In Depth

Disney Waives Retrans Consent Charges for Small Cablers

The Walt Disney Co. is making a significant gift to 91 small cable operators in the markets served by the 10 local TV stations Disney’s ABC owns and operates: No retransmission consent charges or requirements to carry additional Disney-affiliated networks for three years.

A representative of the recipients, which make up about 80% of the cable companies in the ABC O&O markets and fewer than 1% of the cable subscribers in the U.S., called the offer of exemption “a drop in the bucket.”

Disney’s unilateral decision, which would be in force from 2009 through 2011, was announced Tuesday.

“We are very pleased to support our smaller affiliates with this offer,” Preston Padden, Disney’s executive VP for government relations, said in a statement. “American Cable Association President Matt Polka, the ACA board and each of the FCC commissioners deserve credit for raising the concerns that led our company to adopt this new policy.”

Mr. Polka said “thanks” and then some.

“Today is a banner day for the cable industry,” Mr. Polka said in a response issued by the ACA. “A major broadcaster and programmer has finally admitted that the retransmission consent market is broken and does not work the way Congress intended.”

The ACA represents some 1,100 smaller and medium-sized, independent cable companies that provide broadband services for more than 7 million cable subscribers, primarily in rural and smaller suburban markets.

Mr. Polka said the Disney offer is “a first step in the right direction” toward relief for operators who often feel pressured into paying for services customers don’t want in order to retain programming with broader interest. “But to be honest, it is a very small step.”

Without relief from Congress and the Federal Communications Commission on the requirements that broadcaster must be compensated by cable operators for using their signals, he continued, “Disney’s announcement is only a public relations ploy that amounts to far too little relief for far too few operators.

“This is a drop in the bucket for operators and for subscribers,” Mr. Polka concluded.

Mr. Padden seemed taken aback by the tenor of the ACA response, since the Disney offer was aimed at the “genuinely, truly small” operators the ACA has said need relief from the financial burdens of retransmission consent negotiations.

“I don’t know how we could be more responsive,” Mr. Padden told TelevisionWeek Tuesday.

He also said the Disney move grants the relief the ACA seeks “without in any way undermining the principle of retransmission consent.”

The FCC has been sensitive to the pleas of small cable operators, and the Disney announcement “is getting very good reaction from the FCC,” Mr. Padden said.

As for the ACA, Mr. Padden said it appears the organization “is tying the wants of its big members to the needs of its small members. Maybe we need an a la carte rule for the ACA.”

The Disney plan resembles one forced on Fox Broadcasting in 2003 when parent company News Corp. acquired about 34% of DirecTV, the largest satellite programming provider in the country. One of the conditions on which approval of the deal was contingent said that cable operators that have 5,000 or fewer subscribers and that are in the markets of the TV stations Fox owns and operates get no-fee retransmission consent.

(1:50 p.m.: Added final paragraph)