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First Quarter Results Affirm TV Stations' Pricing Power Over Small Cable

Retransmission Consent Price Hikes Posted By TV Stations In 2009

PITTSBURGH, May 7, 2009 -- Financial results for the first quarter in 2009, one of the softest economic periods in decades, produced excessively large retransmission consent gains for several local TV station groups, further bolstering the American Cable Association's contention that the retransmission consent process is broken.

In recent weeks, several publicly traded TV station groups reported their January-to-March earnings, with each one breaking out its retransmission consent revenue gains on a percentage and dollar basis. The results ranged from truly excessive to borderline obscene.

Leading the pack was Journal Communications, Inc., which reported a whopping 333.3% gain in retransmission consent revenue, bringing the total to $1.3 million.

Next was Hearst-Argyle Television, Inc., with a rise of 97.8%, to $12.4 million.

LIN TV Corp. followed with an increase of 82%, to $8.9 million.

Belo Corp. was up 10%, to $9.7 million, and Sinclair Broadcast Group, Inc., reported a 7.5% increase, to $21.1 million.

"When cable customers want to know why their bills keep going up, all they need to do is look at how TV stations exploit retransmission consent to squeeze every penny they can from pay-TV providers, especially ACA's small, independent cable companies," ACA president and CEO Matthew M. Polka said.  "Not only do these excessive carriage fees drive up the cost of subscription TV, but small cable operators then have less money to invest in their networks to deliver more channels in HD, faster broadband Internet speeds and advanced phone services with multiple low-cost features."

Under retransmission consent rules and other Federal Communications Commission regulations, network-affiliated TV stations have been granted both the exclusive right to distribute popular network programming within their television market, and the right to demand payment from cable and satellite operators.  In today's competitive subscription video marketplace, the broadcasters can make take-it-or-leave-it offers, particularly against operators with a de minimis presence in their market.

These broadcasters also maintain the right to pull their signals from any pay-television customer whose provider refuses to accept the broadcasters' prices, terms, and conditions.  In 2008, there were millions of customers who lost access to broadcast service as a result of broadcasters' pulling signals during retransmission consent disputes.

For many years, ACA has urged Congress to review the impact of retransmission consent rules and regulations on pay-TV consumers as TV stations steadily increased their cash demands on small cable companies.  With a strong focus on ensuring its members have access to the American Recovery and Reinvestment Act's $7.2 billion in grants and loans to improve nationwide broadband deployment, the ACA has been monitoring the retransmission consent issue this year.

"Congress expressed its desire not to address retransmission consent as part of this year's Satellite Home Viewer Act (SHVA) reauthorization, and ACA will respect that wish and not push for Congressional action in 2009.  However, long term ACA remains committed to finding a solution to this problem," Polka said.

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About the American Cable Association

Based in Pittsburgh, the American Cable Association is a trade organization representing more than 900 smaller and medium-sized, independent cable companies who provide broadband services for more than 7 million cable subscribers primarily located in rural and smaller suburban markets across America.  Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business.  For more information, visit http://www.americancable.org/

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