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Edited on Sun Oct-17-10 08:52 AM by onenote
On edit: in the interest of full disclosure, over the past 30 years I have represented cable companies, satellite companies, and broadcasters before the FCC and Congress, although most of my work has been on behalf of cable companies.
First, you never had multiple cable companies competing head to head in North Carolina until recently. Now ATT has launched service in parts of the state, there are competing municipal systems in some communities (such as Wilson NC), and everyone in the state has the option of getting essentially the same programming services from either DirecTV or DIsh that they previously could get only from their cable companies. While there has been consolidation in the sense that there are fewer cable companies operating in the state, those companies never competed against each other -- they each served separate franchise areas. Today, subscribers in those franchise areas typically have at least three and often four choices of multi-channel television service. Indeed, nationwide, the "traditional" cable industry had a 90 percent plus market share in 1992 when Congress created retransmission consent. Today, that percentage is down near 60 percent, with the other 30 percent taken by DirecTV, Dish, and the "overbuilders" like ATT, Verizon, Wide Open West, Knology, RCN (and various municipally-owned systems).
Second,the company known as Cablevision in New York is a completely distinct company from the Cablevision that operated in North Carolina (the one in New York is Cablevision Systems Corporation and is/has been controlled by the Dolan family); the one that operated in North Carolina was Cablevision Industries, Inc., and was controlled by a guy named Alan Gerry, who sold the systems to Time Warner back in the mid-1990s.
While its true that some local stations produce content of local interest, that is hardly universal (although, as discussed below, I think I know who owns your station and those station are still local-service oriented and do a good job). Groups such as Free Press, Media Access Project, etc. have documented the absence of local news content on a growing number of stations. Also, consolidation in the broadcast industry (directly or through the use of "local marketing agreements") haver resulted in a number of stations cutting back their local news gathering operations so that the stations all carry the exact same programming - less competition, and less diversity -- not good for the viewers. (Again, I'm not suggesting that is the case for your station; I'm pretty sure its not).
More to the point, the price that stations are demanding for retransmission consent is not reflective of the value of that local content. Its based on the value of the exclusive network programming content those stations offer. If it was merely local content, the market would be competitive, because a cable system could decide it could live without channel 5's news and weather if it has the news and weather from channel 7, or it could go out, as some cable companies have, and create its own local news/weather/public affairs content. But if you want the Phillies/Giants, or if you want American Idol, today your only option is your local affiliate.
Also, while Fox "only" has around 20 owned and operated stations, it increasingly dictates the terms of the retransmission consent agreements entered into by its non-owned affiliates. It does this by putting requirements in network affiliation agreement with those stations that require the station to turn over a certain amount of retransmission consent revenue to FOX and that bar those stations from negotiating with out-of-market cable operators. They even have restricted some stations from granting a contract for a period of longer than a year when the industry norm for the first 15 years of retransmission consent was a 3 year agreement. The reason for the short term? To be able to jack up the price more by using the threat of a service disruption to break the cable operator down.
As for leverage -- here's how it really works in many cases. A few years ago, Sinclair went after Mediacom, which is the largest cable operator in Iowa. Almost half of Mediacom's subscribers are in the state and most are in a Sinclair market (or a market that Sinclair controls through a marketing agreement with another station). But Sinclair operates in a number of other markets and in terms of the portion of its business represented by Iowa, its pretty small. So Sinclair could easily weather the loss of eyeballs if it cut off Mediacom, both because it was a small part of its overall business and because those subscribers would start migrating to Dish or DirecTV and ultimately Sinclair had little to lose. On the other hand, Mediacom was screwed. since half of its customers were in the dark with respect to certain network programming, just before the Super Bowl. THe end result -- Mediacom had to cave in and pay Sinclair what it was demanding.
Finally, i am not suggesting that every market is identical. I am pretty sure I know who your employer is based on your description, and if I'm right you work for a company that has multiple stations all located in North Carolina and thus presents a different situation than the Sinclair/Mediacom model I described in terms of leverage. In addition, the owner of your stations, if I'm right, is a decent, creative guy who is very local-service oriented and has worked well with his local cable operators in the past. WHile the most recent retransmission consent negotiations with your stations (if I'm right) were a bit bumpy, largely in my opinion because of the pressure from Fox and CBS to revenue share, they were resolved without a service disruption, in significant part because your owner is the kind of guy who still understands the commitment a broadcaster makes to serve its local community. Unfortunately, that sort of attitude is increasingly disappearing.
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