When Congress created retransmission consent in 1992, we had good reason to worry about the future of broadcast television. Cable providers had near-monopolies in the communities they served. Potential competitors, such as satellite providers and telephone companies, were still years away from providing video services that could match what the local cable operators were providing. And as more and more viewers removed the rabbit ears from their television sets in favor of cable wires, broadcasters became more reliant on cable providers to distribute their programming to consumers. Congress thus came to view dominant cable providers as a threat to the survival of over-the-air broadcasting.
These concerns gave rise to the 1992 Cable Act, which established new rules governing the carriage of broadcast stations on cable systems as well as other video distributors. The Act gives broadcasters two options for securing carriage on distribution platforms. The first option is for the broadcaster to elect “must carry” status, which entitles the broadcaster to automatic carriage without compensation. The second option is to elect “retransmission consent” status, which allows the broadcaster to bargain with a video distributor for carriage. The two options provide tremendous benefits to broadcasters by ensuring that all broadcasters would obtain carriage one way or another, and could continue to provide important local programming to viewers in their communities.
But as we all know, there has been tremendous change in the television industry since 1992. Cable now faces vigorous competition from other platforms. Satellite providers DIRECTV and DISH Network rank just behind Comcast in subscriber levels and ahead of every other cable operator in the country. Major telephone companies like Verizon (FiOS) and AT&T (U-verse) are also rapidly expanding the reach of their video services. Viewers can even “cut the cord” completely and watch their favorite shows on the web, or download them from services like Apple’s iTunes. In short, broadcasters today have a wealth of options for getting their programming to viewers, and the concerns Congress addressed in 1992 are a distant memory.
As competition among cable, satellite, and telephone companies has flourished, little has changed in the way broadcasters do business. They continue to retain all of the government protections originally granted to them when they faced a monopoly cable provider. Broadcasters retain their monopoly status in the local market because FCC rules prohibit pay TV providers from obtaining broadcast programming from an alternative source. As a result, broadcasters have grown bolder in their demands because they know that they can survive just fine without continuous carriage on any one of the competing distributors in their local market. If a broadcaster withholds or threatens to withhold its signal, the ability of a viewer to switch pay TV providers virtually assures that the distributor will ultimately give in to the broadcaster’s financial demands. In contrast, pay TV providers risk losing customers for good when a broadcaster withholds popular programming and drives them into the arms of a competitor. As a result, broadcast stations, particularly those affiliated with the four major networks (ABC, CBS, NBC, and Fox), can threaten to pull their programming from a pay-TV provider if their compensation demands are not met.
The system is broken, but it isn’t beyond repair. I urge policymakers at the FCC to take action, and soon, to ensure that the retransmission consent system promotes the goals it was intended to serve
Jack Fields represented the 8th Congressional District of Texas in the U.S. House of Representatives from 1980 to 1997 and was Chairman of the Subcommittee on Telecommunications and Finance during part of that tenure, from 1995-1997. He is a consultant to the pay TV industry and lobbies on retransmission consent.