Execs Square Off Over Retrans Fees

Jun 13, 2005  •  Post A Comment

Could the television industry be in for another round of the content-versus-distribution battle?

As the topic of broadcasters being paid retransmission fees begins heating up, a top executive from each side of the fence drew a line in the sand at a media conference last week, with Viacom co-President and co-Chief Operating Officer Leslie Moonves last week repeating his commitment to pursue retransmission fees from cable operators, while Time Warner Cable CEO Glenn Britt indicated he would resist making such payments to broadcasters.

The executives’ comments, made during a New York media conference sponsored by Deutsche Bank, set the stage for what could be a battle royal between the owners of content and those who distribute the content. The flare-up could reopen wounds that only just healed following the battle between cable programmers and cable and satellite operators over mounting programming fees.

Mr. Moonves, whose company is mulling a split of its broadcast properties and cable assets into two separate companies, said that though it might take three to five years before he can start charging cable to carry the CBS and UPN signals, it’s a goal he intends to achieve.

“It’s a new day, and I want to get paid for my programming,” Mr. Moonves said.

“We’re tired of not getting paid or not getting paid properly for the CBS programming,” he said. “We’ve invested a lot of money in the [National Football League], David Letterman and ‘CSI.'”

For his part, Mr. Britt at the same conference said that the idea of paying the broadcasters cash to transmit their broadcast signals is something “in our interests to resist, so we’ll have tough negotiations.”

In addition, Mr. Britt noted that he thinks the regulatory environment for broadcasters might not be hospitable to their attempts to get compensated for retransmission consent, given the broadcasters’ resistance to immediately returning broadcast spectrum once they convert to digital and general concerns among lawmakers and regulators about indecency on TV.

He also noted that should retransmission fees become a reality, the cost of paying the broadcasters would likely be passed on to consumers, which he predicted would transform an industry battle into a political hot potato, much as the programming-fee fight did.

As things stand today, none of the broadcast networks collects a fee from cable or satellite operators, and Mr. Moonves himself has acknowledged that it would be three to five years-when current contracts expire-before his efforts are likely to bear fruit.

But under the 1992 Cable Act, which attempted to level the playing field between cable and broadcasters, broadcasters can choose either to be classified with must-carry status, which forces cable operators to carry them, or to have retransmission consent, which allows a broadcaster to be compensated by a distributor and grants the broadcaster the right to withhold the signal to the cable or satellite operator if no compensation is made. The broadcast networks have chosen retransmission consent, but instead of cash, used the arrangement to barter with cablers for carriage of new cable networks owned by the same corporate parent.

CBS is the exception, since the network didn’t own cable properties at the time. However, since its merger with Viacom in 2000, CBS has figured prominently in negotiations with Viacom’s cable properties, which include MTV Networks and BET. However, most Viacom executives think the opportunities to use that kind of leverage have run out.

Mr. Moonves’ desire to get paid by cable and satellite operators is the latest demand for compensation from broadcasters. Station group Nexstar Broadcasting is locked in a battle over retransmission fees with cable operators Cox Communications and Cable One, which have refused to compensate Nexstar for the retransmission of its stations’ signals in four markets. As a result, Nexstar pulled its signal from the cable operators’ lineup and has since struck deals with satellite operators.