As everyone knows by now, retrans and carriage negotiations are seldom without rancor. But the level of vitriol between Cablevision and Scripps, a fight that led to the elimination of Food Network and HGTV from the MSO’s lineup, seems especially nasty. Talks continue (sort of), but both sides sound fatigued and relatively fed up with one another. The ultimate decider on that one could be NYC-area consumers, many of whom will vote with their feet. But Pali’s Rich Greenfield calculated that Cablevision has a high tolerance for pain here, as it could lose up to 39,000 subs before rejecting Scripps’ demands would actually cost the MSO any money. Scripps says it’s worth much more than the MSO is paying considering the net’s ratings and what Cablevision pays other similarly successful nets (and makes sure to note that every other major distributor has signed on the dotted line). Cablevision, however, says it’s just too much of an increase and too fast—and so far reports only “modest” rumblings from its customers. Of course, Cablevision and Scripps aren’t unique in all of this. Just about all MSOs and content owners have skirmished from time to time over carriage—often under the glare of the media happy to pass along the blow-by-blow to the public and policymakers. What’s the usual result? Dissatisfied customers caught in the middle.
Over the years, I’ve both covered and observed these carriage negotiations. And what’s amazing is that they really haven’t evolved at all. They just hit the same notes year after year, renewal after renewal, angry statement after angry statement. Both sides accuse the other of intolerable cruelty and disregard for the public. Both sides blame the other for any carriage loss and consumer unrest that results from failed negotiations. And eventually, after much pain and suffering, both sides learn to live in peace and harmony. Or at least in a state of mutually assured destruction. But really—and not to use the biggest cliché of the last 20 years, but it’s just so relevant here—“Can’t we all get along?”
Apparently, we can’t. And some would argue that’s perfectly fine. After all, this is business. And these are negotiations. They’re not supposed to be nice, and the very nature of negotiating is that both sides try to push the other to the brink in order to gain the biggest advantage and squeeze out the best possible deal. Fine. But it’s interesting that the tactics and results of these carriage negotiations haven’t changed despite the fact that consumers can now get content through multiple avenues, including online and through telco competitors with similar triple-play products. In some ways, programmers have more leverage than in the past because they can tell their fans to simply switch to a competitor. Operators, however, have shown that they still consider themselves the 500-pound MVPD gorillas who refuse to let themselves get trampled by rate increases that eventually get passed along to customers, who then blame the MSOs rather than the nets (Time Warner Cable’s “Roll Over or Get Tough” campaign is a great example of this tug-of-war playing out very publicly). Where does this go? Anyone’s guess.
The truth is that the MSOs and programmers need to realize that their inability to get along during these times of strife plays out in the public square. And it doesn’t go unnoticed. When you have politicians like John Kerry and Ed Markey—not to mention public interest groups—saying that the retrans process may need regulation to protect consumers, the entire cable industry should be afraid. Very afraid. After all, Markey was instrumental in convincing Congress to pass the 1992 Cable Act back in the Dark Ages of pestilence and famine, which still give cable executives horrible nightmares. And you can bet that if Congress starts messing with retrans, they will eventually point to fights like the Cablevision-Scripps impasse as evidence that the government also needs to get involved in ALL carriage negotiations. In Washington, the anti-regulation forces haven’t been this weak in years. This is fertile ground for Markey and others to push through new regs, and the cable industry might want to ask itself whether its hard-nosed negotiating tactics and vitriol are helping to make it happen.
(Michael Grebb is executive editor at CableFAX).