TV Networks want share of Retransmission Consent Fees [Telecom]

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Several recent articles have discussed attempts by broadcast TV networks to "share" retransmission consent fees that affiliate stations have extracted from cable TV and satellite TV retailers. Here's a link to a recent article that summarizes the situation:

| Networks Seek Dual Revenue Stream | Media chiefs want retrans cash for O&Os--and affiliates | By Claire Atkinson -- Broadcasting & Cable, 11/6/2009

At the moment, this is a private squabble between the broadcast TV networks and their affiliate stations. But if the networks are successful in this effort, it will impact stations' bottom lines. The stations, of course, will then attempt to extract even more money from cable TV and satellite TV retailers.

This is the latest round of a battle that's been going on for years. Traditionally, networks have paid their affiliate stations "compensation" for carrying their programming. Prior to the Cable Act of 1992, the stations got a free ride on cable TV and satellite TV retailers, but stations couldn't charge retailers for retransmission rights. But it was still a sweet deal for the stations: they got paid for carrying network programming and got a free ride on retail distribution networks.

When Larry Tisch was running CBS, he attempted to cut compensation, with disastrous results. Coupled with his decision to drop NFL, affiliates revolted, and many of them switched to Fox after Fox picked up NFL. CBS lost many of their major market VHF stations, and Fox managed to turn the Big 3 into the Big 4. (See Ken Auletta's "Three Blind Mice: How the TV Networks Lost Their Way" for a fascinating account.)

The 1992 Cable Act allowed stations to impose "retransmission consent" fees on cable TV and satellite TV retailers. For several years after

1992, retailers were successful in refusing to pay these fees. But in the past few years, the stations have been increasingly successful. The ultimate sweet deal: they get paid compensation by the network for carrying network programs, and they get paid retrans fees by the retailers that distribute the programming to their customers.

Understandably, the networks want a piece of the retransmission consent pie. You can guess who will end up paying for it.

Neal McLain