Standoffs like the one between Cox Communications and the local NBC affiliate that has kept most Baton Rouge cable customers from watching WVLA since New Year’s Day — including Sunday night’s NFL game — are a sign of a changing TV landscape.
In 2015, there were 191 cases of local networks blacking out their broadcast signals to cable and satellite companies, according to figures from the American Television Alliance, a coalition of cable, satellite and telephone companies. That compares with 107 blackouts in 2014.
This isn’t the first time that a dispute has kept a broadcast station off the air locally. At the start of 2013, a dispute between Raycom Media and Cox kept WAFB off the cable lineup for four days.
White Knight, the parent company of WVLA and its sister station, KZUP, also stripped from Cox’s lineup, said it wants Cox to pay “fair market value for the NBC and local programming” it brings to viewers. In a statement posted on its brproud.com website, the company notes that Cox pays more than $7 per subscriber to carry ESPN and more than $1.65 for TNT.
White Knight did not disclose how much it’s asking Cox to pay to resume retransmitting its programming. Company officials did not respond to repeated phone calls from The Advocate.
Sharon Bethea, a Cox spokeswoman, said that White Knight wants the cable provider to pay a retransmission fee that’s triple the current cost.
Retransmission fees have become an important source of profit for broadcasters, who have seen ad revenue dwindle, and is a growing source of contention with satellite and cable companies.
“It’s a cash cow for them,” said Trent Duffy, a spokesman for the American Television Alliance. Duffy said local broadcast stations have become “more aggressive than ever” about demanding higher fees.
Retransmission fees hit $6.3 billion in 2015, according to SNL Kagan, which tracks the cable industry. At the current rate, the fees are expected to top $10.3 billion five years from now.
Traditionally, cable and satellite systems were required by law to carry local stations. Under 1992 rule changes, local stations are allowed a choice.
Stations can either give their signals to cable companies, in which case they must be carried, or stations can choose to negotiate a separate agreement, usually for money or splitting commercial time with the cable company.
Those rule changes went into effect when the landscape for cable TV was far different, Duffy said. It was a time before smartphones, before video on demand and streaming services being offered on network websites and through platforms such as Netflix, Hulu and Amazon Prime.
“These are horse-and-buggy rules in a rapidly evolving industry,” he said.
Because networks such as WVLA are carried for free over the air, Duffy said cable companies shouldn’t have to pay to broadcast them.
Also under the current system, cable providers have to include local broadcast channels as part of the basic tier of service. That’s a move that clearly drives up cable costs because customers have to pay the transmission costs, said Ted Hearn, a spokesman for the American Cable Association.
“Broadcast and cable programmers are demanding too much money in a market environment where consumers are demanding more choice and options to escape the big bundles that the broadcasters and cable programmers want to retain at all costs,” Hearn said.
But the National Association of Broadcasters said retransmission fees are critical for local stations, which are sources for community news and emergency information. The NAB notes that the vast majority of agreements are quietly reached between cable companies and local stations without service interruptions.
In a statement on its website, the NAB accuses cable companies of not wanting to fairly compensate broadcast stations that provide top-rated content. And while cable and satellite companies complain about rising programming costs, the NAB notes that their bottom line has gone up. AT&T/DirecTV had $33.3 billion in revenue in 2014, while Time Warner Cable’s revenues were $22.8 billion.
“Eliminating broadcasters’ ability to negotiate for the value of broadcast signals would mean less choice for viewers and fewer resources for stations to dedicate to local news, public affairs programming, coverage of emergency weather events and community activities,” the NAB said.
Follow Timothy Boone on Twitter, @TCB_TheAdvocate.