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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. 3/15/2010 08:22:00 AM Eastern

Cover Story

The Retrans Battle Playbook

As networks and cable operators collide, the battleground has gotten a bit predictable, from the hyperbole and spin to the inevitable compromise. Here's what to expect the next time around. More.

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

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.

Cover Story

The Retrans Battle Playbook

As networks and cable operators collide, the battleground has gotten a bit predictable, from the hyperbole and spin to the inevitable compromise. Here's what to expect the next time around. More.