Mediacom and Sinclair Come to Terms
February 8, 2007
The six-month retrans standoff between Sinclair and Mediacom was settled on the eve of Super Bowl weekend. After months of public nail-spitting, both companies issued sparsely worded press releases saying that Sinclair stations would be reinstated on Mediacom cable systems. Cash terms of the deal were not disclosed, but Multichannel News and The Wall Street Journal reported that Mediacom agreed to pay around 50 cents per month per subscriber for Sinclair's signals.
Sinclair pulled 22 of its stations in 13 states off Mediacom cable systems last month after an ongoing dispute over subscriber fees. Traditionally, only those networks exclusive to cable and DBS have received monthly, per-subscriber fees, which typically run from a few pennies up to around $2 for nets like ESPN. This content-payment structure was established 20 years ago when cable operators were begging for programming. Now, unless a startup network is backed by a conglomerate like Viacom or Fox, it's unlikely to see subscriber fees early on.
For the most part, broadcasters negotiate cable carriage through must-carry or retransmission consent. Retrans is used primarily by big broadcasters to get carriage for their cable-only networks, i.e., by letting cable operators "retransmit" their over-the-air signals. Recently, however, broadcasters have started asking for subscriber fees. They say their programming merits it because: A) Broadcast signals comprise some of the highest rated programming on television, and B) cable ops have been using hi-def broadcast signals to promote more costly HD tiers.
Sinclair, based in Hunt Valley, Md., has been on the forefront of demanding subscriber fees, and did so last summer when it went into negotiations with Mediacom, a 1.4 million subscriber cable operation based in Middletown, N.Y. Mediacom subsequently sued Sinclair to keep the broadcaster from pulling its stations, but the court did not intercede. Sinclair pulled its stations in early January, affecting about half of Medicom's customers and firing up the Iowa legislature.
In the weeks that followed, Sinclair cut a retrans deal with Time Warner covering 35 TV stations and 6 million cable subscribers. On Feb. 2, Mediacom announced that Sinclair stations would "be immediately restored" on its cable systems.
FCC Chairman Kevin Martin weighed that evening in a statement, saying, "I am pleased that Mediacom and Sinclair have reached an agreement. This is very good news for their customers."