A Comcast-Sinclair cash deal would set a major precedent

Contract extended to March 10; experts predict cable operator will pay
By Hanah Cho
Sun reporter
Originally published March 2, 2007

Some analysts say any deal between Sinclair Broadcast Group and Comcast Corp. to carry networks such as Fox on Comcast's cable systems would likely include cash payments for the television programming in what would mark a major precedent in this growing industry battle over fees.

Comcast, the nation's largest cable operator, and Hunt Valley-based Sinclair, one of the country's largest television station owners, extended yesterday their current contract hours before it was set to expire. The March 10 deadline allows Comcast to continue carrying popular shows such as American Idol in the Baltimore region and elsewhere while the two continue negotiations on a new deal.

Both companies said they are having "productive discussions," even though Sinclair had threatened to pull its stations from Comcast's lineup before the extension was granted early yesterday.

Philadelphia-based Comcast maintains it will not pay for programming that is available for free over the airwaves because it would mean higher rates for its customers. In turn, Sinclair has not backed away from its subscriber fee demands.

But analysts say a payment seems inevitable, considering the recent shift toward cash in such deals.

"Comcast is going to end up paying Sinclair some cash," said Marci Ryvicker, a senior analyst at Wachovia Capital Markets, who covers Sinclair. In doing so, Ryvicker said, Comcast would "set the precedent and open the gate for the rest of the industry" in establishing retransmission payments as the norm.

Barry M. Faber, Sinclair's vice president and general counsel, said yesterday that he was optimistic the two companies would strike a "mutually acceptable economic arrangement." But he declined to elaborate on those terms.

"We were able to find creative ways to bridge the gaps that existed between us," Faber said. "Based on the things we've been able to agree on, I'm confident that we will be able to put in place a long-term deal prior to the end of the extension."

Comcast agreed but insisted its position remains the same.

"We continue to pursue our priority to protect our customers from having to pay cash for retransmission consent," said spokeswoman Jenni Moyer.


30 stations involved
The dispute between the two companies involves 30 network-affiliated stations - including Baltimore's WBFF-Fox 45 and WNUV-CW 54 - from cable systems that reach 3.4 million customers in 23 markets from Tampa, Fla., to Pittsburgh to Flint, Mich.

For decades, cable providers picked up local broadcast signals without paying cash. In exchange, cable operators compensated broadcasters in other ways. For instance, cable operators agreed to pay to carry NBC Universal's new channels such as MSNBC while retransmitting NBC stations for free. Companies such as Sinclair typically received advertising slots and better channel locations on cable systems for the free signals.

"The cable operators felt that was fair because at least they were getting some benefit for their customers in the process," said Steve Effros, a Washington-based cable industry analyst and consultant. "Now, the Sinclairs of the world are saying, 'We don't care about giving you anymore benefits.'"


Sinclair takes lead
Sinclair has been at the forefront of this growing industrywide battle. The company expects to double to $48 million this year the revenue it receives from cable operators and others who pay to retransmit its television signals.

Last month, it secured a cash deal from Mediacom Communications Corp. after pulling for almost four weeks more than 20 stations it owns in the Midwest and South from Mediacom's cable system.

In January, Sinclair cut a "mutually acceptable economic" agreement with Time Warner Cable, the nation's second-largest cable operator, for Sinclair's 35 stations. Terms weren't disclosed, but analysts estimate that the deal involved some cash.

Besides Sinclair, other station owners are looking for compensation, including CBS. Network Chief Executive Officer Leslie Moonves has said publicly that it would seek payments for its content.

With more cable operators giving in, analysts say the fight might not be about whether to pay or not, but about a price.


'How much'?
"[Comcast] may not be adverse to paying something," said Craig E. Moffett, a senior analyst of U.S. cable and satellite broadcasting at Sanford C. Bernstein & Co. "What really matters is how much cash for retransmission. More important is how much relative to what their competitors are paying."

The prospect of not being able to watch Fox had left some Comcast subscribers on edge.

Without Sinclair's WBFF-Fox-45, Carl and Lora Hobbs of Mount Airy could not watch their favorite show, 24. They were prepared to use an old-fashioned antenna to pick up the station's signal, but they won't need it for at least a little while longer.

While pleased with the extension, Carl Hobbs said he believes customers are getting stuck in the middle of a fight between two corporate heavyweights.

"We'll have to deal with the consequences," he said. "It'll be where I have to use my antenna, or my [cable] price goes up. It's lose-lose for the customer."

http://www.baltimoresun.com/business/bal-bz.sinclair02mar02,0,5745396.story?coll=bal-business-headlines

You don't really have to steer anything away to another station. If the number of eyeballs drops significantly, they'd just get their spot aired 9 times instead of 6.

There's no reason to speculate, we can just wait and see. If only two months off cable will actually break the back of the local broadcaster, there's not a cableco in the country that wouldn't go 2 months without a major network in order to avoid $18.00 a sub in fees over the next 3 years. We'll see who buckles in the next negotiation, and how long it takes.

How long did Mediacom last?

Granted, the advertiser could get their spot aired 9 times instead of 6 on a station suffering from decreased viewership. Where would the station FIND the time for the extra 3 (unpaid) spots? Would it be from other advertisers that are not purchasing the time? The time has to come from somewhere. Perhaps, they could cut into the program itself.

I suspect only 2 months off cable would break some local broadcasters and not break others. The local broadcaster holds most of the cards under current conditions. Some years ago, the primary NBC station in my State was off for a very short time before they came flying back. In our local economy, a station really needs its advertising. Sinclair and certain financially strong stations could hold out a very long time. I wish some cable system would take them to the wall, ...................... just so long as it is not mine. I don't want to be without MY toys.

Quote:
Originally Posted by Stan54
Really, Mr. FanAtic, you are very fast, but you're not all that smart.


Another one of your statements not based in reality.

I based my statement on Mr. FanAtic's demonstrated inability to interpret what I wrote.

A basic concept Stan54 never gets.

Oh, I get THAT limited concept.

2 years ago my take was that Comcast was right and Sinclair was greedy.

2 7% hikes in my rates with minimal additions makes me side with Sinclair. Comcast, take 50 cents from my $120 a mo and give each of the Big 4 their money. After all, I watch their stations the most anyways.

Greed is not the issue. The two sides are engaged in business and the whole idea is to make revenue as MUCH as possible and expenditures as LITTLE as possible.

I suspect only 2 months off cable would break some local broadcasters and not break others.
So did you just pull this number out of thin air or do you have some reason to believe it is this number?

Granted, the advertiser could get their spot aired 9 times instead of 6 on a station suffering from decreased viewership. Where would the station FIND the time for the extra 3 (unpaid) spots? Would it be from other advertisers that are not purchasing the time? The time has to come from somewhere. Perhaps, they could cut into the program itself.


As always, your ignorance is showing. NBC held back over 10% of the spots on the Olympics to see how much bonus weight they would have to throw in.

Positions are always held back. Why do you think you see so many Station Promos and Upcoming Programming Advertisments?

I guess the good news for you at 70 is that you don't have to worry about it as no one is programming to a 70 year old anyway.

As just one current example, the Spokane WA Fox station (fighting with TWC) has been off cable since Dec. 19, 2006 and shows no signs of caving.

Quote:
Originally Posted by Stan54
Really, Mr. FanAtic, you are very fast, but you're not all that smart.


Another one of your statements not based in reality.

I based my statement on Mr. FanAtic's demonstrated inability to interpret what I wrote.

Let me bottom line it for you.

1) This Sinclair Mediacom worked out the way I said it was going to work out, not the way you said it was going to work out.

2) TWC worked out the way I said it was going to work out, not the way you said it was going to work out.

3) Comcast WILL work out the way I said it is going to work out, not the way you said it is going to work out

4) No Station of the big 4 networks that has held out for compensation on cable has caved in after retransmission rights have been pulled

Please show us with your unique 70 years of experience, where you have laid out exactly what would happen with a major issue in Broadcasting and turned out to be correct.

Can you understand that basic, limited concept?

SHOW US THE PROOF or don't go trying to sell us your opinion based on your business savy because right now you are batting ZERO with your opinions turing into fact.

So did you just pull this number out of thin air or do you have some reason to believe it is this number?

Oh yeah, EXACTLY 2 months. Not one day more or one day less.

No, homecom, if you recall, I was saying that I did not claim immediate effect. As a result I talked about an example where you go from a few days up to two months. That was only an example. It could have been an example of 3, 6 or more months.

