Retransmission Consent Rules Help Indies Get Cable Carriage

Independent programmers are building national multicast networks by allying with broadcasters that use retransmission consent talks to get cable carriage for start-ups. Earlier this month, Cal.-based LATV announced a deal with Post- Newsweek stations that will use the group owner’s digital multicast signal to deliver around-the-clock bilingual Latino-targeted programming on the air and on cable in Post- Newsweek’s biggest Hispanic markets (CD Jan 17 p10). Broadcasters said consumers benefit from the carriage arrangements because they get access to more diverse content. But some cable operators fear broadcasters might abuse retransmission consent rules to pack unwanted material onto cable systems. Another concern arises when one TV station uses multicasting to create a de facto duopoly, carrying another network’s programming.

Cable carriage for multicast programming varies in “every market,” Post-Newsweek Stations Pres. Alan Frank said: “Depending on who the players are, it can be not so difficult and very difficult.” Partnering with independent programmers helps broadcasters reach new viewers, he said: “LATV is a perfect example of extending the station’s reach into communities where we're not as strong as we'd like to be. It opens up a lot of areas for us, both from a viewer’s standpoint and an advertiser’s.” LATV is “potentially groundbreaking,” he said: “It opens up a whole new area for thought for stations.”

Difficulty getting cable carriage prompted LATV to partner with broadcasters. The network tried without success for years to strike a deal with a cable operator, Pres. Danny Crowe said: “Linear cable channels are becoming more and more difficult to get. The spectrum has just become rather crowded.” And cable operators hesitate to carry independent networks when majors like Viacom and NBC Universal offer similar products, he said: “It became apparent to us that without taking on partners or selling part of the company, it was going to be difficult to get the kind of distribution we wanted to get with linear cable or satellite.”

Getting carriage without broadcaster help is “nearly impossible” for independent networks, Multicast Network Group Chmn. Michael Ruggiero said. His company, which helped broker the distribution deal between Post-Newsweek and LATV, works with programmers seeking digital broadcast carriage, such as The Tube and a coming Motor Trend auto channel. “We were able to back-door it with these networks using retransmission consent. There’s a lot of good networks that are based on retrans,” Ruggiero said: “We're hoping these new networks will follow the same path as networks like Home & Garden, FX, ESPN 2 and a lot of other networks that were created through the retransmission consent process.”

FCC Carriage Rules

Some broadcasters say FCC retransmission rules aren’t adequate to ensure multichannel customers get stations’ multicast programming -- independently made or not. Multicast programming “will not survive” without cable carriage, and stations can’t rely on voluntary deals, CBS affiliates told senior FCC officials last week, according to an FCC ex parte filing. Participants discussed “the Commission’s authority to adopt digital carriage rules that prohibit cable from stripping out the free programming broadcasters provide through multicasting,” the filing said. The affiliate group meetings, led by Freedom Bcstg. Pres. Doreen Wade, included Chmn. Martin and Comrs. Adelstein, McDowell and Tate. Other participants: Clear Channel, LIN, Media General, Meredith and Nexstar. Broadcasters lost a chance to get mandatory carriage of multiple streams last year when McDowell voiced doubts about FCC authority to impose the mandate (CD June 20 p5).

NCTA wants the FCC to crack down on what they say are retransmission consent abuses, such as local marketing agreements between 2 stations. Bend Cable CEO Amy Tykeson said arrangements where one station multicasts another network affiliate’s broadcast signal are bad for media ownership diversity. The FCC bans common ownership of 2 top- 4 stations in the same market -- a proscription some cable operators want extended to multicasting.

“The more channels that one broadcaster has under its purview,” the worse for cable, Tykeson said: “One can only imagine [the harms]… Just looking at what’s going on out there in the marketplace right now, it’s only going to get worse.” It makes sense to link retransmission consent to media ownership, Howard Barr, who represents smaller cable operators, said: “It is probably proper to link the two, but I would be very surprised if that’s how the Commission comes out on this.”

