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.