Cynically, broadcasters like to trumpet “the market is working,” even though an unbiased observer would say just the opposite is true. Broadcasters believe their own rhetoric only when they can pocket their massive retrans fees with as little bad publicity as possible. Yet, when TV stations occasionally find themselves on the losing end of negotiations, the first thing they do is run to the FCC, crying “bad faith by cable operators.”

Another point broadcasters like to embellish is that their family-budget-busting retrans lucre is being used by local TV stations to upgrade their facilities, and to invest in local news and public-service reporting. In reality, TV stations are sending big chunks of their retrans booty back to the corporate parents of ABC, CBS, NBC and Fox as reverse compensation. The TV networks desperately need the “reverse comp” to defray the cost of their extravagant contracts with an array of professional sports leagues and organizations.

The DeMint-Scalise bill would thoroughly modernize the laws that govern the video market,..especially those located in rural markets.

With all of this as background, ACA is pleased that some on Capitol Hill are committed to effecting positive change. In December 2011, Sen. Jim De-Mint (R-S.C.) and Rep. Steve Scalise (R-La.) unveiled legislation that would, among other things, repeal a number of outdated features in federal communications statutes, including retransmission consent. The DeMint-Scalise bill would thoroughly modernize the laws that govern the video market, promoting the interests of millions of consumers, especially those located in rural markets with unique economic issues.

The DeMint-Scalise legislation is an important first step that would benefit consumers far better than the regulations we live under today. ACA looks forward to working with all House and Senate lawmakers interested in updating communications laws that have failed to keep pace with market conditions and the evolving needs of consumers.

The interests of consumers are central in the debate over who is going to pay for the escalating cost of sports programming. The NFL has announced $42 billion in new TV deals with ESPN, NBC, CBS and Fox. If these media giants want to risk billions in their dealings with the NFL, that is their business, but these deals inarguably mean that huge cable fee increases are coming soon, hitting consumers hard.

ACA isn’t the only one wondering when the insanity on sports-rights fees is going to end. Prominent individuals on the content side of the pay-TV business are just as concerned. Liberty Media Corp. CEO Greg Maffei, who controls QVC and Starz, has described the rising cost of ESPN as a "tax on every American household." Viacom Inc. CEO Philippe Dauman called ESPN a driver of rising subscription costs, noting ESPN "alone as a network in many systems is double the cost of all our networks combined."

ACA has been ahead of the pack on the sports programming issue for many years. It is encouraging that our advocacy on this issue as well as on retransmission consent has generated the kind of support necessary to fuel real and lasting change.

Matthew M. Polka is president/CEO at the American Cable Association. Contact him at [email protected].