Oh yeah, EXACTLY 2 months. Not one day more or one day less.

No, homecom, if you recall, I was saying that I did not claim immediate effect. As a result I talked about an example where you go from a few days up to two months. That was only an example. It could have been an example of 3, 6 or more months.
So what your saying is you don't know. It could be 3 days, 3 months, or 3 years. I understand it was an example, but what are you basing the time frame on. So far it appears to be nothing.

BTW, its HOMCOM, not homEcom.

As always, your ignorance is showing. NBC held back over 10% of the spots on the Olympics to see how much bonus weight they would have to throw in.

Positions are always held back. Why do you think you see so many Station Promos and Upcoming Programming Advertisments?

I guess the good news for you at 70 is that you don't have to worry about it as no one is programming to a 70 year old anyway.

Please, deal with where the station would find the time for the 3 unpaid advertising spots. (Why don't the stations sell the time used for station promos and upcoming programming advertisements. A direct sale of time has to be better than holding back positions for business that didn't work out.)

Careful with references to old age. Mr. Panther will be asking you if you are actually an adult after a comment like that.

So what your saying is you don't know. It could be 3 days, 3 months, or 3 years. I understand it was an example, but what are you basing the time frame on. So far it appears to be nothing.

BTW, its HOMCOM, not homEcom.

Sorry, HOMCOM, that was an error on my part.

The example was based on pure personal speculation to illustrate a thought. Please do not carve it in stone.

As just one current example, the Spokane WA Fox station (fighting with TWC) has been off cable since Dec. 19, 2006 and shows no signs of caving.

Wow! This is interesting. Maybe there is hope yet. You indicate the station shows no sign of caving. How about TWC?

Please, deal with where the station would find the time for the 3 unpaid advertising spots. (Why don't the stations sell the time used for station promos and upcoming programming advertisements. A direct sale of time has to be better than holding back positions for business that didn't work out.)

Stations don't sell all of the commercial time because they know stuff happens sometimes outside of their control that means they can't deliver as promised to their advertisers. Breaking News, Presidential Speeches, Underperforming programs, master control mistake. Those are just some of the reasons why they don't sell all of the time.


Careful with references to old age. Mr. Panther will be asking you if you are actually an adult after a comment like that.
I don't think we will have to worry about that.

Let me bottom line it for you.

1) This Sinclair Mediacom worked out the way I said it was going to work out, not the way you said it was going to work out.

2) TWC worked out the way I said it was going to work out, not the way you said it was going to work out.

3) Comcast WILL work out the way I said it is going to work out, not the way you said it is going to work out

4) No Station of the big 4 networks that has held out for compensation on cable has caved in after retransmission rights have been pulled

Please show us with your unique 70 years of experience, where you have laid out exactly what would happen with a major issue in Broadcasting and turned out to be correct.

Can you understand that basic, limited concept?

SHOW US THE PROOF or don't go trying to sell us your opinion based on your business savy because right now you are batting ZERO with your opinions turing into fact.


1) I did not say Mediacom was going to win. Actually, to the best of my knowledge, the terms of settlement have not been announced.

2) I don't know what you're talking about here.

3) If you said Comcast will pay, I suspect you are correct, but I hope not.

4) I really don't know about this. I do remember that our local NBC went off the cable for a very short time years ago because they were trying to secure payment. Perhaps, you have access to information on this particular case. The station was WCSH Portland. I THINK I recall a comment from station management that they never wanted to go through THAT again. That station was the first one to grant cable retransmission when they went digital.

I have thought and thought about where I might have laid out exactly what would happen with a major issue in broadcasting and turned (it) out to be correct. ............ I can't remember making any predictions in this area. I only recall identifying wants, needs and desires.

(What is this obsession with my age? Is that your best hope in this conversation?)

There is a long and detailed article in this week's MultiChannel News which explains a lot of the key points in the retransmission battle.

It is here:

http://www.multichannel.com/article/CA6421302.html

Stations don't sell all of the commercial time because they know stuff happens sometimes outside of their control that means they can't deliver as promised to their advertisers. Breaking News, Presidential Speeches, Underperforming programs, master control mistake. Those are just some of the reasons why they don't sell all of the time.


I don't think we will have to worry about that.

Regarding the latter, you are probably correct. It is my impression that they know each other. (That's only an impression.)

Regarding the former, I know you are correct on this. On the other hand, as soon as they commit the time to compensate the advertiser for not providing as many viewers as before, it cannot be used for fresh, last minute sales. I would think that sales of time is always the desired end result for a broadcaster. Sold advertising time can always be used for breaking news, etc. and the advertising pushed ahead to future availability of time.

I only recall identifying wants, needs and desires.

Don't you think for a discussion like this your wants, needs and desires should be based somewhat in the business realities of broadcasting.

Sold advertising time can always be used for breaking news, etc. and the advertising pushed ahead to future availability of time.
Not when an advertisers agrees to a specific flight time. You can't always delay ad time until you can find the time them, that is why they hold back ad time in the schedule each day because they know stuff happens.

Don't you think for a discussion like this your wants, needs and desires should be based somewhat in the business realities of broadcasting.

No, not when one is only identifying wants, needs and desires. My wants may totally lack business reality. ........... That is not to say that one cannot enlarge the discussion to include the business reality relating to those wants, needs and desires. At that point, we would be discussing possibilities. In that connection, I wanted to establish that cable possessed a value to broadcasters (as opposed to narrowcasters / satellite distribution of signal). I was unable to distinguish any acknowlegement of that value among the primary posters. It took a death match struggle to achieve that acknowlegement.

Greed is not the issue. The two sides are engaged in business and the whole idea is to make revenue as MUCH as possible and expenditures as LITTLE as possible.

Um, thats basically greed. Unless your implying that Comcast won't turn a profit at all by paying for retransmission. They simply will turn less of a profit or raise rates. Both are greed.

On a side note, this is a very nasty thread. Can we keep this thread to news and polite discussion about the sides instead of a debate? Maybe a thread called "Cable vs Sinclair Debate" should be created.

I for one could careless about advertising dollars, its not really a releated issue.

Um, thats basically greed. Unless your implying that Comcast won't turn a profit at all by paying for retransmission. They simply will turn less of a profit or raise rates. Both are greed.

On a side note, this is a very nasty thread. Can we keep this thread to news and polite discussion about the sides instead of a debate? Maybe a thread called "Cable vs Sinclair Debate" should be created.

I for one could careless about advertising dollars, its not really a releated issue.

In this country, neither Comcast or Sinclair are required to merely "turn a profit at all." They should make no move to "turn less of a profit." That's capitalism. It has worked supurbly and even the communists have decided to do it in order to improve their countries.

I'm afraid that advertising dollars is not only a related issue, it is a primary ingredient to what it is all about. The threat of lost advertising dollars is about the only weapon that I can see the cable company has at their disposal. The problem is that viewers just can't wait long enough for that condition to materialize.

By the way, I agree that there is nastiness on this thread.

The problem is that viewers just can't wait long enough for that condition to materialize.
To me its not a "problem" excepting cable companies, just like everyone else, to pay for the valuable programming that these local stations offer.

Networks offer valuable programming. It's the rare local station that does, outside of the local news. And in Sinclair's case, they don't even do that. Here in the Pittsburgh area Sinclair's Fox affiliate "outsources" their 10 p.m. local news to the crew from the local NBC affiliate.

A high-quality full bitrate HD feed direct from the networks would be something worth paying a premium for. Instead we deal with the middlemen (incompetent cable companies and recalcitrant local stations), who are far more interested in maximizing profits than in providing a quality service.

In general, I believe the content providers should be paid fairly for their content. But I will never respect Sinclair as a company due to their resistance to the digital TV transition and HD adoption.

Belo and Cox Communications Finalize Retransmission Agreement
Monday March 5, 6:27 pm ET
National Deal Covers Stations in Phoenix, Hampton/Norfolk, New Orleans, Tucson and Twin Falls, Idaho


DALLAS and ATLANTA, March 5 /PRNewswire-FirstCall/ -- Belo Corp. (NYSE: BLC - News) and Cox Communications announced today they reached a retransmission-consent agreement that covers Belo television stations and local cable news channels in the Phoenix, Hampton/Norfolk, New Orleans, Tucson and Twin Falls, Idaho markets. The agreement covers the high-definition and analog signals, as well as locally produced content for video-on-demand, of the following stations: KTVK and KASW-TV in Phoenix; WVEC-TV in Hampton/Norfolk, WWL-TV and WUPL-TV in New Orleans; KMSB-TV and KTTU-TV in Tucson; and KTFT-TV in Twin Falls, Idaho. Also included in the agreement are the following local cable news channels: Arizona NewsChannel in Phoenix, Local News on Cable in Hampton/Norfolk, and NewsWatch on Channel 15 in New Orleans.

