Big Shift In Cable Lineup Ahead
New law may make it more expensive to get news programming.
By Lou Prato
Lou Prato is a former radio and television news director and a broadcast journalism professor at Penn State University.
Cable television subscribers shouldn't be surprised if later this year some of their favorite programs are no longer available. These could include a local newscast or even the Super Bowl. Subscribers also may have to pay higher rates to receive such news and information services as CNN,
C-SPAN and ESPN.
That might not have been the intent of Congress when it passed a law last fall mandating new programming, service, and rate regulations for the cable industry. The new rules were supposed to benefit the public by improving service, and making cable cheaper and cable operators more responsive to consumer complaints.
In reality, the rules have squeezed the public between the contending interests of two powerful businesses – cable and broadcasting. Their prime battle is over what's called "must carry/retransmission consent." For years, broadcasters have complained that cable operators have carried station and network programming without paying for it. To comply with the complicated new law, cable systems may have to negotiate with all local stations for permission to retransmit the broadcasters' signals.
The law requires a cable system to carry local stations' programming as a part of its basic package, but the cable operator does not have to compensate broadcasters for doing so. However, if a station demands money, the cable system has the choice of either paying or not carrying that station.
Many cable system owners and broadcasters have taken a hard line. Several cable operators, including the nation's largest, Tele-Communications Inc., say they won't pay for something that is free for anyone with a television set. ABC, CBS and NBC say the stations they own should be compensated. Gary Chapman, president of Lin Television Corp., which owns seven stations, says cable should pay for broadcasting programs just as it does for cable shows.
"Cable systems already pay 3.5 to 60 cents [per subscriber] for cable programming like ESPN," Chapman argues, "yet they complain about paying for over-the-air broadcasting that collectively represents 75 percent of what they offer. Now, if TCI in the Dallas-Fort Worth market doesn't want to carry our NBC station without paying, can you imagine the reaction if they can't show the Cowboys in the Super Bowl? Obviously we believe there is value in broadcasting that should be compensated."
Perhaps the most intriguing perspective on the conflict comes from executives at multimedia companies that own cable systems and television stations in different markets. One such company is Viacom Inc., whose holdings include cable systems with 1.1 million subscribers, five network affiliated stations and such cable programming networks as MTV and Showtime.
"On cable, we have taken the position of not paying [the stations]," says Frank Biondi Jr., Viacom's president and CEO. "Cable can do quite nicely without carrying several broadcasters in the market. As stations, we have said we want to be carried and have good channel position and we're willing to do that without being paid. But we've also said, 'If others are being paid, we should be too.' "
In the past, local independent stations with narrow appeal have been shut out by cable. Now they must be part of the basic cable package. This means system owners with limited channel capacity will have to eliminate some current specialty cable programming to make room for less popular local stations, such as a religious channel or a UHF independent.
Popular news networks like CNN or ESPN won't disappear. Cable operators will move them to a more expensive tier of services above the basic one. Operators also could drop entertainment cable networks such as USA or Nashville completely and make it more difficult for newer networks to gain access.
"In the next six months to two years we'll have slower growth," says Steven Brill, president of the two-year-old Courtroom Television Network. "There are lots of places we had intended on getting into and now we have to wait longer. Frankly, we think it's unfair and unconstitutional."
Even cable's own public service network, C-SPAN, may be hurt. Although it's original network, C-SPAN, is carried by some 4,396 cable systems, the second service, C-SPAN 2, is on only 1,033 systems. In Alexandria, Virginia, for example, the Jones Intercable system has replaced C-SPAN 2's evening and overnight programming with the Bravo network.
Despite the cable industry's complaints, some communications policy experts say the new law will not cut into the cable and broadcast industries' considerable profit margins and, more important, will help protect the interests of consumers.
"This is a situation where cable has been able to frame the debate that the regulation is onerous to the consumer, which it is not," says Jeff Chester, co-director of the Center for Media Education, a nonprofit advocacy group based in Washington, D.C. "The cable industry is basically holding C-SPAN hostage. It's a very mild bill and cable's increasingly non-competitive high rates are at the heart of it." l###