Weighing In on Retrans
B&C Executive Editor Melissa Grego and Business Editor Claire Atkinson offer a point-counterpoint on the ongoing battles for cash.
By Melissa Grego and Claire Atkinson -- Broadcasting & Cable, 3/15/2010 8:22:29 AM
Cover Story
Broadcasters Deserve Compensation
Retrans is not broken. The business
realities for both sides of
the table in this market-based
negotiation scheme are shifting as
the landscape does. So, yes, it is
uncomfortable. It calls for innovation.
But it’s not broken.
Neither distributors nor content owners
have wanted to launch new networks
for years, and, of course, carriage
of these networks has been multichannel
video providers’ primary compensation
to network-owned broadcasters for
distributing their signals.
What still holds true: Broadcasters
need to be compensated. Multichannel
video providers are by definition
in the business of selling
video content, and like
any business they need to
procure product to sell. The
broadcast networks are undeniably
the most valuable
product around; just glance
at a ratings chart.
Cash, which is given
to cable networks on a per-sub fee
basis, is the obvious, established currency
for content. Paying broadcasters
cash for retrans will certainly call
for a different way of budgeting and
accounting on the distributors’ part.
Perhaps they pay less for smallerdraw
programming services, maybe
call for a cut of ad time on broadcast
networks or—gasp!—dip into margins.
They could also decide to pass costs
on to their customers.
Whatever they do, distributors
have had plenty of time to gird for
this. Even if Leslie Moonves hadn’t
been talking publicly since 2006
about going for cash, it was plain
that channel space was filling up
and the Big Four would have to be
compensated some other way. So,
if it’s not cash they want to pay, distributors
must come up with something
else of true value.
This industry proves every day
that it can work together to
create innovative ways of
doing business, and thousands
of retrans pacts have
been quietly, civilly forged in
the last decade. Deal-making
requires focus, energy
and direct communication.
So, rather than waste precious
resources on campaigns that
confuse the customer, raise attention
from Washington and make the TV
business as a whole look like badly
behaved children, all parties would
be best served by simply accepting
the future—and planning for it.
Biting the Hand That Fed Big Media
So much for TV Everywhere. Big media companies never tire of repeating that they’re working to give consumers whatever they want, wherever they want it. And yet at the same time, the breakdown of negotiations between distributors and content providers meant that millions of New Yorkers couldn’t even watch the beginning of ABC’s Academy Awards in their own living rooms.
Those same folks spent the first three weeks of the year without access to Food Network and HGTV. And on it goes, unless someone steps in to stop the shocking state of affairs.
There are no good guys in this protracted retransmission debate, but one can hardly blame distributors for complaining when they’ve helped big media companies build and distribute the very lucrative cable businesses that now prop up the rest of those empires.
No one knows what horse-trades are going on beyond the dispute over the size of retransmission payments. But in the blink of an eye, distributors are now being asked to pay hefty charges for broadcast networks that were previously free, and were offered that way to help media companies get their cable channels off the ground.
The knock-on effect here isn’t likely to be discernibly higher fees when consumers truly have their choice of providers. It will be felt mostly by the plethora of cable channels that don’t command the fees of their big-brand brethren, and may even be forced to roll back their subscription charges due to lack of leverage.
Bigger players, too, are questioning where it leaves them. Discovery’s Bruce Campbell wonders: “What does it mean for us as competitors to that programming?”
At the same time that some set manufacturers are pioneering Internet- connected TVs, the retrans debates— and accompanying program blackouts—are popularizing Radio Shack’s rabbit ears and digital converter boxes. It’s not TV Everywhere; it’s TV at your neighbor’s house, if you’re lucky.
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