Approximately 1.4 million Cox viewers will benefit from the finalized deal. Terms of the agreement were not disclosed by either party.

"We are pleased to have finalized this deal with Cox, and we look forward to continuing to provide our award-winning news and information to our viewers in these cities, especially through the addition of our high-definition signals to Cox customers," said Dunia Shive, Belo's president/Chief Operating Officer."

"We are likewise pleased with the outcome of the negotiations," said Bob Wilson, senior vice president of programming for Cox. "Belo stations are important to our mutual customers, and securing long-term carriage rights to the signals of these stations has long been our goal."

About Belo

Belo Corp. is one of the nation's largest media companies with a diversified group of market-leading television, newspaper, cable and interactive media assets. A Fortune 1000 company with 7,100 employees and $1.6 billion in annual revenues, Belo operates in some of America's most dynamic markets in Texas, the Northwest, the Southwest, the Mid-Atlantic and Rhode Island. Belo owns 20 television stations, six of which are in the 15 largest U.S. broadcast markets. The Company also owns or operates seven cable news channels and manages one television station through a local marketing agreement. Belo's daily newspapers are The Dallas Morning News, The Providence Journal, The Press-Enterprise (Riverside, CA) and the Denton Record-Chronicle (Denton, TX). The Company also publishes specialty publications targeting young adults, and the fast-growing Hispanic market, including Quick and Al Dia in Dallas/Fort Worth, and El D and La Prensa in Riverside. Belo operates more than 30 Web sites associated with its operating companies. Additional information is available at http://www.belo.com or by contacting Carey Hendrickson, vice president/Investor Relations & Corporate Communications, at 214-977-6626.

About Cox Communications

Cox Communications is a multi-service broadband communications and entertainment company with more than 6 million total residential and commercial customers. Cox offers an array of advanced digital video, high- speed Internet and telephony services over its own nationwide IP network, as well as integrated wireless services in partnership with Sprint. Cox Business Services is a full-service, facilities-based provider of communications solutions for commercial customers, providing high-speed Internet, voice and long distance services, as well as data and video transport services for small to large-sized businesses. Cox Media offers national and local cable advertising in traditional spot and new media formats, along with promotional opportunities and production services. More information about the services of Cox Communications, a wholly owned subsidiary of Cox Enterprises, is available at http://www.cox.com , http://www.coxbusiness.com , and http://www.coxmedia.com . Contact Erin Lambremont, public relations for Cox Communications at 404-843-5854.




--------------------------------------------------------------------------------
Source: Belo Corp.; Cox Communications

Networks offer valuable programming. It's the rare local station that does, outside of the local news. And in Sinclair's case, they don't even do that. Here in the Pittsburgh area Sinclair's Fox affiliate "outsources" their 10 p.m. local news to the crew from the local NBC affiliate.
Every single one of the local stations, that I have ever watched, that is afffilited with the Big 4 offers valuable programming, and I come from a market where my CBS station, an O&O, does not even have a local news operation. The network programming is what is of value here, people can get local news from another station, can't get American Idol, Lost, Heroes, or any other network program from another source.

Every single one of the local stations, that I have ever watched, that is afffilited with the Big 4 offers valuable programming, and I come from a market where my CBS station, an O&O, does not even have a local news operation. The network programming is what is of value here, people can get local news from another station, can't get American Idol, Lost, Heroes, or any other network program from another source.

Maybe the middleman should be removed, homcom. I said MAYBE. We won't know for sure until Mr. FanAtic speaks. (I wonder what position HE will take. ....................... Um, ........ now, let's see.)

Consumers always want middlemen removed if they think it will save them money. Everyone wants "factory direct". The reality here is it doesn't matter whether they get a network feed or local feed, they'll still have to pay for the programming. The networks have already stated their intentions regarding their O&O stations, and it is alligned with the intentions of the local affiliates.

It just so happens that at this instant in time, the timing of expired contracts and the resulting negotiations have been isolated to the locally owned broadcast groups. But it doesn't make sense to try and make a case that the local affiliates are manipulating the system against the will of their network partners based on that "freeze frame" - not when the networks have made it clear that they will be doing the exact same thing.

Every single one of the local stations, that I have ever watched, that is afffilited with the Big 4 offers valuable programming, and I come from a market where my CBS station, an O&O, does not even have a local news operation. The network programming is what is of value here, people can get local news from another station, can't get American Idol, Lost, Heroes, or any other network program from another source.My point exactly. But some of these local station owners try to make it seem like they are the source of the content, when all they are is a conduit for it, one who often stumbles in even doing that simple task properly. Unfortunately, it's the system we're living with, and it isn't likely to change anytime soon.

My point exactly. But some of these local station owners try to make it seem like they are the source of the content, when all they are is a conduit for it, one who often stumbles in even doing that simple task properly. Unfortunately, it's the system we're living with, and it isn't likely to change anytime soon.
In the local DMAs the local stations are the source of the network content, just like a franchise restaurant is the only source of that food in your local area. Why should we throw out the franchise agreement in television, why should television have to redo their whole business model and not all the other industries that use the franchise model.

In the local DMAs the local stations are the source of the network content, just like a franchise restaurant is the only source of that food in your local area. Why should we throw out the franchise agreement in television, why should television have to redo their whole business model and not all the other industries that use the franchise model.They don't have to redo their business model, obviously, because they aren't.

Why should "we" throw out the franchise agreement in TV? If by "we" you mean consumers, we can't - we don't have that power. But hypothetically, if we did have a say, in my opinion we should throw it out because doing so would be beneficial to us. The technology no longer requires that we need local stations to retransmit network programming to us.

Let the local stations stand alone if they want to survive, producing their own locally-oriented news and content. They could still have some news affiliations with national networks or entities, but we could get the entertainment and national programming direct from the source.

It's different than getting chicken from the local KFC franchise.

Consumers always want middlemen removed if they think it will save them money. Everyone wants "factory direct". The reality here is it doesn't matter whether they get a network feed or local feed, they'll still have to pay for the programming. The networks have already stated their intentions regarding their O&O stations, and it is alligned with the intentions of the local affiliates.

It just so happens that at this instant in time, the timing of expired contracts and the resulting negotiations have been isolated to the locally owned broadcast groups. But it doesn't make sense to try and make a case that the local affiliates are manipulating the system against the will of their network partners based on that "freeze frame" - not when the networks have made it clear that they will be doing the exact same thing.

I have seen where the CBS O&Os are looking for cash in their retransmission agreements. That $ will end up in the pockets of the ones paying for the network content. What I have been wondering is how the networks will look at their affiliates that are owned by Sinclair, Belo etc. getting compensation for what is mostly network content. It can be argued that the local content that they provide is of little value. The local news can be an exception, and they should be getting a good deal of advertising revenue to reflect that.

Will the networks start changing their contracts with affiliates in the future to capture that retransmission revenue?

It already has changed from the networks paying, to no compensation, to the affiliates actually offsetting some of the network's costs (usually associated with sports contracts). It isn't difficult to picture that trend continuing.

That is absolute correct. When there were only 2 or 3 channels in a market, networks paid stations to be on. Now with so many stations in a given market, all of the stations want to be network affiliates to make MORE money. It is now up to the networks to decide which station THEY want to be on, not the other way around as it used to be.

Quite simply, one of the main reasons networks really do not want to give up the affiliates is because they can't get the same money out of single subs that they can with affiliates. They don't want to loose that money. Affiliates are guaranteed money. You might not have the same amount of eye balls if the networks went to per sub basis.

Why should "we" throw out the franchise agreement in TV? If by "we" you mean consumers, we can't - we don't have that power. But hypothetically, if we did have a say, in my opinion we should throw it out because doing so would be beneficial to us. The technology no longer requires that we need local stations to retransmit network programming to us.
Either way we are going to pay for network programming, straight from the network or thru a local station. The cost of network programming would go up and the quality of content would go down. I just don't see the benefit of receiving network programming directly.

