CBS Blackout Harms Consumers: Statement by the American Consumer Institute

Current regulations unfairly give local broadcast stations the upper hand in negotiations with cable distributors over the payment of programming.  This has led to massive blackouts and much higher prices for consumers, and the recent CBS blackout of Time Warner’s cable customers is yet another example of this problem.

One major reason for strained negotiations has been the FCC’s network non-duplication rule, which prevents cable TV companies from negotiating with broadcast stations outside of local markets that carry the same programming as a local station, forcing the cable company to negotiate only with the local station.  This rule allows the station hold its content hostage for higher compensation, which the evident from the current blackout.

“Policymakers need to act to end retransmission consent rules that favor broadcasters over distributors, which has emboldened broadcasters to increase their prices faster than their costs,” according to Steve Pociask, president of the American Consumer Institute. 

ACI’s research has found that programming costs are increasing more than four times faster than the rate of inflation.  This means that programmers, like CBS, are pushing these higher costs to consumers in the form of higher prices.  “The outdated 1992 must-carry and retransmission consent rules need repeal,” added Pociask.  “The data suggests the presence of market power that is harming consumers, and policymakers need to fix it now.”   

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The American Consumer Institute Center for Citizen Research is a nonprofit educational and research institute.  For more information, visit www.theamericanconsumer.org.

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