Broadcasters' tough talk with cable is not without risks
Are broadcasters getting too brash in their push to get cable operators to pay big bucks to carry their television stations?
That's what one industry analyst is wondering. In his Dec. 18 report (registration required) on the heated retransmission consent negotiations between Time Warner Cable and News Corp.'s Fox, Pali Research's Rich Greenfield warns that all the tough talk from broadcasters could draw some government scrutiny.
"We are actually quite surprised at how openly (and aggressively) the senior executives are talking about retrans -- as we would fear that the government would begin to look at them as a cartel," Greenfield wrote. He added that since broadcasters use the public airwaves for their programming (which they get for free) and there is a Democratic majority at the Federal Communications Commission, "a fine line must be walked."
Greenfield cites tough talk from News Corp. Chief Operating Officer Chase Carey, who said at a recent investors conference that since ESPN gets almost $4 per subscriber per month from distributors, and Fox has the World Series and a Super Bowl every few years, that could "probably justify $5 per subscriber." CBS Chief Executive Leslie Moonves said at the same conference that he is "rooting" for Carey in the spat. Bob Iger, the chief executive of ABC parent Walt Disney Co. and NBC Universal chief Jeff Zucker have also struck similar tones on the subject.
News Corp. and Fox turned up the volume in its clash with Time Warner Cable, taking out advertisements telling consumers the cable company is trying to take away their favorite shows, such as professional football and "American Idol." Time Warner Cable, for its part, already launched a campaign criticizing programmers for raising costs. Although the company did not mention Fox by name, it's pretty clear who the advertisements are aimed at. Fox is looking for $1 per subscriber, per month from Time Warner Cable to carry its local TV stations, including KTTV-TV Los Angeles.
Usually these disputes are resolved before a signal gets pulled. The last major battle that resulted in a channel going dark was in 2000, when Disney pulled ABC's signals off Time Warner Cable during the May sweeps.
However, with Fox asking $1, Pali's Greenfield thinks this time the signal will go off. Fox, he says, has the leverage, but it is not a one-sided battle. And if both sides refuse to back down, they run the risk of government intervention. Then they both lose.
-- Joe Flint
Photo: Chase Carey; credit: Fred Prouser / Reuters