Broadcasters Hone Tactics

It looks like "must-carry" has gone the way of "stay the course."
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WASHINGTON

It looks like "must-carry" has gone the way of "stay the course." Broadcast groups, armed with a new term to replace what some in the industry have concluded was an outdated battle cry, are attempting to play hardball with cable these days and are increasingly using their fledgling digital signals and some older tools as leverage.

"We are repositioning the phrase 'multicast must-carry' to 'anti-stripping,'" said Dennis Wharton, NAB spokesman. Consequently, cable operators are being told to not delete any of a station's 19.39 Mbps, whether that fluid spectrum might entail a single HD channel, several SD channels, or a combination of both.

Hearst-Argyle Television President and CEO David Barrett, among others, had first suggested that must-carry was a "relic of an analog age" nearly a year ago.

"We should discard it," Barrett said. "Digital multicast streams are carried within--not in addition to--a single 19.4 megabit digital television signal."

According to David Donovan, president of the Association for Maximum Service Television, anti-stripping is actually a concept embodied in the 1992 Cable Act, which, in part, prevented cable operators from materially degrading a station's signal and required cable to carry a TV signal in its entirety. These provisions apply to both must-carry and retransmission consent stations, Donovan said. "Thus, the anti-stripping concept is merely an extension of existing law."

PULLING CHANNELS

When Hearst-Argyle's KETV, the ABC affiliate in Omaha, Neb., couldn't come to terms with Cox Cable several weeks ago, it pulled its HD channel off cable but left its analog channel alone. The broadcast group of 25 stations was not happy with what Cox was willing to pay for carriage. Consequently, besides KETV, Hearst-Argyle withdrew only the digital channels of several other properties: KOCO (Oklahoma City); WDSU (New Orleans); KMBC (Kansas City); KHBS/KHOG (Little Rock, Ark.); WESH and WKCF (Orlando, Fla.).

"It's not just the HD shows. It's the flexibility that the digital spectrum now allows that needs to be considered," said Tom Campo, Hearst-Argyle's chief spokesman. "HD is only one of the formats. There are established multicast channels out there already, most notably NBC Weather Plus, which Hearst-Argyle co-created with NBC Universal."

Asked if the industry is starting to play hardball with cable because it has come to the conclusion that "multicast must-carry" will never be mandated by the FCC, Campo said, "I don't know. But it's clear the business model is changing for broadcast TV, with far more electronic media outlets for advertisers to now consider--with cable-only channels, mobile, and Internet broadband services all competing with each other."

At least one longtime TV producer agrees. "I'm feeling that maybe I'm totally out of touch," Dick Wolf recently told The Wall Street Journal. The creator of the "Law & Order" franchise on NBC said "...I guarantee you, if anyone tells you what the television business is going to look like a decade out, they are on drugs."

Another key factor still giving broadcasters some leverage over cable is mass audiences.

"Broadcast remains some of the most viewed and enjoyed programming today, even though there's been some fragmentation," said Robert Rini, communications attorney at Rini Coran PC, in Washington, D.C. "It will remain extremely popular, and broadcasters will continue to provide quality eyeballs for advertisers. What I'm seeing [more of] now is like at WISC-TV in Madison, with its CBS programs on analog, its HD channel up, and with content from MyNetwork TV on its SD multicast channel--all running simultaneously."

Rini said some nonbroadcasters are more open to broadcast's content value than others.

"What frustrates me is when I deal with Dish and other DBS firms, they recognize the value in those broadcast signals. That's in stark contrast to cable, which refuses to recognize the value."

ALL OR NOTHING?

Determining exactly what "value" represents can easily wind up in court. When Mediacom Communications recently filed suit in Iowa against Sinclair Broadcast Group, it alleged Sinclair had violated antitrust laws by seeking cash payments in exchange for retransmission consent for some programming the MSO did not wish to carry.

According to Mediacom, Sinclair wanted a "tying" agreement stipulating that its CW and MyNetwork TV affiliates be included in any overall carriage deal. At least 22 Sinclair stations are affected, with more than a third affiliated with one of the new networks. Mediacom said it has little desire to include the two unproven services, in lieu of "higher-value offerings" to its subscribers.

In late October, a federal judge rejected Mediacom's request for a preliminary injunction. This does not mean the cable operator has ultimately lost its case, but it indicates the court currently thinks Sinclair would eventually be found not guilty of having violated anti-trust law. In response, the cable operator asked the FCC to step in, requesting that the commission order that Sinclair stations remain on the company's cable tier. (At deadline, Mediacom was on notice that its carriage rights to all Sinclair stations will be revoked effective Dec. 1, if an agreement is not reached.)

In response to the Mediacom decision, the American Cable Association, an alliance of small independent cable operators called for retrans reform, accusing broadcasters and content owners of holding their signals hostage in exchange for "exorbitant" fees.

Barry Faber, Sinclair vice president and general counsel, wouldn't speculate on the outcome of the Mediacom fight, but said he believes broadcasters also got some leverage against cable when DBS firms first began carrying local signals in the late 1990s.

"That was the biggest change, the end of the monopoly position held by the cable guys as far as local signals. Prior to that, if you said to cable 'don't carry me,' that risk was fairly small because people didn't really have a place to go for local. But when cable argued that subscribers would never pay for a 'free' over-the-air service, [DBS] discovered the vast majority would pay for it."

Some broadcast groups have both broadcast and cable interests to consider. Dallas-based Belo Corp., a media conglomerate which includes 19 TV stations and seven cable news channels, had given Time Warner Cable permission to retransmit programming from its network affiliates in exchange for access to the TWC's 550,000 subscribers for Belo's new Texas News Channel.

That happened only a few years ago. Today, Belo also acknowledges the "television business" is, indeed, changing at warp speed. In a financial report last month, the firm said, "Belo continues to make steady progress in transforming its businesses to compete in an increasingly Internetcentric marketplace. Our operations are evolving to reflect fundamental changes in media usage by consumers and advertisers..."