Editorial: Seller Beware11/14/2009 02:00:00 AM Eastern
The issue of the FCC's proposed reclamation of some, if not all, broadcast spectrum has wider implications than just the sea change in content delivery and spectrum allocation that it would represent.
First, it could face a high hurdle in the courts, even if the FCC and some broadcasters—looking for a second, one-time revenue stream from the government—manage to strike some kind of deal. But in the meantime, both broadcast and cable interests, whose fates for decades have been joined at the hip, need to think carefully right now about their futures.
Broadcasters still vow to hold onto, and grow, their retransmission consent revenues, yet at the same time balk at sharing any of them with networks. Broadcasters have a case for keeping the cash they get in exchange for the value of their signal to cable, which is considerable. But the affiliates' argument that this value is somehow divorced from the primetime network programming that draws millions of eyeballs is overstating the case, and would certainly be tested in a world where stations are converted to cable channels without an over-the-air signal, or the HD signal viewers crave.
It is arguable who needs whom more. Most cable viewership is through broadcast programming; most broadcast viewership is over cable channels. Broadcasters with government money, and no over-the-air or HD signal except cable or satellite carriage, would have to prove their local value to multichannel video programming distributors, and risk getting cut out of the equation.
ABC used to talk about a cable-delivery model when affiliate compensation was the issue du jour. But in a world where cable operators could bypass stations and negotiate directly for prime real estate, loud talk about boosting retrans fees could become muted.
Cable and satellite operators might like the idea of more retrans leverage, and the $9 billion-plus in new government money that would roll in if 10 million households were converted to broadband with a lifeline multichannel video subsidy. But cable would be falling on its sword on must-carry if it were to acquiesce to carriage of a TV station signal that wasn't even delivered over the air.
Yes, more spectrum for wireless broadband is a given, but from whom and how it will be taken should remain an open question, not a foregone conclusion. The FCC is all about not predetermining outcomes these days (its mantra for the broadband plan, network neutrality, media ownership, etc.).
While some debt-laden, cash-strapped broadcasters could be tempted by the easy out of a government payoff, and cable operators contemplate their own payoff in government cash and retrans options, they both have tradeoffs that should not be obscured by the glare of large, flashing dollar signs.