The Wall Street Journal today has this extensive page one piece on a major dispute between broadcast station group owner Sinclair Broadcasting and small cable company Mediacom. For those who haven’t followed this relatively arcane but high-stakes fight, here’s the background.
Under a 1992 law, local broadcast stations have the freedom to elect one of two options when it comes to cable system carriage of their signals: must-carry or retransmission consent. Under must-carry, cable operators have no choice but to carry the station on their channel line-ups. Under retrans consent, the broadcaster can negotiate with local operators and receive some form of compensation for their signals; if the negotiations aren’t successful, the operator can’t carry the TV station.
Sinclair and Mediacom failed to reach a retrans deal and in early January Sinclair pulled 22 of its 57 stations from Mediacom’s systems — an event that was preceded and followed by lots of negative press, appeals to the FCC and Congress and fights at various state legislatures. But, with a Super Bowl game pending, Mediacom caved last Friday and acceded to Sinclair’s unspecified payment demands. (Whatever Sinclair was asking for, Mediacom claims that the cost of the deal could boost subscriber’s bills by $2/month.)
As bad as this fight has been, a bigger battle looms between Sinclair and Comcast, the nation’s top cable company. Comcast, however, doesn’t plan to budge an inch and with no big broadcast-only sporting event coming up until the World Series, the operator thinks it can afford to force Sinclair to blink. Sinclair will lose audiences and therefore advertisers each and every day its stations are blacked out. “We don’t pay for free TV,” Comcast’s top lobbyist David Cohen says in the WSJ piece.
But, and here’s where cable is screwed: most people will think of Comcast as the “dropper” and Sinclair as “the droppee,” despite the fact that it is Sinclair that would instigate the signal black-out. Comcast, like Mediacom and Cablevision and Time Warner before it, will have to cope with endless customer complaints, bad press engineered by Sinclair and threats emanating from public officials. And, on top of these hassles, some customers will likely switch to DBS providers, or worse, Verizon’s FiOS TV service, if Comcast keeps the Sinclair stations off the line-ups for long.
It’s not fair to Comcast. It’s extortion, actually. Sinclair is actually benefitting from Comcast’s carriage (and could have legally demanded it be carried — at no charge) while Comcast is using channel capacity for Sinclair that it might otherwise use for more profitable efforts. In fact, the cable industry fought long and hard to strike down must-carry laws as unconstitutional, generating two Supreme Court decisions on the matter (the first, Turner I, struck down must-carry as a violation of the First Amendment, and the second, Turner II, was a divided decision that basically upheld must-carry rules). But, fair or not, Comcast stands to lose a lot and gain, um, practically nothing, in any stand-off with Sinclair.
Cynthia Brumfield at 9:54 AM|Comments(1)
FYI - You can access that Wall Street Journal article for free with a Netpass from: http://news.congoo.com
Andrew Tobias blogged about this last week. I thought it was a great tip!
Posted by: David at February 5, 2007 12:17 PM
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