Cable TV Broadcast Retransmission Consent Feuds "Ease Up" [Telecom]

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Neal McLain

unread,
Jun 24, 2009, 1:25:51 AM6/24/09
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| Multichannel News, June 20, 2009
| Retransmission Feuds Ease Up
| Era of Feuding May Be Over, Analysts Say � At Least for Big MSOs
| by Mike Farrell
|
| Broadcasters and pay TV service providers may have informally
| turned down the retransmission-consent volume over the past
| several months, as the nation moved through some potentially
| dicey regulatory periods � the analog-to-digital transition
| and the new presidential administration.
|
| And though it is likely that a few heated discussions will pop
| up over the next few years, some analysts believe that, at
| least for now, the old days of bitter, drawn-out fights
| between cable operators and station groups may be over.

This article (including comments from me writing as texascableguy)
continues at:
http://www.multichannel.com/article/talkback/295393-Retrans_Feuds_Ease_Up.php

Prior to 1975, virtually all programming carried by cable TV systems
consisted of local or nearby television broadcast stations, with a few
channels originated locally by the cable TV company itself ("local
origination") or dedicated to PEG (public, educational, and government)
access. FCC rules in force at the time specified:
- Which stations MUST BE carried.
- Which stations could be carried at the cable company's option.
- Which stations COULD NOT be carried.

Cable companies did not have to obtain a station's permission before
carrying it. Most broadcast station licensees didn't even know how many
cable systems were carrying their signals, or where they were.

In 1975, Time, Inc. began to transmit HBO nationwide via satellite.
Shortly thereafter two more satellite-delivered cable-only channels were
launched: Ted Turner's Atlanta UHF station WTCG (now TBS Superstation)
and Pat Robertson's Christian Broadcasting Network (now ABC Family).
Within a few years, numerous other channels were launched. Today,
hundreds of satellite-delivered channels are available from dozens of
suppliers.

Programmers charge cable systems for the right to carry their channels.
License fees vary widely, ranging from zero (religious and
home-shopping channels) to over $2.00 per subscriber per month (ESPN).

But the old FCC rules governing the retransmission of broadcast
television stations remained largely unchanged until 1992.

In 1992, Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992. This act gave broadcast station licensees
control over cable-system carriage of their signals. Under this Act,
each licensee has the right to choose two options with respect to any
give cable system:

- MUST CARRY: The cable system must carry the signal under technical
rules specified by the FCC. However, the station cannot charge for the
use of its signal.

- RETRANSMISSION CONSENT: The cable system is required to obtain the
permission of the licensee. The licensee is free to demand compensation
or impose other requirements.

Most large regional independent stations and major network affiliates
usually elect retransmission consent. Less popular stations usually
elect must carry.

For several years after 1992, stations electing retransmission consent
did not demand financial compensation. However, many of them demanded
that cable systems carry (and pay for) co-owned non-broadcast
programming. Example: Disney required cable systems to carry most
Disney-owned non-broadcast channels (Disney Channel, Lifetime, A&E,
History, ESPN and its clones).

With the rise of satellite television (DirecTV and Dish) and
telco-delivered television (FIOS, U-Verse), similar
must-carry/retransmission-consent procedures were put in place.

In recent years, station licensees have been demanding financial
compensation as a condition for granting retransmission consent.
Example: as I noted here two years ago, Univision affiliates now charge
$1.00/subscriber/month for the signal. http://tinyurl.com/mnobou

This situation has led to some notable battles. In a few cases, when
retransmission negotiations failed, cable/sat companies have simply
stopped carrying certain broadcast stations.

Of course, whichever side wins these battles, the subscribers lose. If
a cable/sat company drops a station's signal, the subscribers lose a
channel. If the cable/sat company gives in and agrees to pay a larger
fee, the cost is passed along to the subscribers.

