Released: July 24, 2013

Consumers need protection from retransmission fee squabbles

Contact: .(JavaScript must be enabled to view this email address), Consumer Action, 202-544-3088 | .(JavaScript must be enabled to view this email address), League of United Latin American Citizens (LULAC), 202-833-6130

Washington, DC – July 24, 2013 — Many consumers would hate to lose access to Big Bang Theory, NCIS, 60 Minutes—or other popular CBS programs. In fact, cable and satellite customers can’t count on uninterrupted access to any of the Big Four (ABC, CBS, NBC and Fox) networks because the 1992 Cable Act requires pay TV providers to get broadcaster consent to carry the station and, since there’s no limit on what broadcasters can charge in so-called retransmission fees, pay TV providers can either pay up or lose the programming.

The CBS network has upped the ante with a consumer scare campaign. It’s started to run crawls and advertising across its broadcast and cable properties warning Time Warner Cable customers that they may lose programming prior to the expiration of the companies’ retransmission consent agreement on July 25.

CBS is putting consumers in the middle of a fight they shouldn’t have to worry about. Programming blackouts and threats of blackouts harm consumers who may have to switch providers just to keep receiving the same broadcast channels they can get for free with a pair of rabbit ears. While the current dispute affects only Time Warner Cable customers, the situation is likely to spread to other pay TV providers as retrans consent agreements expire and the scrapping begins all over again. Certainly, this type of dispute has affected other pay TV providers and their customers in the past—remember the threats to black out access to widely viewed events such as the Academy Awards and professional sports games.

Threatened blackouts force consumers to think about switching pay television providers just because a local broadcaster wants more money for the same network content they’ve provided all along. This could be especially burdensome to low-income consumers who can’t skip work for an installation appointment. And we fear it forces non-English speaking consumers to switch and give up in-language programming if their second-choice provider doesn’t carry it.
 
CBS CEO Les Moonves calls blackouts the “ultimate leverage” for broadcasters and says that "the sky’s the limit" for retransmission consent fees.

Moonves’ remark really pours cold water on cable and satellite TV subscribers, who are already shouldering big costs to tune in. According to the American Television Alliance, a coalition of industry and public interest groups, retrans fees have increased from $216 million to nearly $2.4 billion in just 6 years. Fees are estimated to more than double by 2018 to over $6 billion. That’s faster than any other programming cost. And those costs get passed on to consumers.

Meanwhile, retrans threatens independent, diverse content because those same broadcast networks own most of the cable channels and link their carriage with broadcast channels, making it harder for new, independent networks to get into the lineup.
 
All of this raises the question: Why does government let broadcasters get away with threatening blackouts? This is a heavily regulated system, but retransmission rules seem designed to increase broadcaster leverage. There are no rules in place to protect consumers from blackouts or allow them to opt out of receiving broadcast stations to save a few bucks on their TV bills.

The FCC has been unwilling to adopt rules to protect consumers from rising retrans fees despite having had a proceeding open to consider such rules since 2011. And there is no way to stop broadcasters from adding new cable channels to their lineups and pushing out minority-owned or community-based channels that might otherwise get carried.

After all the attention paid and money poured into the digital transition of broadcast channels to protect “free” TV, broadcasters who get their spectrum from the public should not hold viewers hostage in retransmission negotiations with pay TV companies. It’s been more than 20 years since the retrans rules were enacted. They’re clearly broken and something needs to be changed to protect consumers instead of broadcasters.

About Consumer Action

Consumer Action has been a champion of underrepresented consumers nationwide since 1971. A non-profit 501(c)3 organization, Consumer Action focuses on consumer education that empowers low- and moderate-income and limited-English-speaking consumers to financially prosper. It also advocates for consumers in the media and before lawmakers to advance consumer rights and promote industry-wide change.

About LULAC

LULAC (www.lulac.org), the League of United Latin American Citizens, is the largest and oldest Hispanic Organization in the United States. LULAC advances the economic condition, educational attainment, political influence, health and civil rights of Hispanic Americans through community-based programs operating at more than 900 LULAC councils nationwide. The organization involves and serves all Hispanic nationality groups.