The nation's largest TV station owners have a good reason to support—or at least not oppose—a $45.2 billion merger between Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC). They have been--and continue to want to--band together to get more leverage when negotiating with the pay-TV service providers who carry their products.
Station group owners like Sinclair Broadcast Group, Tribune and Gannett have all been quietly growing their numbers via acquisitions of other television groups, so they have good reason to remain quiet about Comcast getting bigger.
"From the standpoint of the broadcaster, all this merger would do is to increase Comcast's footprint," Andrew Schwartzman, a public interest lawyer and professor at Georgetown Law School told The Street. "Broadcasters have a stronger interest in the mantra that consolidation is good than they do in picking on somebody else's consolidation."
Some smaller cable operators worry that more consolidation in the broadcast space will lead to more rancorous retransmission agreements. A bigger Comcast—bulked up with Time Warner Cable subs—would seem to tip the scales in favor of the cable operators. That, in turn, could lead broadcasters to argue for a loosening of the rules that govern their own consolidations.
"If the deal is approved, I would hope that there would be some reflection on some of the ownership limits that we live with in broadcasting that might be a bit dated," said Larry Wert, Tribune's president of local broadcasting during an interview conducted at the NAB trade show in Las Vegas. "If you think of the scale of that company and you think of some of the holdups on owning multiple media outlets in a city, it certainly doesn't seem like equitable rules for the playing field."
The American Cable Association, for one, would beg to differ.
The ACA says the real unfairness is in what it considers the vagaries of retransmission consent negotiations, noting that "Frequently, a broadcaster demands the smaller cable operators pay an exceptionally higher per-customer fee than other larger operators in the same market. Broadcasters charge smaller cable operators retransmission consent fees as much as twenty times more than what the largest distributors pay. There is no justification for the price discrimination faced by small cable operator because the retransmission is costless for the broadcast station owner. The burden to a broadcaster of having its signal carried on a large system or a small one is identical."
The group has been particularly adamant in opposing situations where multiple stations in a market band together under a single ownership—a situation increasingly exacerbated by consolidation within the broadcast industry.
For more:
- see this The Street story
- see the American Cable Association's stance on its Web site
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