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Editorial: Broadcasters shouldn’t turn to D.C. for help

Jan 21, 2002  •  Post A Comment

Network and station executives, scrambling to develop new sources of income to help shore up shrinking profit margins, have set their sights on cable-specifically on trying to get compensation from the cable industry in return for letting cable operators carry their signals.
That appears to be the central idea to emerge from behind-the-scenes meetings that have been going on for the past six months among representatives of all four major networks and a number of large station groups.
The executives at these talks are some of the same people who dropped out of the National Association of Broadcasters in recent years because of conflicts between the networks and stations. Now they say they’re willing to put their differences aside and work together toward mutually beneficial goals.
That’s a commendable position, but they may be kidding themselves about their chances of squeezing retransmission fees out of cable operators.
Broadcasters are still smarting from having blown the opportunity to establish a more favorable relationship with the cable industry years ago, when cable was just getting on its feet. News Corp. President Peter Chernin, one of the principals in the recent talks, was himself among the industry leaders who helped shape the relationship in the early days, opting to forgo retransmission payment in favor of getting free carriage for the networks’ fledgling cable channels.
That arrangement has worked out pretty well for the networks. Thanks to cable, network-affiliated channels such as MSNBC and Fox News Channel have grown into lucrative revenue sources of their own.
But as the cable pie has grown, broadcasters have increasingly craved a bigger piece of it. And now that the cable industry has developed into a more formidable negotiating force, those same broadcasters who failed to get the kinds of deals they wanted years ago are hinting they may take their case to the government to force the powerful cable operators to cooperate this time.
That would be a bad idea. For one thing, it would be next to impossible to convince Congress to start pushing around the cable industry, which has one of the most powerful lobbies in Washington. But more to the point, the government doesn’t have any business getting involved in what amounts to a market issue, which should be decided in open negotiations between broadcasters and cable operators.
If broadcasters want to reap greater profits from cable, they would be wise to show some of the kind of creative business thinking that helped build cable into a moneymaker in the first place. They shouldn’t waste their time running to Congress for help.