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Apr 24

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4/24/2007 12:30 PM  RssIcon

As I declared last month, it’s time for commercial broadcasters to pass on must-carry and embrace the potential financial benefits of retransmission consent. Some stations and networks have already made lucrative agreements with cable operators and created a new revenue stream in the process. Time to follow their lead and make some money.

Of course, the retransmission revolution isn’t occurring in a vacuum. While broadcasters might enjoy a positive cash flow, the new world order could negatively impact other parties.

ABOUT THOSE VIEWERS
Let’s start with the most important group, your viewers, particularly the ones with disposable income that advertisers crave. John Q. Public doesn’t know what retransmission consent is, and certainly doesn’t care if the cable company and the local network affiliate can’t play nice.

All he cares about is coming home after a hard day at the office and watching the latest installment of 24 in glorious high definition. That’s why he overspent on the 60-inch HDTV in the corner of the family room, and that’s why he pays the cable company a premium for HD content.

And what happens when you take away his HD? You get an unhappy customer demanding credit and seriously pondering a move to satellite.

That brings us to the cable companies themselves. When negotiations go bad and retransmission consent is denied (and yes, I suspect this is going to happen more and more), broadcast channels are going to go dark. If this becomes a trend, it will turn into a customer service nightmare.

But be warned: With the right PR, your local cable franchise could easily turn your station into the greedy bad guy in the renegotiation process. You may have logic on your side, but the cable companies have history because they’ve never had to pay to carry your station. They might even evoke sympathy from customers because you made them shut off your station. And imagine the nasty phone calls you’ll get when the local franchise starts telling its customers that you forced them to raise monthly cable rates.

Another group that will most likely take a hit are cable networks. Remember, the cable company is going to pass on to the consumer whatever retransmission fees you collect. Consumers will, in turn, complain about increased costs.

As a result, to minimize or eliminate yet another rate hike, franchises will put pressure on cable networks to reduce their carriage fees. If retransmission fees for broadcasters catch on as expected, it’s not going to be easy to establish a new cable network in the next few years. Other networks could feel the pinch as well.

Now, the economic health of cable networks competing for your viewers may not be much of a concern to you, but the attitude of your community toward your business better be. Make your case for retransmission fees, but don’t lose your audience in the process.

YOUR NEW EDITOR
Finally this month, it is my pleasure to announce the new editor of Television Broadcast, Peter Caranicas. I am leaving this magazine in good hands. He’s been covering the video industry for years and is one of the journalists who “gets it.” Peter is already developing next month’s issue, and will be joining me at NAB2007 to get reacquainted with about 100,000 of our closest friends.

I started writing for TVB back in 1994, and I’ve enjoyed my temporary return to these pages. It’s an amazing time in the broadcast industry, filled with new challenges, new technologies and new opportunities. I look forward to reading about your continued adventures.

Mark J. Pescatore is the host of the Television Broadcast Two-Minute Drill and the editor of Government Video magazine. Contact him at mpescatore@nbmedia.com.

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