I have seen where the CBS O&Os are looking for cash in their retransmission agreements. That $ will end up in the pockets of the ones paying for the network content. What I have been wondering is how the networks will look at their affiliates that are owned by Sinclair, Belo etc. getting compensation for what is mostly network content. It can be argued that the local content that they provide is of little value. The local news can be an exception, and they should be getting a good deal of advertising revenue to reflect that.

Will the networks start changing their contracts with affiliates in the future to capture that retransmission revenue?

I just returned from the YMCA to find that Oxb had beat me to the punch with my next point. Good job, Oxb. I think that's a great question.

The ever-present Mr. Panther has already provided us with an answer.

Perhaps, all of the the retransmission money should pass through to the originating network.

On the other hand, since the original business models of the networks and local stations did not include retransmission fees, perhaps, it could be argued that there need not be such a thing as a retransmission fee. An exception on the original business model thought might be Sinclair who, I suspect, may have included retransmission fees as a prime ingredient in their business model for buying stations.

Either way we are going to pay for network programming, straight from the network or thru a local station. The cost of network programming would go up and the quality of content would go down. I just don't see the benefit of receiving network programming directly.Why do you think the cost would go up and the quality of content down? How do the local stations improve the cost or quality? When it comes to network programming they're glorified switching stations. Who often forget to throw the HD switch, or downgrade the signal with local on-screen crawls, station bugs, multicasting, etc. Great value there.

Why do you think the cost would go up and the quality of content down? How do the local stations improve the cost or quality? When it comes to network programming they're glorified switching stations. Who often forget to throw the HD switch, or downgrade the signal with local on-screen crawls, station bugs, multicasting, etc. Great value there.
The local stations provide for a free avenue to receive the programming off air, because of this substitute for other distribution methods they are not as easily able to ask for the some price a ESPN asks for from a multichannel provider, even though their content is watched by far more people. Also many viewers would be lost because they will not pay for a multichannel service of direct network feeds. The major reason that network programming is so popular is that it is free or precived to be free by consumers. The direct cost to consumers for a direct network feed versus one from a local station will be higher and as a result the networks will cut budget and quality because of the downturn in viewers.

If they were just "glorified switching stations" they wouldn't be running local crawls. :)

I appreciate the argument for the "free" OTA service provided by the local stations. That has value for consumers who choose to receive the network programming via antenna. Still, the total number of such viewers has to be far less than those already paying for and receiving the programming via cable, satellite, etc. I'm sure some of the knowledgeable folks here probably know the numbers on that.

So how about a model that lets consumers choose to purchase direct from the "factory" or alternately obtain the programming OTA from a local franchise? This exclusive DMA stuff isn't in our best interests.
The major reason that network programming is so popular is that it is free or precived to be free by consumers. Not so sure about that. I don't think the average cable or satellite viewer gravitates towards the network programs because he thinks of them as "free" vs. another typical cable channel as "pay." He is paying one bill for all his channels and will watch whatever appeals to him. It so happens that network programming is more popular because it is generally perceived to be better by more people. It's the program, not the "free" nature of it, that matters.

Comcast CEO Brian Roberts @ the Bear Stearns Media Conference in West Palm Beach today says Comcast has no intention of paying for Sinclair Retransmission rights - and the extension runs out in 4 days right before the CBS March Madness Starts.

We will see.

So how about a model that lets consumers choose to purchase direct from the "factory" or alternately obtain the programming OTA from a local franchise? This exclusive DMA stuff isn't in our best interests.Consumers overwhelmingly would choose to receive the network programming from the local stations because that is what they are used to and it would be cheaper or appear to be cheaper to the consumer.


This exclusive DMA stuff isn't in our best interests.
Many business decisions are not in the consumers best interest because that is not what these business are in business to do.


Not so sure about that. I don't think the average cable or satellite viewer gravitates towards the network programs because he thinks of them as "free" vs. another typical cable channel as "pay." He is paying one bill for all his channels and will watch whatever appeals to him. It so happens that network programming is more popular because it is generally perceived to be better by more people. It's the program, not the "free" nature of it, that matters.
The free nature of the OTA networks have allowed them to build a reputation in consumers minds of high quality programing and bigger budget programming then seen on cable. It not because consumer see them as free, but they see the end results of the OTA network being free.

So how about a model that lets consumers choose to purchase direct from the "factory" or alternately obtain the programming OTA from a local franchise? This exclusive DMA stuff isn't in our best interests.

I doubt they'd offer such an arrangement, but if they did, they'd have to compensate the local rights owner. So you'd end up paying twice as much, and the local affiliate would still get their $0.50 - then maybe they could give you your local affiate along with a network feed.

But there's little reason or motivation to develop such a plan.

My point exactly. But some of these local station owners try to make it seem like they are the source of the content, when all they are is a conduit for it, one who often stumbles in even doing that simple task properly. Unfortunately, it's the system we're living with, and it isn't likely to change anytime soon.

Hmm, my local CBS affilaite, KLAS produces about 8 hours of local HD news every day. Are you saying that content is worthless?

On the other hand, since the original business models of the networks and local stations did not include retransmission fees, perhaps, it could be argued that there need not be such a thing as a retransmission fee. An exception on the original business model thought might be Sinclair who, I suspect, may have included retransmission fees as a prime ingredient in their business model for buying stations.

If the pay TV system hadn't evolved the way it has, they may not ever have asked for a retransmission fee. But they are looking at cablenets who are competing for their viewers who get those fees which enable them to outbid them for quality programming and sports contracts. Then they use their popularity to leverage additional fees for more cablenets and they are in an even better position to outbid the broadcast nets. The whole game has changed, and the Big 4 need to be on the same field to compete.

The ironic thing here is this system was created, in large part, by the Big 4 networks and their leveraging of their O&O stations to force carriage of all these high-priced cablenets. Yet there seems to a lot of sentiment here that the local affiliates are trying to snag money that should "rightfully" be funneled to the national network.

I'd wager that a key motivation behind the CBS/Viacom split was to allow them to position themselves (CBS) as a provider of premium programming that isn't receiving any compensation for that programming. That sounds a lot better than being the company that used the popularity of CBS programming in order to make everyone pay for Comedy Central, BET, Spike TV, TV Land, Nickelodeon, MTV, VH1, MTV2, CMT - and now they want to double dip and get compensated for CBS again.

If anyone got the royal shaft, it's the locally owned ABC affiliates. Last I heard, the ABC O&O's were not seeking a fee (at least, yet). But that's only after they used their O&O's in the same way as Viacom, but to a much more obscene extent. Then they outbid themselves in order to shift Monday Night Football from ABC to ESPN. So not only are they leveraging their O&O's to benefit their cablenets, they are devaluing the programming package carried by their affiliates. Then they magnanimously state that (paraphrased) "While we can't speak for all of our affiliates, we will not be seeking compensation for any of the ABC affiliates that we own". You can almost hear 180 ABC affiliate GMs saying "Thanks a hell of a lot for that!" in unison.

I've stated this before - but I feel it's necessary to continually point out.....

Don't mistake my opinion about what is "right" or "fair compensation" for the local affiliates (and their national network programming) compared to what the cablenets are receiving - and what is necessarily good for the industry, or the consumer.

Here's my view summed up:
1) The Big 4 programming are each worth the ~$0.50 carriage fee proposed compared to the programming fees received by their competitors.
2) They are actually worth far more than that if they are valued on a level playing field with their competitors.
3) We will all sh*t a brick if we end up having to pay that actual value.
4) Once they get compensation, the cherry is popped, and they become part of the current Pay TV system - not "free" channels.
5) Once part of the Pay TV system, they will push #2 - and #3 will happen.

That's when the system breaks, we get a consumer friendly do-over, and a la carte will be the only reasonable outcome.

On a side note - I'd expect this retransmission fee to at least double at the end of the first 3 year contract.

Hmm, my local CBS affilaite, KLAS produces about 8 hours of local HD news every day. Are you saying that content is worthless?

As witnessed in past posts, he only complains when his local station's news isn't available on cable - not yours.

If the pay TV system hadn't evolved the way it has, they may not ever have asked for a retransmission fee. But they are looking at cablenets who are competing for their viewers who get those fees which enable them to outbid them for quality programming and sports contracts. Then they use their popularity to leverage additional fees for more cablenets and they are in an even better position to outbid the broadcast nets. The whole game has changed, and the Big 4 need to be on the same field to compete.

The ironic thing here is this system was created, in large part, by the Big 4 networks and their leveraging of their O&O stations to force carriage of all these high-priced cablenets. Yet there seems to a lot of sentiment here that the local affiliates are trying to snag money that should "rightfully" be funneled to the national network.

