PITTSBURGH, July 6, 2009 -- A new report by respected industry analyst SNL Kagan projects that retransmission consent revenue is expected to soar to $1.2 billion by 2011, results that are troubling for cable customers in smaller markets and rural areas who are expected to bear a larger percentage of those increases than those in urban areas. A recent American Cable Association member survey showed that broadcasters discriminate against small, independent cable operators in remote areas by forcing them to pay higher retransmission consent fees than operators in urban markets.
"Based on the broadcasters' past practices, SNL Kagan's report indicates that the problems facing consumers in rural America -- where station owners leverage market power and favorable government rules to inflict greater financial harm on the customers of smaller cable providers than on larger operators -- will get significantly worse in the years ahead. Congress must fix a broken retransmission consent process by preventing broadcasters from unjustifiably discriminating against consumers served by cable operators with a small number of subscribers in a local TV market," ACA president and CEO Matthew M. Polka said.
According to published reports, SNL Kagan is projecting that retransmission consent fees will hit $1.2 billion over the next 18 months, more than double the $500 million haul that broadcasters collected last year and up appreciably from the $739 million level expected in 2009.
SNL Kagan's results strongly reinforced key findings in ACA's member survey (available here), submitted to the Federal Communications Commission in May as part of its annual assessment of competition in the multichannel video programming market. ACA's survey showed that small and medium-sized cable operators saw their cash retransmission consent payments leap an incredible 271% from 2008 to 2009.
ACA's survey also documented price discrimination on a percentage basis as major publicly traded broadcast station groups reported first quarter 2009 increases in retransmission consent revenue that came in far below the 271% percent increase experienced by small cable operators. For Hearst-Argyle Television, Inc. retransmission consent revenue was up 97.8%; for LIN TV Corp, up 82%; andfor Belo Corp., up 10%.
The survey, conducted by Clarus Research Group (CRG) in Washington, D.C. was based on responses from about 25% of ACA's 900 member companies.
"After looking at both SNL Kagan's new report and Clarus Research Group's survey for ACA, any fair-minded person would conclude that these hyper-inflationary spikes in retransmission consent fees take a toll on the smallest operators in the market by depleting resources that are needed to offer customers more affordable advanced services, like HD, and deploy to high-speed broadband services in unserved and underserved areas, a goal of the Obama Administration," Polka added.
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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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