This shows up during contract renegotiations. Programmers are demanding that USA Communications pay exorbitant rate increases for certain networks that can be as high as 300%. Ultimately our customers have to pay for some of this cost as well. In addition, many programmers engage in a practice known as "bundling." They use their market power to force cable operators to carry networks with low viewership in exchange for continued distribution of their most highly desired channels. And while they may make their most popular channels available on a standalone basis, often the price to carry just the channels you want is much higher than the "bundled" deal they present.
Of the various cable networks, sports channels are among the most expensive. We think a reasonable solution is to give customers choice and offer a separate package of sports channels. Unfortunately, the sports networks absolutely will not agree to this solution, and consequently all Basic Cable customers are forced to subsidize their costs.
Broadcast TV stations represent a unique situation where the contracts are known as "retransmission consent agreements." Basically, about every three years, we must negotiate with broadcasters for the right to distribute their signals which are otherwise available to you for free over the air with a digital converter. As with other programmers, broadcasters are also making demands with exorbitant price hikes that we feel are unjustified. Without effective regulatory oversight, it's becoming more common for a single media company to own or control two or more of the major broadcast stations in the same market. This type of market power will undermine cable operators' ability to keep prices in check for customers.
We never want you to lose your programming and we will never remove a channel so long as we are actively engaged in good faith negotiations. However, broadcasters and programmers have the power to black us out. Don't let that happen. You have a voice. Visit americantelevisionalliance.org to express your concerns to your local Congressional representatives. Reform to protect customers is more likely to happen if you take action. It's important to acknowledge that we won't agree to a deal that we think is not in our customers' best interests. We're committed to providing a fair price-value to all of our customers, and there may be times when we simply cannot reach terms that we can agree to. If we are ever forced to drop a channel, we will notify our customers and do our best to share with you our reasons for the drop.
This a complicated issue and there are plenty of sources where you can learn more about the topic. Here are just a few:
• An article written by Jack Fields who represented the 8th Congressional District of Texas in the U.S. House of Representatives from 1980 to 1997 and was Chairman of the Subcommittee on Telecommunications and Finance during part of that tenure, from 1995-1997. Click here to read.
• An associated press article explains the issues surrounding retransmission consent and the ultimate impact to the customer. Click here to read.
• The Washington Post covers recent disputes and lawmakers response to the regulatory environment that allows for these disputes. Click here to read.
• See what congressional representatives are saying about the need for reform. Click here to read.
What is retransmission consent?
Since 1992, television stations have been authorized by the U.S. Congress to grant or deny permission for a cable television system to carry their signals. This right is renewable every three years. The broadcaster's agreement is up at the end of 2011 and they have threatened to deny us the right to retransmit their signal on our cable systems unless we pay an exorbitant price increase, with little room for negotiation.
How is this any different from cable networks which I know charge a programming fee?
Broadcast channels are available for free over the air if people choose to purchase a digital converter from retail stores to receive their programming. In addition, many of their shows are available for free over the Internet. At USA Communications, we believe we should not have to pay a premium for programming that is available for free.
I already pay USA Communications for cable service, so aren't you just passing their charges on to me anyway?
The price that you pay for USA Communications cable does include the programming fees that we must pay to various networks as well as the cost of operating our business. Wherever we have control over costs, we run as efficiently as possible so that we can provide you with a competitive price-value for our services.
With programming fees, our negotiating leverage is limited. What the broadcasters are demanding is unreasonable, especially for a service that is otherwise available for free. We don't think we or you can afford to absorb their exorbitant demands. Therefore, we will continue to fight for a reasonable increase.
Why shouldn't I switch to another TV provider so I don't have to worry about this?
Every TV provider faces challenging negotiations with programmers, and specifically broadcaster TV stations, across the country. In fact, many TV providers are engaging their customers in similar conversations and encouraging reform in this space. Below are a couple of examples of how other TV providers are addressing this same issue with their customers.
• AT&T U-Verse: We're Fighting For You
• Time Warner Cable: Roll Over or Get Tough