Although this situation has hit all cable and sat providers, it has hit
small cable operators particularly hard. The American Cable
Association, representing small cable companies, has led an effort to
get Congress to provide some relief from ever-increasing retransmission
consent fees.
http://www.americancable.org/issues/page/Retransmission_Consent

The Mutlichannel News article linked above notes that "Broadcasters and
pay TV service providers may have informally turned down the
retransmission-consent volume over the past several months..." Perhaps
so, but ACA, led by its president Matt Polka, will certainly continue to
fight for lower rates.

Neal McLain
aka texascableguy

Adam H. Kerman

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Jul 2, 2009, 10:46:59 PM7/2/09
to
Neal McLain <nmc...@annsgarden.com> wrote:

>This article (including comments from me writing as texascableguy)
>continues at:
>http://www.multichannel.com/article/talkback/295393-Retrans_Feuds_Ease_Up.php

>In 1992, Congress enacted the Cable Television Consumer Protection and

>Competition Act of 1992. This act gave broadcast station licensees
>control over cable-system carriage of their signals. Under this Act,
>each licensee has the right to choose two options with respect to any
>give cable system:

>- MUST CARRY: The cable system must carry the signal under technical
>rules specified by the FCC. However, the station cannot charge for the
>use of its signal.

>- RETRANSMISSION CONSENT: The cable system is required to obtain the
>permission of the licensee. The licensee is free to demand compensation
>or impose other requirements.

>Most large regional independent stations and major network affiliates
>usually elect retransmission consent. Less popular stations usually
>elect must carry.

How do these rules apply to each multi-plexed programming stream of a
digital broadcaster choosing [to invoke the] "must carry" [option]? Or
does it apply only to the the first subchannel? If that subchannel is
HD and the cable system offers HD channels, must it be carried as HD?

An independent broadcaster in Chicago owns a full power license and
several low power licenses. It has mixed and matched programming over
the years, typically introducing new program concepts on one of the
low power stations before simulcasting it or moving it [to] a
subchannel of the full power digital station.

Does simulcasting via one of their low power stations give them additional
clout when negotiating carriage because the law gives them additional
privileges for owning more licenses? They've complained for years that
DTV and Dish won't carry all programming streams, even the ones simulcast
on one of the low power stations.

Neal McLain

unread,
Jul 3, 2009, 10:31:03 AM7/3/09
to
I wrote:

> This article (including comments from me writing as texascableguy)
> continues at:
>
http://www.multichannel.com/article/talkback/295393-Retrans_Feuds_Ease_Up.php

> In 1992, Congress enacted the Cable Television Consumer Protection
> and Competition Act of 1992. This act gave broadcast station
> licensees control over cable-system carriage of their signals. Under
> this Act, each licensee has the right to choose two options with

> respect to any given cable system:

> - MUST CARRY: The cable system must carry the signal under technical
> rules specified by the FCC. However, the station cannot charge for
> the use of its signal.

> - RETRANSMISSION CONSENT: The cable system is required to obtain the
> permission of the licensee. The licensee is free to demand
> compensation or impose other requirements.

> Most large regional independent stations and major network
> affiliates usually elect retransmission consent. Less popular
> stations usually elect must carry.

"Adam H. Kerman" <a...@chinet.com> wrote:

> How do these rules apply to each multi-plexed programming stream of
> a digital broadcaster choosing [to invoke the] "must carry"

> [option]? Or does it apply only to the first subchannel?

The must-carry rule applies only to the main channels of full-power
stations -- the channels typically numbered X-1 or X.1. Stations that
elect retransmission consent are free to demand just about anything.

> If that subchannel is HD and the cable system offers HD channels,
> must it be carried as HD?

If "that subchannel" is the main channel (and if the station is a
full-power station, not an LPTV), then yes, it must be offered in
digital format. Furthermore, for a period of three years following
the 06/12/09 DTV transition date, cable TV systems must carry it
simultaneously in analog AND digital for the benefit of subscribers
who do not own DTV sets. (This requirement does not apply to
satellite companies because their signals [are] all already carried
digitally.) http://saveaccess.org/node/2171

Note that "digital" is not necessarily the same as "HD." All high-def
signals are digital, but the reverse is not necessarily true.

