Under a new legislative proposal sponsored by Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) and Ranking Member John Thune (R-S.D.), real TV freedom would become the law of land. Ironically, given the chance to salute an idea that took its name seriously, TVFreedom.org, a front group of the National Association of Broadcasters, has been nothing but hostile to the Rockefeller-Thune Local Choice proposal, slinging a lot of social media mud since the proposal first surfaced on Aug. 8
What possibly could be the problem? Rockefeller-Thune’s positives are too many to list, but here are just a few: TV stations would set the price of their channels on pay-TV systems and collect all the revenue. TV stations that are local-ratings winners would be in position to command the highest fees. TV station-initiated blackouts permitted under current law would never happen again. And pay-TV consumers would not have to pay for TV stations they don’t want and could do so without giving up pay-TV entirely, which current law does not permit in the case of cable subscribers. Again, what’s not to like?
Myth No. 1: Rockefeller-Thune would be bad for broadcasters.
Truth: The Rockefeller-Thune proposal would be the best thing to happen to TV stations in decades. Local stations, especially those with highly rated NFL games (think Super Bowl!) along with popular prime time dramas, would be able to command truly rich market rates. For years, broadcasters have said because of their high ratings, they deserve to be paid as much as the most expensive cable channel – ESPN -- and the reason they can’t is the depressed rates imposed by miserly cable operators with market power. Because Rockefeller-Thune is an invitation for broadcasters to charge as much as they want, keep all the revenue and never have to negotiate with a hated cable pay-TV gatekeeper ever again, one has to ask: Why would NAB and "TV Freedom" be against TV freedom for broadcasters?
Myth No. 2: Broadcasters would lose 100 percent Pay-TV penetration
Truth: If a TV station charges a free-market rate of $5 per month and, say, 25 percent of cable subscribers sign up voluntarily, that would generate more revenue than a retransmission consent fee of $1 imposed on every subscriber pursuant to government regulation. So if the local station prices its channel appropriately, the claim that 100% pay-TV penetration is necessary to make a profit is a canard. The idea that 25% to 50% pay-TV penetration will cost a TV station an unacceptable loss of its advertising audience is also baseless. Under Rockefeller-Thune, a TV station’s potential ad audience would equal the sum of all of its pay-TV subscribers and all antenna-only viewers. That’s exactly the formula in place today and it would not change one iota if Rockefeller-Thune became law.
Myth No. 3: Pay-TV providers would game the payment system.
Truth: Under Rockefeller-Thune’s opt-out formula, pay-TV providers would have to carry every local TV station by default. TV stations would lose carriage in a pay-TV home only if the customer elected not to pay the stations’ fees. The cable operator is required to give the TV station all the revenue. The notion that the cable operator would deliberately deploy a hinky billing system to slow the transfer of revenue is a red herring. With millions of people comfortable using PayPal to complete eBay auctions, Uber to pay for car service – not to mention that Amazon just unveiled a new credit/debit card reader for small business – it takes a powerful imagination to believe that pay-TV operators and broadcasters are incapable of adopting a frictionless payment system that involves just a couple of clicks.
Myth No. 4: Broadcasters would waste valuable time and resources marketing themselves to subscribers.
Truth: No one in American commerce is better at getting out its message than local TV stations, and the financial opportunities awaiting many of them under Rockefeller-Thune would swamp the pittance needed to alert consumers about their new local TV choices. If TV stations are so bad at marketing, how come after so many years, I can still recall that “Winstons taste good like (sic) a cigarette should” and can still hear Pat Summerall’s sonorous voice telling me to stay tuned after NFL football for 60 Minutes, Everybody Loves Raymond and Murder, She Wrote. Only in political battles do broadcasters pretend that they don’t have the most powerful megaphone in America.
For years, broadcasters have been saying that retransmission consent costs pay-TV consumers “just a few pennies a day.” But we now know that this is just a hollow NAB-TVFreedom.org talking point, because the last thing TV stations want to do is give consumers the control and price transparency that they desire or the right to decide for themselves how many pennies they want to pay each day for what NAB and TVFreedom.org continue to call "free TV." TVFreedom.org, why are you against TV freedom?
Polka is president and CEO of the American Cable Association, a member of the American Television Alliance (ATVA).