Fox TV’s decision to blackout its programming from some Cablevision subscribers is affecting consumers in parts of New York, Philadelphia and nearby areas. While the latest blackout stems from a breakdown in broadcast retransmission negotiations and the refusal of broadcasters use arbitration, the real losers here are consumers.
In 1992, lawmakers passed legislation designed to protect broadcasters against what was then a cable monopoly. Since then, satellite providers, telephone companies and other overbuilders have entered the market and are now competing against traditional cable TV providers for voice, data and video services. While the monopoly is gone, these old laws have shifted market power to broadcasters — giving them the ability to raise retransmission fees at rates much faster than inflation. Cable providers can choose to pay these higher fees and pass them along to consumers in the form of higher cable prices. Alternatively, broadcasters can and are pulling the plug — cutting off sports and other programs from the public. In other words, consumers are faced with blackouts or higher fees. So, consumers appear to be the biggest loser here, all due to outdated laws that give broadcasters market power over an increasingly competitive market.
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