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Guest Blog: How Come 'Free' TV Costs Us All So Much?

STELA represents the best opportunity to reform communications 6/19/2014 01:30:00 PM

People are frustrated with high pay-TV bills. The rates keep going up. The reason is simple: retransmission consent, the fees that broadcasters charge pay-TV providers.

In the last eight years, retransmission consent fees have risen 119 times the rate of inflation. By 2019, broadcasters will demand an additional $25 billion for “free” TV. But the real costs are more than just the skyrocketing fees.

The pursuit of retrans led to a wave of TV station consolidation that has crushed diversity and killed local programming. Big television groups like Sinclair and Media General are gobbling up stations, jacking up retrans rates and touting the profits in quarterly earnings reports.

In 2006, according to Free Press, out of the 1,349 commercial television stations, only 44, or 3.26%, were minority owned. Today, according to FCC commissioner Mignon Clyburn, there are five. The number licensed to black owners has dropped from 21 to 3, 2 of which are operated under a sharing arrangement. As Clyburn said, “the numbers are trending incredibly downward.”

Because of retransmission consent, local TV stations have become mere franchisees of the Big Four. There’s roughly a 7% chance your local television station is locally owned. Much like fast food, you might recognize the faces on the TV, but what they’re serving you is devoid of any substance.

2010 FCC study found that less than 30 seconds of a 30-minute newscast is devoted to coverage of local government. Instead, stations increasingly run entertainment stories and plug network programming. Even worse, about half of all stations don’t show any local news.

In addition to retrans fees, broadcasters abuse the system by tying carriage of local TV stations to their expensive cable networks. The Big Four own 25 of the top 50 and use them to ensure higher retrans rates for the dozens of stations they own around the country. 

Retransmission consent also costs us variety. When the Big Four broadcast networks require carriage of the new channels, smaller independent networks are squeezed out. That’s why several independent programmers join consumer groups and pay-TV companies in calling for retrans reform.

Finally, the pursuit of retrans dollars discourages broadcasters from giving up spectrum so it can be put to better – or any – use. Wish you had stronger coverage and quicker downloads on your phone? Thank broadcasters for squatting on spectrum because of retransmission consent.

When retransmission consent was being debated back in the early 1990s, the head of the National Association of Broadcasters promised that retrans was specifically for local stations. Nothing could be further from the truth. Today, the four broadcast networks make their “local” affiliates pay massive programming fees. For every $1 that a TV station collects in retransmission consent fees, that station has to send 50 cents back to New York for programming.

After more than two decades, retransmission consent is costing us all. Consumers are subject to higher fees and blackouts. We’ve been denied truly local TV and independent and diverse voices. The pursuit of retrans stifles spectrum innovation.

The Satellite Television Extension and Localism Act (STELA) represents the best opportunity to reform communications. There is bipartisan support from members of Congress in both houses. How much more will inaction on retrans reform cost us?

Brian Frederick, Ph.D., is spokesman for American Television Alliance, a coalition of consumer groups, independent programmers, and pay-TV companies.

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