McAdams On: Retrans Regs—One Size Does Not Fit All

SCHOOLED: I recently wrote that the cable industry’s call for retransmission reform was a smokescreen for hosing subscribers with bloated programming packages. I dropped the $100 cable package that came with my new coordinates because it was comprised mostly of channels I would never watch. (See “Cable Rates,” from the Jan. 16 issue of TV Technology.) I blamed in the industry for its own slow demise, since a la carte programming is increasingly available online.

Then I got a call from a cable operator with a system serving fewer than 3,000 subscribers. His experience is significantly different from that of my former provider, which has several million subscribers across the country. With so much consolidation at the top of the pay TV industry, it’s easy to overlook the hundreds of small businesses in both cable and broadcast television. For those businesses, retransmission negotiations are an entirely different prospect from those between massive providers.

I’ve long held no patience whatsoever with the battles waged among News Corp., Disney, CBS and Time Warner, Cablevision, DirecTV and Dish. (Comcast is omitted because no one fights with the Borg.) Not one of these companies cares one iota for the poor beleaguered “consumer” whom they claim is “harmed” by the other guy when negotiations get heated. “Consumers” are otherwise known as “incremental revenue units” to these companies. It’s ridiculous to think for a moment they would ever have anyone’s best interest at heart other than their own. That’s business, and we all know it, and that’s fine. It’s just their “consumer harm” nonsense that starts red-zoning the BS meter.

The cable operator who called me—we’ll call him “Clark”—does business in a community of 2,225 people. His family’s been in the business for 40 years. His subscribers know him by name. I don’t imagine he hails them as “hey, there, Incremental Revenue Unit No. 55. How’re the kids?”

Of the $53 he charges for a Classic Cable package of 71 channels, he pays $27 in programming fees. Not all of that is retrans, of course. There are plenty of cable-only channels pulling shenanigans. He told me of a major league sports network that demands fees on 50 percent of his subscriber base, even if they’re on a tier delivered to only 10 percent.

What’s galls Clark even more, however, are how the broadcast networks leverage carriage of their owned-and-operated stations. Access to local O&O signals are increasingly attached to compulsory carriage of the kind of networks that drove me to drop the cable package here. No one else watches them either, Clark said, but if he wants the local broadcast signal, he’s got to squeeze them in.

“They are leveraging popular content to get low-rated networks on systems,” he said. “Where’s the incentive to be good? Where’s the incentive to have quality content when you’re going to get paid anyway?”

It’s hard not to look at the programming lineup on most cable channels and see that he has a point.

“I would love to have a greater number of tiers with more variety,” he said. “Say you’re a sports fan, and I could just provide one sports channel… I would like nothing better to do that, but my hands are tied.”

Retrans reform, Clark said, is vital to the survival of his business and hundreds of others like it. He would like to be able to negotiate for networks individually, without having to pay a premium if he doesn’t carry all the add-ons. How that regulation is written, I don’t particularly know, but a one-size-fits-all clearly will not.