I'd wager that a key motivation behind the CBS/Viacom split was to allow them to position themselves (CBS) as a provider of premium programming that isn't receiving any compensation for that programming. That sounds a lot better than being the company that used the popularity of CBS programming in order to make everyone pay for Comedy Central, BET, Spike TV, TV Land, Nickelodeon, MTV, VH1, MTV2, CMT - and now they want to double dip and get compensated for CBS again.

If anyone got the royal shaft, it's the locally owned ABC affiliates. Last I heard, the ABC O&O's were not seeking a fee (at least, yet). But that's only after they used their O&O's in the same way as Viacom, but to a much more obscene extent. Then they outbid themselves in order to shift Monday Night Football from ABC to ESPN. So not only are they leveraging their O&O's to benefit their cablenets, they are devaluing the programming package carried by their affiliates. Then they magnanimously state that (paraphrased) "While we can't speak for all of our affiliates, we will not be seeking compensation for any of the ABC affiliates that we own". You can almost hear 180 ABC affiliate GMs saying "Thanks a hell of a lot for that!" in unison.

I've stated this before - but I feel it's necessary to continually point out.....

Don't mistake my opinion about what is "right" or "fair compensation" for the local affiliates (and their national network programming) compared to what the cablenets are receiving - and what is necessarily good for the industry, or the consumer.

Here's my view summed up:
1) The Big 4 programming are each worth the ~$0.50 carriage fee proposed compared to the programming fees received by their competitors.
2) They are actually worth far more than that if they are valued on a level playing field with their competitors.
3) We will all sh*t a brick if we end up having to pay that actual value.
4) Once they get compensation, the cherry is popped, and they become part of the current Pay TV system - not "free" channels.
5) Once part of the Pay TV system, they will push #2 - and #3 will happen.

That's when the system breaks, we get a consumer friendly do-over, and a la carte will be the only reasonable outcome.

On a side note - I'd expect this retransmission fee to at least double at the end of the first 3 year contract.

By his own admission, he doesn't read posts this long - so no need to give details - he chooses ignorance over enlightenment - or perhaps he just can't read and digest complex sentences.

Hmm, my local CBS affilaite, KLAS produces about 8 hours of local HD news every day. Are you saying that content is worthless?No, this is what I said:Networks offer valuable programming. It's the rare local station that does, outside of the local news. So I acknowledge the value of local news. I further said:Let the local stations stand alone if they want to survive, producing their own locally-oriented news and content. They could still have some news affiliations with national networks or entities, but we could get the entertainment and national programming direct from the source.So a good station producing compelling local news and other programming is welcome. It's a little different, because it's public TV, but the local PBS station here (WQED) has produced a lot of good programming, from Mr. Rogers to Rick Sebak's many specials.

As witnessed in past posts, he only complains when his local station's news isn't available on cable - not yours.Um, I don't recall ever complaining about my local station's news not being on cable, so I don't know what you're talking about. Maybe you can point out where I did that; perhaps I just forgot. In any case, I'm not surprised that you took such a shot, worthless as it is. As witnessed in countless of your past posts, your general approach is to belittle and deride the opinions of others and be adversarial when there's no reason for it. I guess that makes you feel important or something. There are a lot of people who contribute good information and insight on this forum. You are most certainly not one of them.

Um, I don't recall ever complaining about my local station's news not being on cable, so I don't know what you're talking about. Maybe you can point out where I did that; perhaps I just forgot. In any case, I'm not surprised that you took such a shot, worthless as it is. As witnessed in countless of your past posts, your general approach is to belittle and deride the opinions of others and be adversarial when there's no reason for it. I guess that makes you feel important or something. There are a lot of people who contribute good information and insight on this forum. You are most certainly not one of them.

The ignore function works wonders if you feel my information is worthless. If you believe what you typed, then put me on ignore - otherwise, your posts have no meaning and I suppose we will all see you for what you are.

And one last thing - Stan54 was the one complaining when his local news station was taken off cable - but doesn't want to pay for watching it.

Quote from HDTVFanAtic:

"Stan54 was the one complaining when his local news station was taken off cable"

What on earth are you talking about? You keep making things up that aren't there which might help account for why you are a legend in your own mind (so to speak).

Nice post by Mr. Panther by the way. When I have a moment, I want to re-read it and comment.

Yeah, whatever FanAtic. And anybody who reads just a few of your posts can see you for what you are. Nice how you reply to a poster who quotes me directly with a snide remark and then say you were talking about somebody else.

Q: How can you tell when FanAtic is insulting somebody?
A: He's typing on his keyboard.

In any case, I don't care to bother with you any further. As evidenced by your 2500 per year posting rate you'll just keep replying with your garbage ad infinitum anyway.

UPDATE: Comcast Nixes Cash-only Compensation For TV Retransmission Rights

By David B. Wilkerson

CHICAGO (Dow Jones) - Comcast Corp. has no intention of doing a straight cash deal in exchange for the right to retransmit broadcast television signals, Chairman and Chief Executive Brian Roberts said Tuesday.

Speaking before a gathering at the annual Bear Stearns Media Conference, Roberts said that despite a recent movement among TV broadcasters to secure cash-only compensation from cable companies, Comcast (CMCSA) (CMCSK) remains interested in "co-op" deals that involve an exchange of "some kind of approximate value."

Traditionally, cable companies have exchanged advertising time or some other form of non-cash compensation for retransmission rights. But TV station owners, trying to find new sources of revenue at a time when competition with the Internet, MP3 players and other media is becoming more intense, appear ready to change that equation.

Roberts said the company expects to announce a retransmission deal shortly, in a possible allusion to ongoing negotiations with Sinclair Broadcast Group (SBGI) . The two companies recently agreed to extend their current agreement through March 10.

"With pure independent broadcasters," Roberts commented, "we think we can get a deal that involves something other than cash ... something that won't force us to increase costs to consumers, or charge for free TV."

As for network-owned TV stations, the Comcast chief said there is no current deal in place set to expire before 2012. "This is not a conversation we're having anytime soon," Roberts said.

The executive said he "chuckles" at the possible reasons for statements made by Les Moonves, chief executive of CBS Corp. (CBS) , who said on Monday that his company, after recently signing cash-based retransmission deals with several small cable operators, will do the same with "big" cable outfits.

On other topics Tuesday, Roberts reiterated his confidence in the company's competitive position against large telephone companies.

Comcast competes against Verizon Communications' (VZ) emerging FiOs video service, which gives that company the ability to offer video, broadband and phone services, cable companies still have an advantage in having offered a bundled package of all three offerings - the so-called "triple play" -- sooner.

"Don't underestimate the first mover advantage," Roberts said. "I think people are going to look back and say cable was able to run the table before there was any pushback [from phone companies]."

Roberts went on to say that the rapid growth in usage for video-rich Web sites such as YouTube is making people more likely to want broadband service from cable companies, which offers much faster download times than the digital subscriber line, or DSL technology long offered by most phone companies.

When reminded that video-on-demand hasn't generated the kind of revenue growth many observers had anticipated five years ago, Roberts said the service, which allows users to view numerous programs at any time, is extremely valuable nonetheless as another incentive for consumers to keep Comcast service. For technological reasons, satellite providers are unable to offer VOD, and tend to offer digital video recording capability instead.

"Between [our] HBO On Demand and DirecTV, there's no comparison. I can get all the 'Sopranos' episodes I want, and I don't have to program a DVR."

Comcast shares closed up 2.3% at $25.88.

http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070306%5cACQDJON200703061829DOWJONESD JONLINE000978.htm&

I posted over on the "Hot Off The Press" thread, but think it is relevant here.
Note that this commentary is very pro stations. Nonetheless, some of the facts, strategeies and assumptions mentioned seem to be unknown to many.

Commentary: Get Set For a Retrans Fight
Now that broadcasters are getting the upper hand in retrans negotiations, cable wants to gut broadcasters' rights in Washington
By Harry A. Jessell, editor and publisher, TVNewsday.com March 7, 2007

You can almost feel it.

Retrans has reached the tipping point.

All of a sudden, it seems, the leverage in retrans negotiations has shifted to broadcasters. A growing number are now able to extract fees from cable operators who want to carry their signals.

With hard-nosed broadcasters like Nexstar’s Perry Sook and Sinclair’s David Smith leading the way, TV station groups are tearing up old revenue projections and factoring in millions in new retrans dollars.

