Legislator looks to end split-market DMAs [Telecom]

From Broadcasting & Cable, July 14, 2009:

| Ross Introduces Split-Market Bill | By John Eggerton | | Looking to bring an end to split-market Nielsen DMAs, in which cable | and satellite subscribers may be receiving the local channels of an | adjacent state instead of their own, Rep. Mike Ross, D-Ark., has | introduced the Local TV Freedom Act. "The time has come to stop | delivering 21st-century technologies with 1950s business practices," | he said. "Americans should not be bound by outdated laws that prevent | them from receiving their home-state programming."

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As I noted here a few days ago (TD, 7 Jul 2009), a network-affiliated commercial television broadcast station (CTBS) has the exclusive right to broadcast the programming of its affiliate network within its Designated Market Area (DMA).
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A DMA may encompass CTBSs licensed to one or more cities. Each DMA is named for the names of the CTBS cities it encompasses. Some DMAs encompass only one city (e.g. New York DMA); some encompass several cities (e.g. Paducah Cape Girardeau Marion Carbondale Mcleansboro Popular Bluff, Mt. Vernon DMA). DMA boundaries are determined by Nielsen Media Research based on viewer surveys in non-cable (off-the-air viewing) homes. Most DMA boundaries follow county lines, although some counties are split. Many DMA boundaries overlap two or more states.

Multichannel Video Programming Distributors (MVPDs; i.e., cable television and satellite television providers) are required by federal regulations to carry (either under the must-carry rules or the retransmission-consent rules) all network-affiliated CTBSs within the DMA, and they are prohibited from carrying a CTBS from any foreign DMA. If a DMA contains one CTBS affiliated with a given network, that CTBS must be carried. If the DMA contains two or more CTBSs affiliated with the same network, all must be carried subject to several exceptions (not the least of which is that every CTBS must provide a usable signal to the MVPD).

The whole DMA system is based on government-sanctioned exclusive distribution agreements between each network and its affiliates. Within each DMA, the affiliate(s) are the only legal suppliers of network programming within the geographic area defined as the DMA. In any other business, this arrangement would be called a monopoly. In the television broadcast business, it's called "consumer protection."

The issue raised by Rep. Ross's bill concerns "split markets": DMAs that overlap state lines. As the Multichannel News article notes, "Split markets are Nielsen DMAs that cross state lines and in which some viewers to cable and satellite services are getting the local station from the adjacent state rather than their own [state].

In my (not-unbiased) opinion, Ross's bill would be a good start, but it doesn't go far enough. I think the entire monopoly-by-DMA regime should be junked, thereby allowing any MVPD to negotiate with any CTBS for carriage. That would introduce competition at both ends of the video services market:

- At the retail end, Dish Network, DirecTV, and local CATVs would continue competing against each other for customers, just as they do now.

- At the wholesale end, CTBSs would be forced to compete against each other in order to gain retail carriage. This would bring retransmission-consent fees down in a hurry. Furthermore, it would encourage CTBSs to stream their signals over the internet, and that, in turn, would force them to switch sides in the copyright-royalty debate: instead of advocating higher rates (thereby disadvantaging their non-broadcast competitors), they would have an incentive to advocate lower rates.

Of course, doing any of these things would put Congress on a collision course with the NAB. Even a democratically-controlled Congress is not likely to pick a fight with the NAB.

Neal McLain

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Neal McLain
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