As president-CEO of the American Cable Association (ACA), the lobbying arm for about 900 small- and medium-sized cable operators, Matt Polka had his hands full in 2011 making sure his members got a fair shake when the federal government approved Comcast's $30 billion move to become an industry behemoth as Comcast-NBCUniversal. That deal's done, but Polka's work has only just begun as the ACA shifts its focus to what could be this year's big issue: retransmission agreements between broadcast and cable networks. He took some time to talk with this year's challenges--and the ones already passed--with FierceCable editor Jim Barthold.
FierceCable: First off, Comcast. You guys were apparently worried about this merger from the moment it was announced. Do you think you get a fair shake with the conditions the feds imposed on the deal?
Matt Polka: We're satisfied because we believe the FCC did a very good job to push for conditions that addressed our members' problems. In that case we think the process worked.
FC: How so?
"The Commission strengthened our members' ability to use arbitration against Comcast for regional sports and retransmission consent programming."
MP: They help protect our members with Comcast-NBC for regional sports programming, NBC owned-and-operated retransmission consent and cable programming for NBC and Comcast. The Commission strengthened our members' ability to use arbitration against Comcast for regional sports and retransmission consent programming. For the first time this extends to arbitration rights for national cable programming which would allow our members' buying group at the National Cable Television Cooperative to hold Comcast accountable and take them to arbitration if there's a dispute about Comcast or NBCU programming.
FC: You've segued nicely into the big topic for 2011: retransmission. It seems that negotiations keep getting uglier and uglier and that the rift between local cable operators and broadcasters is becoming a chasm. Do you worry that Comcast with its stable of cable and broadcast programming will add to the angst?
MP: Well, they are the largest MVPD (multichannel video programming distributor) and network. I can always be an optimist and hope they exhibit leadership in this regard but I'm kind of a realist in terms of what happens in the marketplace and we've told our members to be prepared.
FC: When it comes down to it, it seems that NBC has been pretty benign compared to some of the more aggressive players like News Corp. and Walt Disney Co. Is that a good sign?
MP: They haven't been in a league with Fox and Disney that have outright cash demands ... and CBS, too but NBC has done a lot to lock up their O&O retrans rights through carriage of their Olympic programming. I wouldn't say that's something that's worked out well because our members object to paying for even more sports programming in return for the right to receive a broadcast signal.
"The networks have seen the station groups and stations starting to extract real money."
FC: That was the old retrans model, wasn't it, a sort of tit for tat: carry these extra channels and we'll give you broadcast channels or, even in some earlier cases, carry us on our channel on your lineup? That seems to have changed. What's the situation now?
MP: The networks have seen the station groups and stations starting to extract real money. Fox, Disney and others have been saying, "We deserve a piece of that; in fact we deserve a piece of what the stations negotiate." I only expect that to continue.
FC: It would seem that's a bigger problem for smaller local ops than it is for the big MSOs.
MP: It depends on where they're located. Often our member companies will have to negotiate with a local, more independent station, not one that's tied to a large station group.
FC: So what's the big problem?
MP: You'll often have a situation where one of these local broadcast groups use a local marketing agreement. These local marketing agreements are designed to allow stations to share marketing but what they'll do is embellish it and give one group the ability to negotiate retrans consent because that station will have greater leverage and can bring in more cash. The price of retransmission consent goes up as a result of the combination.
FC: We've both been around long enough to remember when local cable operators and local broadcasters got along; or at least didn't despise each other. What's happened to civility?
MP: The content owners said 'We have this valuable asset that we can hold hostage. We have a monopoly marketplace because network non-duplication rules give us a monopoly and we have the right to choose and demand payment for a bundle of channels like Fox with FX; ESPN with ESPN2. Now some 80 or 90 channels are on the cable dial simply because of a retransmission tie-in. The cost of retransmission consent has been borne by consumers.
FC: One other thing you have to be watching is the government's ongoing push to take back broadcast spectrum and give it to wireless services. Aside from the potential threat of wireless plays to your members, this would seem to open a can of must-carry retransmission worms in local markets where broadcasters would depend on cable operators for carriage. We can't get into this in this interview but it's an issue that needs to be addressed--perhaps as the broadcasters gather in April for their annual NAB funfest in Las Vegas.
MP: We're not directly involved in the spectrum issue, but you can see a pattern where the broadcasters are trying to maintain and hold onto these old advantages that were given to them by the government. They're trying to do so at all costs despite the fact that the market ... the whole world has changed. I don't think they're embracing that notion too much.