Two weeks ago, CBS CEO Les Moonves finally made good on his big retrans talk by cutting deals involving nine operators and more than one million subs. He later said the deals will yield $6 million a year—50 cents per sub per month.

Moonves senses the shift. “[Did] you noticed that these nine MSO deals were done without a whole lot of noise?” he asked security analysts last week. “The MSOs are realizing that it’s better to get along than to fight.”

LIN TV is excited because it thinks it has the upper hand and most of its retrans deals with cable are now ripe for renewal. Last week, it announced a deal with Cox involving nine stations in five markets. Nobody is talking terms, but everyone is assuming that cash was involved.

Even Gray Television, which has long had a go-along, get-along attitude on retrans, is starting to talk about getting its “fair share” from cable operators.

“We certainly see the momentum shifting,” Gray CFO Jim Ryan said at the Bear Stearns Media Conference yesterday.

The tipping point was a long time coming.

When Congress granted broadcasters retrans rights in 1992, the presumption was that they would immediately begin receiving monthly payments from operators for their signals.

For a lot of reasons, it never happened—until now.

And let me be clear: retrans is not easy. To squeeze money out of cable operators takes the right set of circumstances and a willingness to risk the short term for the long term. It’s not for everyone.

Of course, now that broadcasters are having some success, the cable operators want to change the rules. They want Congress or the FCC to shift the leverage back to cable operators by restricting broadcasters’ retrans rights.

For the most part so far, the effort to gut retrans has been led by the American Cable Association, which represents smaller, independent cable operators who were the first to feel broadcasters’ muscle.

But as TVNEWSDAY’s Kim McAvoy reported last week, cable’s big lobby—the National Cable & Telecommunications Association—has now taken up the fight.

That sets up what should be a titanic contest between NCTA and the NAB this year over retrans that will be real test of their relatively new leaders, Kyle McSlarrow and David Rehr, respectively.

Nothing less than the financial health of TV broadcasting is at stake. Stations need retrans revenue to offset the loss of network comp and the inexorable decline in national spot.

Fortunately, the retrans case for broadcasters is clear and simple.

Cable operators pay monthly affiliate fees to cable networks that have a fraction of the audience. If ESPN is worth $2.50 per sub per month, surely the local CBS affiliate (NFL, The Masters, March Madness) is worth 50 cents.

Cable operators say that paying retrans fees will cause them to raise rates. Nonsense. They can find money for broadcasters simply by cutting fees that they inexplicably pay to cable networks that hardly anybody watches. Better yet, they can drop those networks and send broadcasters an even bigger check.

Broadcasters provide local public service. They have reporters on the street and anchors that show up at community events. They have satellite trucks, helicopters and weather radar that can track tornadoes. Spike TV has World’s Wildest Police Videos and Late Night Strip.

Satellite TV operators and telephone company offering the exact same service as cable are willingly paying retrans fees. No fuss. They enter a market, and the first thing they do is lock up the best programming in town—the programming they need to compete with cable. If the new entrants can pay, entrenched cable can pay.

Cable operators have always recognized the value of retrans rights, but have insisted on non-cash compensation—carriage of cable networks in which the broadcasters had an interest or committing to advertising buys on stations.

But now that broadcasters are demanding cash, the operators pretend that the rights have little or no value.

Part of cable’s anti-retrans rhetoric is that operators shouldn’t have to pay for “free TV.” Well, guess what? Local broadcasting isn’t free. In fact, it costs a lot of money to build, maintain and operate a state-of-the-art TV station, to license syndicated programs and to produce several hours of local news each day.

Right now, broadcasters are still paying the bills for digital transmission facilities and they are preparing to spend millions more so that they can produce local news in high definition and stay competitive with other broadcasters.

The only thing that’s free about broadcasting is over-the-air reception. As part of their pact with the government, broadcasters are committed to making their service available to anyone who can afford a TV set.

But at this point I would say that it is in neither broadcasting’s nor cable’s interest to encourage over-the-air reception. Instead of handing out rabbit ears in the middle of retrans fights, cable operators would be far better off paying broadcasters and making them partners in driving folks to sign up for cable.

That’s what the satellite operators and telcos have done. When a retrans fight breaks out, DirecTV and Echostar swoop in to pick off unhappy cable subscribers. Mediacom says it lost 7,000 in its recent retrans fight with Sinclair.

Cable’s call for retrans reform is really a call for more government involvement in what should be—and has been for a decade and a half—a private negotiation. Does anybody really want more regulation, more FCC meddling in their business?

The broadcasters are playing defense right now. All NAB has to do is maintain the status quo.

But perhaps it should consider offense. Here are a couple of ideas that NAB may want to push when cable comes to shove:

An antitrust exemption that allows all the stations in a market to negotiate together for retrans fees. This would balance things out in market dominated by one or two cable operators. Cable could hardly protest. Last year, ACA proposed that small cable systems be allowed to do the very same thing.

A minimum retrans fee for every TV signal. In this way, Congress could insure the future of local broadcasting—a cornerstone of its communications policy since the 1920s. To be fair, the fees could be tied to ratings. The more viewers a station has, the more money it would get. Stations could accept the minimum or negotiate for higher fees.

In the coming debate, both sides will claim that only they have the true interests of the consumer at heart and that the other side doesn’t really care about either mom or pop at all.

But, face it, this isn’t a consumer issue. This is business.

If cable operators want broadcasters’ signals, they just have to pay for them.

---------------------------

Harry A. Jessell

Prior to launching TVNEWSDAY in January 2006, Harry worked for more than 25 years as a reporter and editor for Broadcasting & Cable (formerly Broadcasting), the leading business magazine for the TV and radio industries. As the magazine's top editor from 1997 to 2004, Harry moved the magazine from Washington, D.C., to New York City and shifted its focus from law and regulation to programming and advertising.

On the magazine's editorial page and in his bi-weekly column, he advocated full First Amendment protections for and minimal government regulation of broadcasting and other electronic media.

As a reporter in the 1980s and early 1990s, Harry covered broadcast technology, cable TV, the Federal Communications Commission, Congress and the federal courts. He was named executive editor in 1993 and editor in 1997.

http://www.tvnewsday.com/articles/2007/03/07/daily.8/

That’s what the satellite operators and telcos have done. When a retrans fight breaks out, DirecTV and Echostar swoop in to pick off unhappy cable subscribers. Mediacom says it lost 7,000 in its recent retrans fight with Sinclair.

That was in 4Q 2006 before the signals were pulled - just the notices that were run on the Sinclair stations. We have yet to see the real damage that will be reported in the 1Q07 numbers.

Smit: Charter System Sales Could Help Retrans Talks

By Mike Farrell 3/7/2007 5:50:00

Charter Communications CEO Neil Smit told an audience at an industry conference Wednesday that moves the St. Louis-based operator made last year to tighten up its footprint could have another unexpected benefit -- strengthening its position in retransmission-consent negotiations.

Charter sold about 390,000 subscribers in several nonstrategic geographic markets last year. The sales helped to consolidate the MSO’s footprint and reduced its total number of headends by about 45%.
At the Bear Stearns Media Conference in Palm Beach, Fla., Smit said Charter has multiyear retransmission agreements in place with the Big Four networks’ station groups (CBS, NBC, ABC and Fox), and it has a cordial relationship with the other smaller station groups in its footprint.

He added that Charter’s stance has been not to pay cash for retransmission consent because it believes broadcast licenses were granted “so the consumer could receive the signals for free. That value proposition should continue.”

And while other station owners have pushed hard for retransmission cash -- and received it -- Smit said Charter’s moves to clean up its footprint have increased the densities of its existing clusters, which could make it harder for station groups to play hardball, given that they would put greater portions of their ad revenue at stake.

“[The sales] really improved the density of our clusters, which I think brings negotiating strength to the conversation with broadcasters,” he added.

While there has been speculation that Charter would continue selling off systems -- including its larger Los Angeles and Fort Worth, Texas, properties -- to help pay down its massive $19 billion debt, Smit said that is not in the mix.

“We’re not really of the belief that because someone wants an asset, we feel pressured to move an asset,” he added. “We’re focused on driving the revenue and [cash-flow] growth of the business.”

http://multichannel.com/article/CA6422613.html?display=Breaking+News

“[The sales] really improved the density of our clusters, which I think brings negotiating strength to the conversation with broadcasters,” he added.

It can also have the opposite effect of forcing a standoff to come to a quicker end because all of the people will be looking for other MSO options. That sword cuts both ways. It is no slam dunk for cable.