Although the must-carry rules do not apply to subchannels, a cable or
satellite company may carry any subchannel voluntarily. Full-power
stations electing retransmission consent may demand carriage of some
or all subchannels in their retrans-consent agreements. In theory,
these are free-market negotiations between the broadcasters and
cable/satellite companies, although (in my not-unbiased opinion), the
law is stacked in favor of the broadcasters.

> An independent broadcaster in Chicago owns a full power license and
> several low power licenses. It has mixed and matched programming
> over the years, typically introducing new program concepts on one of
> the low power stations before simulcasting it or moving it [to] a
> subchannel of the full power digital station.

> Does simulcasting via one of their low power stations give them
> additional clout when negotiating carriage because the law gives
> them additional privileges for owning more licenses?

The rules governing carriage of LPTV stations are murky.
http://law.justia.com/us/cfr/title47/47-4.0.1.1.4.4.3.5.html

In general, LPTV stations have no must-carry rights with respect to
either cable TV or satellite. As to "additional clout," I would say
that LPTV stations have approximately zero clout.

It's certainly possible that an LPTV could do such a good job that a
cable TV company would carry it voluntarily, particularly in small
markets in which the LPTV is the only local station. But that's a
free-market decision between the LPTV and the cable company.

> They've complained for years that DirecTV and Dish won't carry all


> programming streams, even the ones simulcast on one of the low power
> stations.

The must-carry rules apply only to the main channels of full-power
stations. The rules do not require carriage of full-power station
subchannels or to any LPTV channels.

Neal McLain

Adam H. Kerman

unread,
Jul 3, 2009, 11:55:10 AM7/3/09
to
Neal McLain <nmc...@annsgarden.com> wrote:
>"Adam H. Kerman" <a...@chinet.com> wrote:

>>How do these rules apply to each multi-plexed programming stream of
>>a digital broadcaster choosing [to invoke the] "must carry"
>>[option]? Or does it apply only to the first subchannel?

>The must-carry rule applies only to the main channels of full-power
>stations -- the channels typically numbered X-1 or X.1.

Thanks. That's what I had assumed.

>>If that subchannel is HD and the cable system offers HD channels,
>>must it be carried as HD?

>If "that subchannel" is the main channel (and if the station is a
>full-power station, not an LPTV), then yes, it must be offered in
>digital format.

But my question is whether the digital format must be HD, specifically,
as it could be SD to save bandwidth.

>Furthermore, for a period of three years following the 06/12/09 DTV
>transition date, cable TV systems must carry it simultaneously in analog
>AND digital for the benefit of subscribers who do not own DTV sets.

My understanding of the rule: If the cable company offers ANY analogue
channels, then it must offer ALL local broadcast channels in analogue.
I'll assume this applies only to channels that made the must-carry
election, and that the rules for negotiated carriage are on a per
contract basis. It's entirely possible that there are cable systems that
dropped analogue channels altogether and are thus not subject to the
rule requiring analogue translation of local broadcast stations.

Also, the analogue channels need not be available to subscribers with
cable-ready analogue tuners in their tvs. The cable company could
require subscribers to use a set-top box to make an analogue signal
available. In my area, many local broadcast stations have been on the
digital tier. Basic-only subscribers who wish to receive these in
addition to the still-analogue stations require a special set-top box
that I'll guess is capable of receiving clearQAM only.

>Although the must-carry rules do not apply to subchannels, a cable or
>satellite company may carry any subchannel voluntarily.

If the main channel is offered on a must-carry basis, can the cable
company elect to offer any other subchannel without retransmission
consent?

