The Retransmission Fee Mess

The economics of the broadcast television industry has been under stress since the US rolled in to recession in 2008. That horrible year saw a perfect storm of negative activity as the financial, automotive, and retail sectors all were hit hard by layoffs and tightening of consumer spending, resulting in millions of dollars in lost TV advertising at the local level.

TV stations held on, thanks to the 2008 political races. In 2009 the recovery began, but most GMs will tell you that the situation is nowhere back to 2007 levels. A bright spot in all of this has been an increase in retransmission fee negotiations with cable and satellite operators.

Now, the networks, led by CBS CEO Les Moonves, and Disney CEO Bob Iger, wants a big chunk of that change. (see http://www.broadcastingcable.com/article/457399-Iger_Affiliates_Retrans_Payments_Will_Grow.php for the latest on this story). The networks point is a valid one--their programming is probably one of the main reasons people watch local TV.

But the networks are also discounting the importance of local news and other local programming which of coures is where the value is at in local television. So now, local affiliates have grinding negotiations to deal with at the local level, knowing full well that the networks are going to want a big piece of the action. This is playing out locally in my market as I write this, as Belo is in heavy negotiations with Time Warner regarding carriage of Belo's 18 TV stations. If no deal is reached by Saturday, Belo will pull their signals from TW's cable lineups (see http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-timewarner_21bus.ART.State.Edition1.270af23.html)

Of course, much of this money being swapped between affiliates, cable/satellite/IPTV providers and now the networks will raise costs for programming that will ultimately be paid for by the consumer. So our bills will rise, with few looking out for the consumer and social policy. Can't afford cable? Too bad. Get an antennae.

It's a lousy system for everyone. It's a system built on greed. Right in line with the return this week of Gordon Gekko, who coined the phrase "greed is good" in the original Wall Street movie starring Michael Douglas.