Relax ...TV Police Are Not Coming

If you have been watching local TV stations recently you may have seen a spot urging you to contact your federal elected officials and tell them not to take away your “free over-the-air TV channels.”  These slick spots tout the benefits of free broadcast TV, but fail to explain what it is that is really in jeopardy. Even if you visit the special website  featured in the spots, the exact nature of the real issue is not clear. From the tone of the spots the viewer is left wondering if the Federal TV Police will soon be breaking down your front door and confiscating your rabbit ears.  Or perhaps the big wigs in Washington are getting ready to levy a TV tax similar to the one in the UK.  Well, if you dig deeper (and the local stations and the NAB, their lobbying group, know you will not) you will find that the issue is all about money and profits and not at all about taking your TV away.

I have written extensively about the revolution in the TV business and how what we see, how we see it, and how it is all financed are undergoing unprecedented change.  The broadcast industry is not a big fan of change since the status quo serves their business model well.

To help you understand the issue, here is a bit of background.  Local commercial TV stations receive cash payments or other compensation from cable and satellite companies that choose to carry local broadcast signals on their systems.  The technical term is retransmission consent payment.  (Note that noncommercial public stations do not receive these payments.)  Nationwide these payments amount to billions of dollars and have become a very important revenue source for local TV stations.   This revenue stream has been on the increase in recent years as other revenue sources for local stations have been on a downward trajectory.  Periodically, stations negotiate with the cable and satellite carriers to establish the fees.  Recently, these negotiations have become more contentious as stations want more and cable and satellite want to pay less. 

Often these negotiations become public and acrimonious.  Right now for example, WXIXChannel 19 is in negotiation with DIRECTV and is running spots on the air warning that DIRECTV may cease carrying the channel.  Increasingly the cable and satellite carriers are balking at these payments and have been lobbying congress to change the retransmission consent regulations.  Their argument is that these escalating fees force them to increase monthly customer bills at a time when fewer people are watching these stations.  Some have threatened to put the local stations on a more expensive tier of service and, of course, charge more.  This may require some FCC rule changes.

This issue is only a small part of a much larger issue of how we pay for our TV.  For many years, cable and satellite companies have used a bundling system to develop your monthly bill.  Subscribers pay for TV channels even though they may never watch them.    The new internet-based TV program distributors can provide an a la carte service with viewers able to select and pay for only what they watch. 

So contrary to what you might gather from the TV spots, there is no need to lock your doors and hide the remote or rabbit ears.  You are safe for the time being.