Cable and satellite companies negotiate with broadcasters, as well as other cable networks, for the right to retransmit their signals in a process known as retransmission consent. Terms can include cash payments, barter and advertising. This compensation is critical to local TV stations' ability to provide local news, community and emergency information, as well as top-quality entertainment. Recently, certain cable and satellite companies have waged an aggressive lobbying effort urging the government to weigh in on these private, market-based negotiations in an attempt to avoid fairly compensating broadcasters, who produce the highest-rated content on television.
The right for local TV stations to negotiate for retransmission consent was granted by Congress in the 1992 Cable Act, legislation that intended to curb excessive cable rate increases while promoting competition in the video marketplace. Prior to this law, cable operators used broadcast signals without stations' consent and resold the signals to subscribers, making millions.
The current free-market process provides incentives for both parties to come to mutually beneficial arrangements, which is why negotiations are completed with no service interruptions or fanfare the great majority of the time. In the handful of instances where agreements are not easily reached, there is a distinctive pattern: 90 percent of the time there is an impasse it involves Time Warner Cable, DirecTV or DISH â€“ the same big companies begging for government intervention.
These big companies are urging policymakers to change the retransmission consent system, simply because they don't want to fairly compensate broadcasters for their signals. They claim that broadcast retransmission fees (a mere two cents of every dollar of cable profits) are responsible for higher cable bills. The truth is, cable bills have risen faster – sometimes double – the rate of inflation since 1999, long before broadcasters received cash compensation for their signals. Despite having the highest-rated programming on television, broadcasters have long been the least compensated by cable and satellite companies.
While complaining about programming costs, cable and satellite companies are pocketing big profits. In 2012, Time Warner Cable had revenues of $21.3 billion, DirecTV had revenues of $29.7 billion and DISH had revenues of $14.2 billion.
Thus far, there has been no substantive government action as numerous policymakers recognize this is a private negotiation that does not require government intervention.
In 2011, the Federal Communications Commission (FCC) initiated a rulemaking, requesting comment on retransmission consent issues and laws governing TV carriage. Notably, the FCC concluded that it lacked the authority to impose proposals such as mandatory arbitration and forced carriage. To date, the FCC has taken no action.
In 2012, Rep. Steve Scalise (LA-01) and then-Sen. Jim DeMint (SC) introduced legislation that would remove fundamental TV carriage laws that are important to local broadcasters, including retransmission consent rights. Ultimately, this legislation was not enacted and has not been introduced in the 113th Congress.
Broadcasters oppose government intervention that would upend the retransmission consent system for the benefit of the big cable and satellite companies. The retransmission consent negotiation process is fair and market-driven. Eliminating broadcasters' ability to negotiate for the value of broadcast signals would mean less choice for viewers and fewer dollars for stations to dedicate to local news, public affairs programming, coverage of emergency weather events and community activities.
Congress and the FCC should allow broadcasters and cable and satellite operators to continue to conduct private, market-driven negotiations for retransmission consent and avoid tilting the scales in favor of either party. Government intervention would only disrupt a marketplace that has resulted in more programming choices and services for local television viewers.