>Full-power stations electing retransmission consent may demand carriage
>of some or all subchannels in their retrans-consent agreements.
>In theory, these are free-market negotiations between the broadcasters
>and cable/satellite companies, although (in my not-unbiased opinion),
>the law is stacked in favor of the broadcasters.

Heh. From Day One, must carry rules were a burden on cable. Not that
anyone asked me when I was a kid, but it wouldn't have been unreasonable
to continue to expect viewers to have proper outdoor antennas to receive
local stations, with cable providing supplemental television service.
This statement wouldn't apply to CATV situations.

>In general, LPTV stations have no must-carry rights with respect to
>either cable TV or satellite. As to "additional clout," I would say
>that LPTV stations have approximately zero clout.

I didn't know that; thanks.

Neal McLain

unread,
Jul 4, 2009, 10:09:16 PM7/4/09
to
"Adam H. Kerman" a...@chinet.com> wrote:
>
> Neal McLain nmc...@annsgarden.com> wrote:

>> "Adam H. Kerman" a...@chinet.com> wrote:
>
>>> If that subchannel is HD and the cable system offers HD channels,
>>> must it be carried as HD?
>
>> If "that subchannel" is the main channel (and if the station is a
>> full-power station, not an LPTV), then yes, it must be offered in
>> digital format.
>
> But my question is whether the digital format must be HD, specifically,
> as it could be SD to save bandwidth.

I'm not aware on any government rule that requires HD to be transmitted
in HD even on the main channel. Stations are free to transcode it to
SD. However, program suppliers may include HD requirements in their
license agreements.


>
>> Furthermore, for a period of three years following the 06/12/09 DTV
>> transition date, cable TV systems must carry it simultaneously in
>> analog AND digital for the benefit of subscribers who do not own DTV
>> sets.
>
> My understanding of the rule: If the cable company offers ANY analogue
> channels, then it must offer ALL local broadcast channels in analogue.

Your understanding is correct.

Under current rules, cable TV systems must carry ALL full-power local
stations in analog AND digital formats until June 12, 2012. This
requirement ensures that analog-only subscribers continue to have access
to broadcast programming. It also allows the cable companies to avoid
the cost of providing converters to all analog subscribers.

An exception exists for cable TV systems that convert ALL analog
channels (broadcast, non-broadcast, and PEG access) to digital format
AND provide digital-to-analog converters to all analog-only subscribers.
See footnote [1] and scroll down to NOT-SO-SMALL STUFF.

> I'll assume this applies only to [broadcast] channels that made the


> must-carry election, and that the rules for negotiated carriage are on
> a per contract basis.

True.

> It's entirely possible that there are cable systems that
> dropped analogue channels altogether and are thus not subject to the
> rule requiring analogue translation of local broadcast stations.

True. That's the exception I noted above.

> Also, the analogue channels need not be available to subscribers with
> cable-ready analogue tuners in their tvs. The cable company could
> require subscribers to use a set-top box to make an analogue signal
> available. In my area, many local broadcast stations have been on the
> digital tier. Basic-only subscribers who wish to receive these in
> addition to the still-analogue stations require a special set-top box
> that I'll guess is capable of receiving clearQAM only.

True. That's the exception I noted above. Of course, subscribers hate
settop boxes because of the inconvenience. And they *really* hate it if
the cable company charges a rental fee. Just ask Lisa.

Nevertheless, as I've noted in previous posts here, the day is coming
when everything will be digital [2]. It probably won't be on June 13,
2012; indeed, some pundits think analog will be around for years. See
footnote [1] and scroll down to DECADES OF ANALOG.


>
>> Although the must-carry rules do not apply to subchannels, a cable or
>> satellite company may carry any subchannel voluntarily.
>
> If the main channel is offered on a must-carry basis, can the cable
> company elect to offer any other subchannel without retransmission
> consent?

AFAIK, yes.


