Top network and station executives have been meeting behind the scenes for the past six months to figure out how broadcasters can tap a second revenue stream, said executives who have attended the meetings.
Sources said that one idea some representatives of the group have been promoting would be to find a way to force cable operators to pay for the retransmission of broadcast signals.
But the group has also been considering additional options, including deriving new revenue streams from digital spectrum or providing additional services for cable.
“We’re trying to figure out where the business is going,” said Peter Chernin, News Corp. president and chief operating officer, who sources credit with playing a key leadership role in the initiative.
The group includes representatives from all four major networks, Tribune Broadcasting, Belo, Hearst-Argyle Television, Post-Newsweek Stations, Cox Broadcasting and Emmis Broadcasting. The networks and some of the groups have been at each other’s throats over a series of issues the past couple of years, including affiliate compensation.
But according to Mr. Chernin, they’ve come together now out of the realization that they’re all in the same boat and need to forge a unified vision of the industry’s future together.
“Let’s spend our time talking about the issues that unite us,” Mr. Chernin said. “Let’s just put the issues that divide us aside.”
Jeff Smulyan, chairman and CEO of Emmis Broadcasting, who has also taken a leadership role in the unofficial organization, said, “What we’re saying is let’s study the problem and let’s look at all the issues facing over-the-air TV.”
Mr. Smulyan has made clear he believes that getting a piece of the cable pie should be a broadcaster’s key goal. But Mr. Chernin said the group had made no decisions about potential actions. Indeed, News Corp., which has a variety of cable networks, is not anxious to promote a solution that would alienate the cable TV industry.
“Most of us don’t think a solution is to sort of declare war between the broadcasting and cable industries,” Mr. Chernin said. “It certainly isn’t a solution for Fox.”
The concept of forcing cable operators to pay for retransmitting broadcast signals also has the enthusiastic endorsement of David Smith, president and CEO of Sinclair Broadcast Group, who is not part of this new alliance. Sinclair owns or operates 63 TV stations.
“The single-largest issue facing us, independent of the economy, is the ability for us as an industry to get to the real value of what we deliver to the consumer by being paid for it,” Mr. Smith said.
The fact that this group of broadcasters has formed an alliance is somewhat surprising because all the networks except ABC bailed out of the National Association of Broadcasters over the past several years because the NAB’s affiliate-dominated board forced the organization to fight a network effort to loosen station ownership rules.
As of last week, the retransmission issue did not even appear to be on the NAB’s radar screen.
Any moves on the issue would also be met by screams of bloody murder from the cable industry on grounds that it would force additional rate increases.
Said Marc Smith, a spokesman for the National Cable & Telecommunications Association, “Anything that increases the costs to our customers would be of great concern to us.”