Remember the Great CBS Blackout of 2013? The one where Time Warner Cable and CBS couldn't come to an agreement on content fees and CBS pulled its programming for a month? Hundreds of thousands of Time Warner Cable subscribers abandoned the company before it was over. It was a painful month. For a while, it looked more like a war of attrition between two of the country's biggest media titans than what it really was: a simple disagreement over content fees.
The dispute ultimately hurt TV watchers like you and me. So, federal regulators are trying to clamp down on the underlying issue in a move that could limit the risk of such blackouts in the future.
The Federal Communications Commission signaled on Thursday that it wants to end TV stations' ability to jointly negotiate content fees with cable companies, a tactic that the FCC says has helped drive up the rates that Comcast, Time Warner Cable and other providers must pay broadcasters in exchange for their programming. Known as "retransmission consent," the arrangement has been an incredibly lucrative one for TV stations, as the Pew Research Center notes.
FCC chairman Tom Wheeler says he's intent on slowing the rise of retransmission fees.
"The cost of these 'retransmission consent agreements' has skyrocketed from $28 million in 2005 to $2.4 billion in 2012 — a nearly 8,600 percent increase in seven years," Wheeler wrote Thursday on his blog. "When broadcasters and cable or [satellite] operators fight, consumers take the blows."
The research group SNL Kagan estimates that if nothing changes, broadcasters could make as much as $7.6 billion by 2019 from such fees.
Cable companies, Wheeler added, have been passing on the costs of those agreements to consumers, meaning higher bills for pay-TV viewers.
The broadcast industry denies that it's responsible for the rapid rate of fee increases, pointing Friday to a chart implying that cable prices have generally risen faster than inflation.
"It is utterly disingenuous for policymakers and the Big Cable lobby to suggest that broadcasters are the cause of rising cable rates," said Dennis Wharton, a spokesman for the National Association of Broadcasters. "Cable TV companies have been gouging subscribers with jarring rate hikes long before broadcasters began receiving modest compensation for the most-watched programming on television."
Broadcasters stand to lose some of their leverage as a result of the proposed ban on joint bargaining, said Brent Skorup, a policy analyst at George Mason University's Mercatus Center.
"Blackouts will never totally disappear, but retrans payments make them more frequent," he said.
Taking the sting out of retransmission fees — by forcing TV stations to negotiate individually with cable companies — could help ward off the worst disputes between networks and cable companies. And that could mean fewer events like the CBS blackout.