TAB fights Pay-TV’s broadcast a la carte plan

The Pay-TV industry’s latest and greatest customer service plan would force their long-suffering subscribers to work harder to get their favorite programming – local broadcast stations – if they also want to watch the occasional cable channel on the same system.

The proposal is rooted in the lie that it would stem channel blackouts and lower costs and wholly in the fact that Pay-TV wants to gut the basic tier of lifeline programming and the retransmission consent system.

And they have two of the most powerful U.S. Senators embracing their plan which they intend to attach to the pending renewal of the Satellite Television and Localism Extension Act (STELA) at a Senate Commerce Committee meeting slated for Sept. 17.

This, despite the fact that the overwhelming majority of programming blackouts involve cable channels, not local broadcast stations, and that retransmission consent payments to local broadcasters total about two cents of every dollar on a cable or satellite bill.

The so-called “Local Choice” proposal introduced by Sens. John D. Rockefeller IV, D-West Virginia, and John Thune, R-South Dakota, will unjustifiably eliminate broadcast television’s longstanding statutory right of retransmission consent and unfairly single out free, over-the-air local television stations for mandatory a la carte treatment.

The proposal, if enacted, would destroy localism, including the backbone of our nation’s Emergency Alert System, by denying fair compensation to broadcasters without providing consumers any meaningful choice or relief from having to pay for hundreds of cable channels instead of the handful they watch in addition to local stations.

As reflected in more than a decade’s worth of economic literature and policy debate, mandated a la carte pricing proposals have been proven to increase prices, decrease programming diversity and result in fewer choices for consumers, not more.

Aside from these obvious policy failures, TAB and state broadcast associations throughout the country recently posed these questions in a joint letter to Rockefeller and Thune in seeking to understand how such a system would be implemented:

• Absent a statutory requirement or contractual relationship between broadcasters and pay-television distributors, what incentive would these distributors – who are competitors to broadcasting – have to cooperate with the television broadcast industry in making a la carte work as this proposal intends?  Who and how would that cooperation be policed? 
• Given that the proposal apparently intends to save those consumers, who opt out of paying for the broadcast stations, money on their monthly subscriptions, who and how will pay-television providers be held accountable?
• How would pay-television providers acquire ancillary programming rights, such as video-on-demand and over-the-top rights that are currently contemplated as part of the retransmission consent negotiations?
• An a la carte business model would upend the network-affiliate relationship with potentially devastating consequences for the networks, for their affiliates and for the financial markets.
  • Would existing retransmission consent contracts, many of which are long-term in nature, remain valid until expiration or would they be voided? 
  • All of the television network agreements provide that their affiliated stations pay their networks “reverse compensation” that is tied to retransmission consent fees paid by pay-TV providers.  How would those agreements – which are multiyear and expire at different times – be treated under the proposal?

TAB is holding meetings on the issue with key members of the Texas Congressional delegation and staff in Washington, DC, and individual broadcasters are encouraged to weigh in before the Sept. 17 meeting.

For more details, contact Oscar Rodriguez.