Why Pay More For Cable TV Blackouts?

For the last two decades, video distribution networks (mostly cable and satellite) and video programmers (broadcast and non-broadcast TV channels) lived under rules that govern what distribution must be offered to content owners, and what content owners must allow distributors to carry – mostly subject to negotiated prices.  These regulations – called retransmission consent, compulsory copyright license, and must carry – favored broadcast stations in their negotiations with cable, leading to higher prices for consumers.  Congress picked these rules to prevent (what was then) monopoly cable distributors from completely bypassing over-the-air content.  Today, the industry has matured and would improve under free-market conditions.

Video programmers and cable TV have prospered and both face competition from satellite, telephone company networks, and internet sources.  Cable has expanded its product line to include telephony and highly popular internet access.  Video programmers refined cost cutting and revenue enhancements (product placement, targeted advertising, and merchandising tie-ins) plus retransmission consent payments of $1.1 billion per year that will triple within 5 years.   Their negotiations over retransmission fees are at times responsible for “consumer abuse tactics” like blacking-out major sports events and popular shows.  Consumers have to pay the negotiated increases in program charges as part of their subscription fees, but consumers have zero clout during the cable and programmer negotiations.

Now Congressman Steve Scalise (R-Louisiana) and U.S. Senator Jim DeMint (R-South Carolina) have introduced “Next Generation Television Marketplace Act” in both the House and Senate.

This bill helps consumers by removing things that had prevented a free market from developing.  It removes “must carry” and the matching “compulsory copyright license” (except for educational programming).  It removes the retransmission consent obligation, and, for the first time, allows the programmer and distributor to negotiate on equal terms.  It removes “basic tier” as a prerequisite to buying anything else.  It removes outdated rules that advantaged broadcasters in the negotiations, allowing for a marketplace where video and cable operators negotiate on equal terms with programmers.  That will keep cable and video service prices lower for consumers.

Alan Daley is a retired businessman living in Colorado.  He follows public policy from the consumer’s perspective.

 

 

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