>
>> Full-power stations electing retransmission consent may demand
>> carriage of some or all subchannels in their retrans-consent
>> agreements. In theory, these are free-market negotiations between the
>> broadcasters and cable/satellite companies, although (in my
>> not-unbiased opinion), the law is stacked in favor of the
>> broadcasters.
>
> Heh. From Day One, must carry rules were a burden on cable. Not that
> anyone asked me when I was a kid, but it wouldn't have been
> unreasonable to continue to expect viewers to have proper outdoor
> antennas to receive local stations, with cable providing supplemental
> television service.

On Day One, broadcast stations were the only programming sources
available. That's how the cable TV industry got started: entrepreneurs
in places like Astoria Oregon, Tuckerman Arkansas, and Mahanoy City
Pennsylvania built cable systems because the nearest broadcast stations
were either too far away or blocked by terrain.

These entrepreneurs owned hardware/furniture/appliance stores; they
built cable systems so they could sell TV sets. Although they soon
discovered that all of their competitors were suddenly selling TV sets
too, they also discovered that they were making more money from their
cable TV operations than from their hardware/furniture/appliance stores.
So they sold the stores, became full-time cable TV operators, and
founded an industry.

Even today, there are millions of viewers who can't receive any
broadcast stations off-the-air. Case in point: Tehachapi, California.
Even the cable TV company in Tehachapi can't get anything off-the-air;
the headend doesn't even have a tower. All broadcast signals are
received via satellite or imported by microwave.

Before satellite program delivery started in 1975, the only
non-broadcast programming available to cable companies were access
channels and "local origination" (LO) programming produced by the cable
companies themselves. Most LO programming consisted of a character
generator running most of the day, with an occasional live or taped
event (high school sports; city council meeting,
interview-with-the-mayor, church service).

The first must-carry rules were promulgated by the FCC, not Congress.
They defined the area of applicability as a 50-mile radius around each
broadcast station's city of license (without regard for the actual
location of the transmitter). That rule was overturned in court. In
1992, Congress got into the act with the grotesquely misnamed "Cable

Television Consumer Protection and Competition Act of 1992." This act

created the must-carry/retransmission consent model that exists today.
It defined each station's service area as its DMA (Designated Market
Area) as determined by Nielsen Media Research based on viewer surveys in
non-cable homes. The cable industry sued to overturn it; it went all
the way to the Supreme Court, which upheld it.

So, yeah, must-carry rules were -- and still are -- a burden on cable.
But carrying broadcast stations was the industry's bread and butter from
1948 until 1975. In the court cases over must-carry, the cable industry
never questioned the fact that it should/would carry some broadcast
stations; the issue was over *which* stations it had to carry. The
cable industry wanted to carry only popular local stations and whatever
distant independent stations as it could pick up off the air (many cable
systems built 1000-foot towers to get distant stations off the air, or
imported them by microwave).

This battle still rages today. Case in point: the PADUCAH CAPE
GIRARDEAU MARION CARBONDALE MCLEANSBORO POPLAR BLUFF MT. VERNON DMA, an
enormous geographic area in Kentucky, Tennessee, Illinois, and Missouri
[3]. Every broadcast station located anywhere in that DMA has
must-carry rights with respect to every cable TV system in the DMA.
Fortunately (for the cable industry), there's a loophole: the station
has to provide a usable signal at the cable system's headend. If the
cable system can't pick up the station's broadcast signal off-the-air
with its normal facilities, the station has to provide the signal by
some other means or forgo carriage.

Satellite program delivery began in 1975, when Time, Inc. launched HBO
nationwide. In the years that followed, hundreds of non-broadcast
channels were launched, and most of the cable industry's programming now
comes from satellite-delivered non-broadcast sources. But the industry
was built on carrying broadcast stations, and broadcast stations are
still an important part of the industry's offerings.

So I'm not defending the must-carry rules; I'm simply pointing out that
without broadcast stations, the cable industry wouldn't exist.

