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August 8, 2013
Dennis Wharton
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Testimony of NAB EVP Marcellus Alexander on Retransmission Consent Negotiations

WASHINGTON, DC -- NAB Executive Vice President of Television Marcellus Alexander testified this morning before the The New York City Council Committee on Consumer Affairs and Subcommittee on Zoning & Franchises at a hearing on "Oversight: Time Warner Cable, CBS and the Consumers Stuck in the Middle."

Below is a transcript of his testimony as prepared for delivery. Also available is testimony by New York State Broadcasters Association President David Donovan and CBS Executive Vice President of Planning, Policy and Government Relations Marty Franks.

* * *

Thank you Chairman Garodnick, members of the Committee and subcommittee. I am Marcellus Alexander, Executive Vice President, Television at the National Association of Broadcasters. We represent local radio and television stations across the country and broadcast television networks. I am a former television general manager and appreciate the opportunity to be here.

Since my last visit with you in July of 2010, a review of carriage negotiations shows a clear trend. Since the beginning of 2012, when an impasse was reached, 80% of those situations involved three companies…Time Warner Cable, DirecTV and DISH.

There are over 5,800 cable systems in the United States. Only three-tenths of one percent of those cable companies have ever been party to a service disruption. These three pay-tv companies have been involved in four out of every five disruptions in 2012 and 2013.

When I was here 3 years ago, I said the retransmission consent process is fair, it works and it benefits our viewers, your constituents. We at NAB still believe that now as strongly as before. Having said that, I'd like to update my statement: the process is fair, it works, it benefits viewers/constituents, but there are companies that are attempting to break the process that over the years has worked 99% of the time.

There's a saying that you're probably familiar with, "don't let perfect be the enemy of good." Attempting to get to 100% by utilizing legislators and/or regulators might actually have the opposite effect, causing more disruptions and greater uncertainty to consumers.

I'd like to make several points regarding retransmission consent today.

Point 1

Retransmission consent continues to benefit viewers by allowing local broadcasters to better serve their communities.

Broadcasters continue to reinvest their revenues in local news and coverage.

In 2011, broadcasters hired more than 1,100 additional anchors, reporters, producers and news staff.

Total employment in local television newsrooms grew by 4.3 percent to 27,653 employees. This is the second highest total on record.

The average television station also set a new record in 2011 for the amount of local news aired – the average amount of news rose to five and a half hours per weekday last year.

Point 2

The revenue generated through retrans allows broadcasters to invest in news operations that keep your constituents informed about local issues.

Last October, Hurricane Sandy hit this region hard and crippled local communities.

It caused tens of billions of dollars of damage, resulting in 8 million homes without power and a devastated communications infrastructure.

Through it all, local New York television stations prepared citizens to cope with this disaster, and in virtually all cases, stayed on the air nonstop, providing a lifeline to their local communities.

It is retransmission consent dollars that support this local community service and coverage.

Point 3

Compensation to local television stations through retransmission consent negotiations is not responsible for higher pay TV prices for your constituents.

As you can see in the charts included in your folders:

• cable rates far outpace the rate of inflation;

• fees paid to basic cable networks significantly outweigh those associated with broadcast;

• cable revenues dwarf total broadcast retransmission fees;

• the growth of retransmission consent fees is on a continued and projected decline.

Point 4

Understandably, you are concerned with how contractual impasses between broadcasters and pay TV companies affect your constituents. We encourage more creative solutions to this issue.

Our stations are always available to consumers, free over-the-air. We, as broadcasters, can probably do a better job of educating consumers as to the availability of this option.

Pay-TV needs to do more as well, by providing better notification and ample notice of possible disruptions to consumers.

And the FCC should allow customers to easily switch among competing pay TV providers, without incurring financial penalties, and also receive refunds when stations are unavailable.

All of these options are far better to unnecessary changes in law or regulation.

Mr. Chairman and committee members, thank you again for the opportunity to visit with you today and to appear alongside my industry colleagues from CBS and the New York State Broadcasters Association. There are some areas where we could enhance consumer awareness and choice during carriage impasses, but we continue to caution against policy changes to television carriage laws and the unintended consumer harm that would result.

I look forward to answering any questions you might have.

Thank you.

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Below are links to charts Mr. Alexander referenced in his testimony:

Cable rates have grown over the rate of inflation before retransmission consent payments

The growth of retransmission consent fees is slowing

Cable revenues dwarf retransmission consent fees

Broadcast retransmission fees compared to fees paid to basic cable networks

About NAB
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