The nasty battle over retrans: Titanic deck chairs, Rome burning come to mind

Daniel Frankel, FierceCableWar, what is it good for?

Well, higher or lower broadcast retransmission fees, depending on which side of the policy debate you stand on.

And I wonder, amid the nasty, ongoing communications battle between broadcasters and the pay TV industry over reshaping retrans rules, if enough longterm thought is being given to insurgent threats that could ultimately render the point moot.

With broadcasters hemorrhaging ratings points and advertising dollars not only to cable but to the Internet, and cord cutting recently deemed by the tech press to be a "real thing," do these guys know what time it is?

The negotiation behind this battle makes perfect sense to me--on both sides. But the vitriolic communications strategy behind it strikes me as shortsighted and tone deaf.

The latest mortar fire was initiated Wednesday by TVfreedom.org, a D.C.-based, loosely run, broadcast-backed coalition launched through PR strategy and crisis management firm Mercury in February to counteract what broadcasters believe is a huge lobbying advantage held by the pay TV industry.

TVfreedom's latest attack concerned pay TV service outages--it counts 3,050 of them in the first five months of this year, which it says dwarfs the five service interruptions caused by stalled retransmission negotiations between pay TV providers and broadcasters.

"This data highlights concerns regarding pay-TV service and broadband network reliability across the nation," wrote TVfreedom communications director Robert Kenny in a letter to Sen. Claire McCaskill made widely available to the media. "In light of increasing profit margins for the nation's largest multibillion-dollar pay-TV service providers, unreliable service or faulty infrastructure raises questions about the commitment each of these companies has to consumer service quality."

The letter to McCaskill came about a week after the Missouri Senator took TVfreedom up on an earlier request to investigate what it feels are rampant consumer billing abuses throughout the pay TV industry.

It's questionable as to whether any of this will affect issues like STELA, but if TVfreedom's goal was to brand the broadcast industry's most important distribution partner as a group of fraudsters with outdated tech, well, there's some billable success to show member clients that include the National Association of Broadcasters and various network affiliates.

Does it have to go down this way?

In 2011, I attended a Hollywood Radio & TV Society luncheon, which hosted a discussion with CBS chief Les Moonves. I was struck by how eloquent a case he made for his networks' right to receive escalating levels of retrans money.

It was a simple argument: If CBS drew far more viewers than top-rated cable networks like TNT and USA, why should the latter be the only ones compensated in hundreds of millions of dollars in licensing fees? What, in an age when practically no one uses a broadcast antenna anymore, is really the difference between broadcast and cable platforms?

For his part, Kenny and his team have all sorts of data they could use to further this argument. Retrans, he told me, only accounts for around $3 to $3.50 of the typical $130 video/broadband bill. Compare that to the $4-plus per subscriber that ESPN commands all on its own, then compare the ratings points between even the lowest rated broadcast network and the highest rated cable networks.

There's a vastly compelling story there. Why not message that instead of tearing down the entire pay TV industry?

"We recognize that pay TV and broadcasters need each other," Kenny responded. "We need to find ways to work together, not just for our businesses, but for the customers we serve. But our main goal is to make sure the facts are on the table."

Of course, with much of their content business still based on the byzantine production models of old Hollywood, it's questionable as to just how much benefit broadcasters would get if all the "facts" were indeed laid bare, as Suddenlink Communications CEO Jerry Kent suggested when he told lawmakers that pay TV companies will make their billing policies transparent when broadcasters reveal the wholesale price of their content.

For their part, the pay-TV-backed lobbying groups on the other side are feigning the high road, with the American Cable Alliance calling TVfreedom latest barrage "TV station mudslinging."

TVfreedom's campaign is "shortsighted and disingenuous, given that they so desperately need pay TV to deliver eyeballs and retrans dollars," added Brian Frederick, an executive for PR strategy firm Porter Novelli, who manages communications for another pay-TV-backed coalition, the American Television Alliance.

For its part, the ATVA didn't entirely keep its gloves on Wednesday while responding to the latest TVfreedom attack, noting that broadcasters are "sitting on $1 trillion of public spectrum that could upgrade wireless broadband and improve service for millions."

Of course, with the No. 1 supplier of pay TV content also facing some dire threats, you've got to second-guess the strategy of calling negative attention to what amounts to a vital, spectral lifeline should things get much worse for broadcasters.  

But it's all fair. This is war, you know.--Dan

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