Broadcasters say today’s system of retransmission consent negotiations works fine. “Congress passed this law 15 years ago to correct an imbalance that unfairly benefitted cable operators who built their business on the backs of local broadcast signals,” NAB Exec. Vp Dennis Wharton said: “There’s something inherently unfair about a business that takes a competitor’s product, resells it and keeps all of the money for itself.” Industry officials said there’s nothing wrong with seeking compensation from cable, citing payments to TV stations from DBS and telco TV.

Some Commissioners may empathize with cable concerns, but they're not likely to push to include retransmission consent reforms in a media ownership order, said FCC and industry officials. “It’s not part of the ongoing media ownership proceeding,” an FCC official said: “It’s relevant because it shows a sense of market domination that broadcasters have, but it’s not an issue as far as the rulemaking is concerned.”

Martin seems disinclined to change retransmission consent rules, said a broadcast official. The official cited comments by the chmn. to the effect that Mediacom and Sinclair, and not the FCC, should work out the companies’ high-profile carriage spat. “I don’t see it getting brought up in the ownership proceeding because there are too many moving parts to begin with,” another broadcast official said: “You're going to see a lot of smoke on retransmission consent at both the Commission and on the Hill, but I don’t see anything happening… The burden’s on the other side to get something changed. The status quo is fine with us.”

Multicast Must-Carry

Some independent networks don’t need new FCC rules to prosper in a multicast environment, they said. LATV is doing fine without a multicast must-carry mandate, Ruggiero said: “We've had no problem with the cable operators. To me, digital must carry doesn’t make a difference.” That said, LATV, The Tube and the other networks Ruggiero handles are not getting carriage on cable operators’ coveted analog tiers. Instead, broadcasters negotiate for spots on a cable operator’s most popular digital tier, he said: “A lot of people were waiting for digital must carry to happen and didn’t realize there are other ways to get cable operators to act.”

Major broadcast networks are slow to invest in multicast networks because it’s easy for them to get cable carriage, Ruggiero said: “If you're ABC, you don’t need multicast channels. You just go to the cable operators and say, ‘You will carry my Toon Disney, won’t you?’ For them to put money and resources into multicast channels may be way premature.” The major networks might be likelier to launch digital counterparts after the Feb. 2009 transition, he said.

NBC-owned KNBC L.A. hasn’t gained cable carriage for a local news multicast channel it introduced in April 2006. KNBC News Raw, which features longer-form programming and behind-the-scenes features, can be viewed online at knbc.tv. Traffic there spikes for breaking news, said Exec. Producer- Special Projects Charles Stewart. WNBC N.Y. got cable carriage for its local multicast channel, WNBC 4.4, a spokeswoman said. That channel features a mix of rebroadcast news from the main channel, shows produced by other NBC-owned stations and some independent programming.

Ion recently debuted Qubo, a kids-oriented multicast network, and plans to bring a new “healthy lifestyle” network for adults on the air in 6-8 weeks, CEO Brandon Burgess said. As with Qubo, Ion will feature programming by the new network on its primary analog signal, while broadcasting around the clock in digital. “That’s a smart way to handle the programming, to have the programming nested in the analog platform,” he said: “Viewers can sample the brands on the analog platform and, if they like it, they can come back to the digital platform.”

Ion plans to devote about 30% of its digital spectrum to multicast, Burgess said. About 50% of the spectrum will go to broadcast primary signals in 720p HD, but those spectrum allocations aren’t set in stone, he said: “Given that we don’t broadcast football… I'm not sure we're going to bet the farm on HD.” The other 20% will be used to test mobile broadcast technologies, he said: “We're now going to gear up to putting some real focus behind out of home services. We're holding back some spectrum to have that flexibility.” Those services “open up a whole new line of applications for broadcasters” beyond multicasting, he said: “It could be content that goes to a conditional access box. It could be essentially a mobile Netflix model.”

Cable operators should support multicasting because it will offer them cheap and usually free programming, Burgess said: “The people we're really competing with are other cable channels who basically overcharge for their product.” Some cable operators share that view (CD Dec 11 p8).