That was in 4Q 2006 before the signals were pulled - just the notices that were run on the Sinclair stations. We have yet to see the real damage that will be reported in the 1Q07 numbers.

Really? I thought the number came up in the past week during an analyst's session and it was all-inclusive. If you are right (and you almost always are!) I agree the final figures will be substantially worse.

I posted over on the "Hot Off The Press" thread, but think it is relevant here.

A minimum retrans fee for every TV signal. In this way, Congress could insure the future of local broadcasting—a cornerstone of its communications policy since the 1920s. To be fair, the fees could be tied to ratings. The more viewers a station has, the more money it would get. Stations could accept the minimum or negotiate for higher fees.

http://www.tvnewsday.com/articles/2007/03/07/daily.8/

Wasn't something much like this proposed in the early nineties, before retransmission consent was passed?

In any event, if this is done, it certainly should be tied to ratings -- no good reason to force cable systems to pay for stations that carry nothing but infomercials or home shopping.

Hopefully the cableco's negotiators don't buy that reasoning. It will only give them a false sense of bravado and drag out the talks.

The pressures they will face will come from their customers and their desire to watch that programming. Having more of those customers within that DMA won't change the percentage that jump ship. One defection represents $700 - $800 a year in revenue. The broadcaster will not face that same kind of financial pressure.

Turn a funnel upside-down and dump the cableco's lost revenue in the top. The amount that makes into the tiny hole represents the revenue lost by the broadcaster. The scenario outlined by Charter is just the equivalent of dumping the water faster.

Really? I thought the number came up in the past week during an analyst's session and it was all-inclusive. If you are right (and you almost always are!) I agree the final figures will be substantially worse.

Well, in the 8-K filed with the SEC on 2/23/2007 for 2006 4Q results, they claim:


For the fourth quarter, basic subscriber losses amounted to 14,000, which includes the negative impact of our retransmission dispute with Sinclair Broadcasting Group, as compared to a loss of 6,000 in the prior year quarter. Digital customers rose by 14,000 during the fourth quarter of 2006, as compared to a gain of 17,000 in the same period last year.


http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0000950123-07-002625&Type=HTML

In an answer to an analyst question on the 4Q conference call Rocco says the reason the losses were almost double the 4Q 2005 losses were because of the "nasty" campaign waged on them by Sinclair and Directv starting in October of 2006. Rocco says about 1/2 the losses or probably 7,000 were due to the Sinclair dispute.

http://us.rd.yahoo.com/finance/confcall/streetevents/SIG=13d9rtfmi/*http%3a//web.servicebureau.net/conf/meta?i=1112855907&c=2343&m=was&u=/w_ccbn.xsl&date_ticker=2_23_2007_MCCC

Now, Stan54 may feel that Mediacom didn't loose any customers in 2007 Q1 when the plug was pulled on the Sinclair Stations for a month - but then he would be wrong as Rocco said on the conference call that they lost subs in January 2007 as well.

Rocco refused to divulge the number of subs lost on the conference call saying that information concerning the Sinclair retransmission fight would be used against other cable companies in their retransmission fights - although he did say it was not 10% of their subs.

For people like Stan54 who can't read between the lines, if it had no significant impact, they would be willing to divulge it to show it had no effect and spur other cable companies to hold the line.

However, as he refused to give the answer - and framed it they way he did, it would have to help broadcasters and hurt other cable companies, it clearly means the number is significant though no where near 10% of their subs.

Rocco also stated that he felt he could fight the FCC decision on principal but it would have taken another 2 or so months so the FCC would have agreed to do Arbitration - but he had an obligation to his shareholders so he caved in.

ROFLMAO. What a spin master he is - that was as good as his assertion that it was Sinclair who took the dispute public and aired it in the press.

On the conference call it was also clearly stated that the rate increases which they expect to bring in 8%-9% greater revenues a year, had to be held off from implementing in Q1 were held off because of the Sinclair situation - so despite Stan54's assertion, the Sinclair situation actually saved Mediacom Customers money in 2007 Q1.

Bottom line is, in the within the 68 days when 2007 Q1 results must be released, we will know for sure what the numbers are.

I know this is taking the argument back to it's simplest form but if a cable company is not charging subscribers extra for HD network feeds then why are stations (Sinclair) expecting compensation? Shouldn't they be happy that thousands more people are watching their channel instead of a competetors? I know in my case if I can't get the networks from my cable company then I just can't get them at all. I'm too far away to receive OTA.

Allowing free retransmission of HD channels seems like a win for the consumer, a win for the cable company, and at least a draw for the network. They might be missing out on cash from the cable co. but aren't they generating extra revenue from increased viewership? I know in my case if I can't get FOX-HD from pittsburgh I sure as hell will not watch FOX-SD based out of Pittsburgh. I'll choose to watch my local fox affiliate (WV station that currently does not broadcast in HD).

I know this is a very simplistic look at things but it seems like a better solution to me.

If the revenue generated from advertising to those extra viewers came close to the revenue generated from retransmission fees, it might be considered a draw. But it isn't close at all.

Also note that while when this thread started, the topic was discussing a fee for the HD feeds - that is no longer the case. The retransmission fees are for both the SD & HD feeds. Your WV affiliate will likely have the same posture when their current contract expires.

BTW - you could also say that the cableco isn't charging "extra" for ESPN. I doubt that means Disney will pass on their $3.00 a month per sub.

The Business of Television
Legal Memo: Know the Rules of the retrans game
If it's retransmission consent gold you seek, make sure you understand your rights and the FCC regs governing negotiations
by Michael D. Berg in TVNewsday Mar. 9, 8:09 AM ET

After 14 years on the books, retransmission consent is sure grabbing headlines now.

Last week, Belo and Cox announced a down-to-the-deadline agreement covering 1.4 million cable subscribers, and nine unnamed operators agreed to pay CBS cash for consent—a long-standing cable taboo.

Last month Sinclair and Mediacom reached an agreement, apparently involving cash, that restored 24 stations to 700,000 Mediacom subscribers. The deal was reached only after the FCC denied Mediacom’s request to compel Sinclair’s interim consent in January.

In the last few days CBS, LIN TV and other broadcasters have been vocal about their intent to seek cash from the largest cable operators when current retrans agreements expire.

Retrans consent also plays an important role in the run-up to the Feb. 17, 2009, DTV transition. Between now and then, stations broadcasting in analog and digital—now all but a few—can get must carry only for their analog signal. The companion digital signal can be carried only through a retrans agreement.

Also under current law, stations that go all-digital on or before the transition date can get must carry for their main digital signal, but not for multicast subchannels. They need retransmission consent.

Against this backdrop, here is a snapshot of FCC rules on retrans negotiations and agreements. Like good wine, the rules have gained complexity and appreciation with age. The two main ones are the retrans rule and the good faith rule.

The retrans rule (Section 76.64)—In the 1992 Cable Act, Congress created a new property right for broadcasters in their TV signal with regard to cable and other multichannel video program distributors (MVPDs) including satellite and now telephone companies.

The rule implements that right by prohibiting MVPDs from retransmitting commercial TV broadcast signals without the express written authority of the originating station unless the station has elected must carry.

For the first time in the long history of broadcasting and cable, the rule required operators to get stations’ permission before carrying their signals.

For must carry, FCC rules dictate the terms of carriage and require no written agreement. Payment for must carry, or for must carry channel position, is prohibited.

In contrast, under retrans almost everything—including who pays what kind of compensation to whom—is negotiable, and a written agreement is required.

Under the rule, written retrans agreements:

• May not be exclusive (i.e., the station may not limit its carriage to one MVPD, and the operator may not agree to exclude other TV signals).

• Must specify the extent of consent granted (i.e., for the entire signal or any portion of it). This applies to analog and digital signals.

The retrans rule requires stations to choose between retrans and must carry every three years. Current elections were made by Oct. 1, 2005, and apply to calendar years 2006-2008. The next election is Oct. 1, 2008, and covers 2009-11.

New TV stations, and stations that go all-digital and return their analog spectrum, must make their initial election during the period from 60 days before to 30 days after the start of new or digital-only broadcasting. Those elections take effect 90 days after being made.

The term of agreements—when they expire—is negotiable, and can be longer or shorter than the three-year election periods. That is one reason why some retrans agreements are expiring now, in the middle of an election cycle, and creating headlines.