As for your suggestion that a cable system could exist without carrying
any broadcast stations, back in 1964, a California company known as
Subscription Television, Incorporated (STV) tried to do exactly that.
They built a distribution network and were ready to start offering
service, but the "save free TV" folks (underwritten by the motion
picture and broadcast industries) pushed through 1964 California
Proposition 15 to outlaw it. The proposition passed. The courts
eventually overturned it, but it was too late for STV. Of course, had
it passed, it would have outlawed HBO, Showtime, etc.; indeed, it might
even have outlawed basic cable TV! See footnote [4].

Kerman continued:

> This statement wouldn't apply to CATV situations.

I don't understand that statement. CATV *is* cable TV. Back when the
industry started, CATV stood for "community antenna television" because
that's all it did: act like a big antenna for broadcast stations. But
after CATV systems started carrying non-broadcast satellite-delivered
programming, the term "cable TV" replaced "CATV". I still use "CATV"
and "cable TV" interchangeably.

Footnotes:

[1] "Analog is Dead. Long Live Analog"
By Todd Spangler -- Multichannel News, 2/18/2008
http://tinyurl.com/kov3yf

[2] "A-la-carte v. Tiering"
By Neal McLain -- Telecom Digest, 4/9/2004
http://massis.lcs.mit.edu/archives/reports/alacarte-cable-service
Scroll down to (or search) CATV ACCESS CONTROL

[3] "Paducah ... DMA map"
TruckAds.com
http://tinyurl.com/Paducah-DMA

[4] "Darn That Pay TV!": STV's Challenge to American Television's
Dominant Economic Model. Journal of Broadcasting & Electronic Media.
Fall, 2000
http://www.entrepreneur.com/tradejournals/article/print/70451817.html

Neal McLain

Adam H. Kerman

unread,
Jul 5, 2009, 9:41:13 AM7/5/09
to

If I understand correctly, cable and CATV are regulated differently,
that systems that exist to retransmit broadcast stations to locations
within the 35 mile radius of the broadcast tower that defines the market
but for reasons of geography cannot receive the signal continue to be
treated like monopolies and subject to rate setting by tariff.

I don't know how things are regulated in areas outside television markets
based on radii around broadcast towers.

Yes, I agree that the technology originated with CATV, supplementing
broadcast television, but came to compete with it too.

tlvp

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Jul 5, 2009, 9:45:37 AM7/5/09
to
On Sat, 04 Jul 2009 22:09:16 -0400, Neal McLain <nmc...@annsgarden.com>
wrote, in part:

> ... [much snipped] ...


>
> I don't understand that statement. CATV *is* cable TV. Back when the
> industry started, CATV stood for "community antenna television" because
> that's all it did: act like a big antenna for broadcast stations. But
> after CATV systems started carrying non-broadcast satellite-delivered
> programming, the term "cable TV" replaced "CATV". I still use "CATV"
> and "cable TV" interchangeably.

Funny, I always thought CATV stood for "Community Access TeleVision."
Anyway, that's what our local Community Access stations seem to think.

> Footnotes: ... [likewise snipped] ...
>
> Neal McLain

Straighten me out, please, if I've got that wrong :-) .

And cheers, -- tlvp
--
Avant de repondre, jeter la poubelle, SVP

Adam H. Kerman

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Jul 6, 2009, 6:47:21 PM7/6/09
to
tlvp <mPiOsUcB...@att.net> wrote:
>Neal McLain <nmc...@annsgarden.com> wrote:

>>I don't understand that statement. CATV *is* cable TV. Back when the
>>industry started, CATV stood for "community antenna television" because
>>that's all it did: act like a big antenna for broadcast stations. But
>>after CATV systems started carrying non-broadcast satellite-delivered
>>programming, the term "cable TV" replaced "CATV". I still use "CATV"
>>and "cable TV" interchangeably.

>Funny, I always thought CATV stood for "Community Access TeleVision."

CATV systems literally erected antennas in the best location to receive
a signal, then sold the signal to subscribers who lacked line of sight
to the transmission tower.

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