What's On My Mind As 2012 Begins

For the first column of the year, it would be altogether fitting and proper for me to give you a pep talk pointing out the positive economic trends, technological developments and industry initiative that will make 2012 a winner for broadcasting. But TVB has already done that. So what I think I'll do is comment of several matters that have been on my mind over the holidays and that don't quite rise to the level of their own columns.

Can dereg be too much of a good thing? Although they rail against it, broadcasters really like government regulation as long as it the right kind of regulation. This truth was brought home by the NAB's glib dismissal of the dereg bill floated last month by Rep. Steve Scalise and Sen. Jim DeMint.

The measure would eliminate all the broadcast ownership rules and toss out the compulsory license along with must-carry and retransmission consent that depend on the license.

If enacted, the legislation would rock the regulatory foundation of broadcasting and cable. That's way too scary for many broadcasters. They don't want any tampering of the retrans/must-carry regs, especially now that they have turned retrans into a nice revenue stream. And a lot of broadcasters are comfortable with the ownership rules just as they are.

But a wholesale deregulation bill is something that broadcasters should think about. Most broadcasters could get along at least as well as they do today without the compulsory license and retransmission consent. If those government artifices went away, they would be replaced with a conventional copyright regime that would turn each TV station into a local cable network. And like a cable network, the station could negotiate for programming fees just as they now do for retrans fees. It's all the same. And cable networks get a lot more money per rating point via copyright than TV stations do via retrans.

The only stations that get hurt in this brave new world are those that are too weak or too unpopular to negotiate for carriage on cable. These are the ones that now rely on must carry. You've got to ask yourself: If they don't have enough viewership to get carriage on their own merit, why should the government mandate it? Plus, must carry has always been constitutionally suspect.

I understand that the Scalise-DeMint legislation was cooked up by cable operators trying to gut broadcasters' retransmission rights (see below), but they may be wrecking a system that could be replaced by another than puts them at an even greater disadvantage.

Lobbyist, heal thyself. The American Television Alliance is the faux-grassroots organization of cable operators and networks that is pushing for retrans reforms so they can better withstand broadcasters' demands for retrans fees.

Among its tactics is to scream every time a broadcaster and cable operator fail to reach a retrans agreement and point out how much pain the loss of broadcast signals is causing the affected citizenry.

One problem for ATA is that it hasn't had much to scream about. Virtually all the retrans contracts that expired at the end of 2011 were quietly renewed as usual.

Another problem is that the biggest and ugliest carriage dispute of the holiday season had nothing to do with retrans. It was Time Warner Cable's refusal to meet Cablevision demands for higher fees for its two MSG regional sports networks in New York, thus depriving local fans of access to their beloved Knicks and Rangers.

The spat is nasty, with Time Warner Cable's Glenn Britt at one point saying that sports channels should be relegated to pay tiers.

And, yes, you lovers of irony, Time Warner Cable and Cablevision are both members in good standing of the American Television Alliance.

What's good for the goose... Cable operators who can't stand the thought of paying the local network affiliates the same as they pay TNT or TBS also kvetch that it's not fair that two affiliates in a market working together under a shared service agreement may negotiate jointly for retrans payments. It's two against one, they whine to the FCC and whomever they can get a meeting with on the Hill.

Well, here's something the lawmakers and regulators may not know. Time Warner Cable, the fourth largest satellite/cable operator (12.2 million subs), represents Bright House Networks, the 10th largest satellite/cable provider (2.1 million subs), in all retrans negotiations. That's quite a lot of negotiating clout in the hands of Mr. Britt and company.

And, yes, you lovers of irony, Bright House is also a member of the American Television Alliance.

CBS goes from station seller to station buyer. It was good to see some action in the station trading market in the last few months of 2011. It shows that there are still strong believers like Scripps and Sinclair willing to make big bets on the future of the business by paying fairly high cash flow multiples (9 or 10 times, by my reckoning). Sinclair was the most aggressive buyer, laying down nearly $600 million for the Four Points Media and Freedom groups.