Sinclair wants stations to unite

Dec 2, 2002  •  Post A Comment

In a call to arms, a top Sinclair Broadcast Group representative last week urged TV stations to band together to force cable operators to pay for the right to retransmit broadcast digital television signals.
“All we need to do is stop being wimps,” said Nat Ostroff, Sinclair VP of new technology.
Under long-held conventional wisdom in the broadcasting industry, cable operators owe broadcasters because they make money by selling program packages that include broadcast signals to consumers.
The Cable Act of 1992 cleared the way for broadcasters to demand a cut from cable for retransmitting their signals.
But efforts to collect have fizzled thus far because major broadcast networks have opted to accept the opportunity to launch new cable networks in lieu of cash.
According to Mr. Ostroff, broadcasters have a fresh opportunity to collect today, because they’re now launching DTV operations.
“I think they [cable operators] want it [broadcast DTV] and they’re trying to hide it,” Mr. Ostroff said in an interview.
“The economic risk [to broadcasters] is zero because we’re not getting any revenue for digital now,” he added.
Mr. Ostroff also said that markets with at least two broadcast duopolies [dual TV station ownerships] would be in a particularly good position to bargain with cable operators without running afoul of antitrust laws.
“Like airlines, one might follow the other,” he said. “It just takes someone to make the first move.”
He said further relaxation of broadcast duopoly rules-to permit a single broadcaster to own three or more TV stations in the same market-would give individual broadcasters even more clout.
“Our focus is get deregulation so we can compete effectively with monopolies,” said David Smith, Sinclair CEO, at a financial seminar hosted by Bear Stearns in Washington last week.
Added Mr. Ostroff, “This creates a huge incentive for broadcasters to build out their digital plant, and the second revenue stream from cable will pay for it.”
Mr. Ostroff also said that cable industry use of broadcast signals without fair pay is the “functional equivalent of theft.”
“Of course we shouldn’t give our digital signals away,” said Jeff Smulyan, chairman and CEO of Emmis Communications and another longtime advocate of retransmission consent payments.
Also creating incentive for broadcasters to get payments is a consensus that the market is already saturated for the cable networks that major broadcasters might get instead of cash retransmission consent payments.
“If Sinclair doesn’t want to make its free over-the-air digital TV signal available for cable carriage, that’s its choice,” said Rob Stoddard, a spokesman for the National Cable & Telecommunications Association. “Channel capacity is limited, and there are plenty of other programmers and broadcast stations vying for digital cable carriage.”