Smaller pay television providers are under assault from the excessive demands of local TV stations. Congress needs to step in and support legislative reforms that curb the undue price hikes and sudden signal blackouts designed to turn consumers against their traditional pay-TV providers.
As a small cable operator from Southeast Missouri, I was invited to testify before the House Energy and Commerce Committee in June to talk about how fees charged by broadcasters are leading to more and more TV blackouts.
In the four months since I testified, things have gotten much worse. Since my appearance on Capitol Hill, there have been 216 broadcaster blackouts, impacting 138 markets across 44 states. That’s 216 blackouts in the past 134 days alone! Additionally, a new poll shows that 1 in 3 television or streaming users has been the victim of one of these blackouts.
This week, the Senate Commerce Committee will consider legislation that is designed to protect consumers from broadcaster abuses. The limited oversight provided to the Federal Communications Commission known as “good faith” rules are included in the Satellite Television Extension and Localism Act Reauthorization Act of 2014, which Congress must reauthorize before the end of the year. Failure to do so will leave hundreds of small cable operators and millions of consumers without protections that have been in place for many years.
Small video providers who support STELAR’s renewal face a big obstacle: The National Association of Broadcasters and its members are lobbying Congress to let the program expire. It’s not surprising why the NAB would want to pull the government’s referee from this process. Even with the FCC’s oversight in place, broadcasters have been able to collect billions of dollars in fees. Since 2006, retrans fees have gone from about $215 million to $11.7 billion annually, an increase of more than 5,300 percent. Meanwhile, broadcast TV ratings – the measurement used to determine popularity and thus advertising rates – continue their downward trajectory.
Out-of-control retransmission consent fees disproportionately harm smaller cable operators. According to a recent FCC report, small systems pay at least one-third more than large systems pay in retrans fees. Because cable operators pass these fees along to customers – as much as $20 per month – rural cable subscribers pay much more for nominally “free, over-the-air” broadcast programming than their urban counterparts. Small cable operators not only suffer from paying higher fees but are also forced into accepting onerous terms and conditions, like the forced bundling of various channels and carrying unpopular channels that our customers do not want.
Recent changes in the marketplace are making this situation even worse.
First, individual broadcasters now control multiple “top-four” network feeds in more than a hundred local markets – and sometimes control three or even four such feeds – despite FCC rules that are supposed to prevent this kind of anti-consumer consolidation.
Second, corporate broadcasters have gotten much bigger nationally, with behemoths like Sinclair and Nexstar controlling more than 100 stations each across the country.
Third, broadcasters increasingly bundle other “marquee” programming networks with their signals – raising consumer prices for both. This means that broadcasters have more market power than ever before, and certainly more than Congress expected, and cable subscribers pay the price.
Under the current system, small cable operators like mine are facing tough choices. Recent headlines indicated that retransmission consent fees and other programming fee hikes have prompted some smaller cable operators to exit the business. This is especially bad for older Americans less likely to turn to streaming services, and especially those living in rural areas like those my company serves.
Congress must not just reauthorize the good faith rules. It’s not enough. It must revisit its video laws and make meaningful reforms to protect consumers. Every five years since 1988 Congress has reauthorized STELAR, and each time it has used the opportunity to review other video laws along with it. It must do so again this year. For instance, I’ve urged Congress to extend the good faith rules to the buying groups of small and medium-sized cable operators in their negotiations with large stations groups. But let’s be honest: Congress needs to update the Communications Act.
Big broadcasters shouldn’t be allowed to bully companies like mine. Small cable operators and millions of rural Americans are counting on Congress to not only re-authorize STELAR before the end of the year, but also strengthen protections for TV viewers during retransmission consent negotiations.
Over the course of time, small cable operators and our customers have been able to rely on Congress for small, incremental safeguards in STELAR, such as the “good faith” rules. The sunsetting of these rules without any consideration will leave us out in the cold-without any protections at all.
Please don’t allow our “horse” to die without giving us a new horse on which to put our saddle!
Patricia Jo Boyers is the chairman of ACA Connects and president of BOYCOM Vision in Poplar Bluff, Mo.
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