You know how a lot of consumers are fed up with rising cable bills, excessive program bundling, and limited access to TV shows? It turns out independent cable operators feels the same way.
Over and over and over at today’s American Cable Association Summit – a policy-driven event put on by the independent cable organization – I heard frustration about the state of the pay-TV business from small cable companies who feel outgunned in a market where the content bills just keep going up. Indie operators have two main complaints, and they’re both related. First, they have no leverage in licensing retransmission agreements because content owners can threaten TV blackouts. Second, in some markets, broadcasters are working together to set licensing fees, a practice the cable operators consider to be collusion. According to Wide Open West CEO Colleen Abdoulah, collusion is taking place in 20% of TV markets and is driving up retransmission costs by at least 22%.
Abdoulah describes the situation very succinctly. It’s an isue of media ownership. Because ownership has consolidated over the years, media companies have been able to bundle popular content with shows operators might otherwise not buy and charge for both. In theory the media companies are supposed to negotiate in good faith with operators to make content available, but as I overheard one person say in a hallway at the summit, there is no good, there is no faith, and there is no negotiation.
The result? More TV blackouts and higher subscription costs for consumers. Retransmission issues are also slowing the progress of TV Everywhere rollouts as programmers waffle about whether and how to give up content streaming rights.
Now, keep in mind, the sentiments today were all being expressed at a cable event. No doubt broadcasters have their own complaints about dealing with the pay-TV providers. But it’s clear from the continued rise of licensing fees that power is currently with the programmers.
As for what to do about the situation, ACA members are pleading with the FCC and Congress to reform retransmission consent rules. While the ACA is generally not in favor of federal regulation, the association consensus is that there’s no genuine fair market today. And given that fact, the ACA would love for government to step in and even up the playing field. As ACA president Matthew Polka puts it, there’s a crisis coming. And despite my willingness to fork over cash for sports programming, even I have a threshold. Consumers won’t keep paying more for cable TV. Eventually something will have to give.