Another reason is that sometimes operators and stations cannot agree on details in the three months between the October elections and the start of the three years they cover (Jan. 1, 2006). As a result, existing agreements are extended, often more than once, by mutual consent while negotiations continue.

Extensions should be written and signed. Both operator and station have incentives to avoid gaps in consent. During them, carriage by the operator is prohibited.

In some instances now, such as the recent Sinclair/Mediacom dispute, the broadcaster may decide to allow consent to expire to hasten negotiations.

The good faith rule (Section 76.65)—This rule requires both sides to negotiate in good faith. (Incredibly, when Congress first required the rule in 2000, the obligation fell only on TV stations. Not until August 2005 was good faith applied to MVPDs as the “reciprocal bargaining obligation.”)

How can a rule define good faith? In the case of retrans, in two ways: by specific standards (a list of “don’ts”) or by the context (“totality of the circumstances”).

Either party violates good faith by refusing to negotiate retrans, name a representative with authority to bind the negotiator, meet at reasonable times and locations, put forth more than one unilateral proposal or sign a written agreement containing the parties’ full understanding.

Other violations are failing to answer, including reasons for rejection of a proposal by the other side, and agreeing that either negotiating party will not have a retrans agreement with another TV station or MVPD, which also violates the retrans rule.

In addition, a station or operator can try to show that the other party failed to deal in good faith based on the totality of the circumstances surrounding the negotiations.

Enforcement of the good faith rule is complaint driven. An unhappy party must file a complaint within one year of the alleged violation, of the signing of the agreement or of notifying the alleged violator of the intent to complain.

A separate FCC rule, modeled on the above rules, applies to DBS. For telco MVPDs like AT&T and Verizon, the FCC has not ruled on their regulatory status, but they carry stations under retrans agreements.

The rules are the framework for retrans negotiations. What happens within that framework is making news. For business and legal reasons, all TV companies should follow retrans developments and focus on carriage strategy surrounding the digital transition date.

[B](This colums on TV law and regulation by Michael D. Berg, a veteran Washington, D.C. communications lawyer and the principal in the Law Office of Michael D. Berg, appears monthly. He is also the co-author of FCC Lobbying: A Handbook of Insider Tips and Practical Advice. He can be reached at mberg@michaelberglaw.com.

Note: This article provides general guidance only and is not a substitute for individualized legal advice for particular situations.

http://www.tvnewsday.com/articles/2007/03/09/daily.3/

Deadline near for Sinclair, Comcast

Cable customers wait to see if deal on programming costs can be struck by tomorrow

By Hanah Cho
Sun reporter

Originally published March 9, 2007

Millions of cable customers nationwide, including many in the Baltimore region, are waiting to see if popular Fox shows such as American Idol remain on their cable systems as Sinclair Broadcast Group Inc. and Comcast Corp. approach tomorrow's deadline to reach a deal on programming costs.

Comcast said yesterday that discussions between the two parties remain "productive" and that they are working to reach a "fair agreement that would avoid any interruption in service for our customers."

Barry Faber, Sinclair's vice president and general counsel, could not be reached for comment yesterday, but he said last week that he was optimistic the two companies would strike a new deal before tomorrow.

At issue has been how much airing local programming is worth. Sinclair is aggressively seeking cash from cable operators for the right to retransmit its broadcast signals.

But Philadelphia-based Comcast maintains it will not pay cash for programming that is available for free over the airwaves - a position reiterated by the company's chief executive officer this week.

After Sinclair threatened to pull its programming off Comcast's cable system last week, the two parties agreed to extend the current contract until tomorrow.

The dispute between the two companies involves 30 network-affiliated stations - including Baltimore's WBFF-Fox 45 and WNUV-CW 54 - from cable systems that reach 3.4 million customers in 23 markets from Tampa, Fla., to Pittsburgh to Flint, Mich.

Without a deal, Comcast customers in Baltimore City and Baltimore and Carroll counties would be without a Fox affiliate. Customers in Harford, Anne Arundel and Howard counties would lose the Baltimore Fox affiliate on their cable systems, but they also receive the Washington Fox station, which would not be affected by a cutoff.

Cecil County customers also would lose the Baltimore Fox affiliate, but they can get the Philadelphia Fox station.

All customers in the Baltimore area would lose the CW network.

For decades, cable providers have picked up local broadcast signals without paying cash. In exchange, cable operators compensated broadcasters in other ways.

For instance, cable operators agreed to pay to carry NBC Universal's new channels such as MSNBC while retransmitting NBC stations for free.

Companies such as Sinclair typically receive advertising slots and better channel locations on cable systems for the free signals, or cable companies agree to buy advertising from broadcasters.

Comcast Chief Executive Officer Brian Roberts said this week at an annual Bear Stearns Media Conference in Florida that the relationship between broadcasters and cable providers over so-called retransmission consent rights has not changed.

"We're not interested and will not pay cash" for retransmission rights, Roberts said. "We are going to help market each other's businesses, and there's going to be a win-win outcome that will not require us to raise consumers' rates or charge the customer for free TV. That line is drawn, that's not changing."

In most cases, such fights end amicably without blackouts. But a few broadcasters, including Sinclair, recently have pulled programming from some cable systems during negotiations.

http://www.baltimoresun.com/business/bal-bz.sinclair09mar09,0,956681.story?coll=bal-business-headlines

The Business of Television
Comcast, Sinclair Reach Retrans Deal
By Mike Farrell MultiChannel News 3/9/2007

With barely one day to spare, Comcast and Sinclair Broadcast Group reached a retransmission-consent agreement for Sinclair stations representing about 3.4 million of the cable operator’s subscribers Friday.

While terms of the deal were not disclosed, Comcast said it did not pay cash for the right to carry Sinclair’s television signals.

“Comcast has achieved its objective of not paying cash for broadcast carriage that would need to be passed on to our customers,” executive vice president David Cohen said in a prepared statement. “Consistent with our existing agreement with Sinclair and all of our other retransmission-consent agreements, comparable value is being exchanged.”

The four-year deal -- it expires March 1, 2011 -- also calls for Comcast to carry digital-multicast channels Sinclair is currently broadcasting in Richmond, Va., and Baltimore, as well as certain other multicast channels in Comcast markets that the stations may broadcast in the future.

And the new deal involves advertising and co-marketing agreements, including Web opportunities, as well as advertising and cross-promotion opportunities on both companies’ properties.

“We have always been willing to discuss exchanges of value with broadcasters,” Cohen said in an interview. “Those exchanges of value vary from deal to deal. We have had with Sinclair an existing exchange of value where we’re paying cash but receiving marketing and advertising benefits back from Sinclair that are of comparable value to the payments we’re making. We were able to make a deal consistent with that model.”

Comcast’s existing deal with Sinclair was set to expire March 10. If the two parties hadn’t reached an agreement, Comcast was in danger of losing the right to carry Sinclair’s 37 stations in 23 markets -- mostly affiliates of Fox, MyNetworkTV and The CW -- in markets such as Baltimore; Pittsburgh; Minneapolis-St. Paul, Minn.; Nashville, Tenn.; Richmond, Va.; and Tampa. Fla.

Cable operators across the country were keeping a close eye on the negotiations. Sinclair -- just off a three-month battle with midsized cable operator Mediacom Communications, where Mediacom agreed to pay an estimated 40-50 cents per subscriber, per month for stations representing about 50% of its total footprint -- has been one of the more aggressive station groups pressing for cash for retransmission consent. Several operators have said in the past that if Comcast agreed to pay cash for the Sinclair signals, it would represent a paradigm shift in retransmission-consent negotiations.

Operators apparently have dodged that bullet for now.

“I think you can draw a deeper line in the sand,” Cohen said. “Those who would say that there is a sea change occurring in retransmission consent are premature in their assessment.”

While terms were not disclosed, Sinclair had more to lose in a protracted battle with the nation’s largest cable operator. Sinclair stations represented just 15% of Comcast’s total 24.2 million-subscriber footprint, while the Comcast markets accounted for more than 30% of Sinclair’s total advertising revenue. In addition, Comcast carries another Fox station in the Baltimore-Washington, D.C., market, so losing Sinclair’s Baltimore Fox affiliate would have had little effect on the cable operator.

http://www.multichannel.com/article/CA6423098.html?display=Breaking+News

Hmmm. Sinclair blinked first. That's huge for cable operators. It also takes away a lot of future ammunition for stations in negotiations.

They either got something extremely valuable - like multicast carriage - or they passed up on a lot of sure cash.

They either got something extremely valuable - like multicast carriage - or they passed up on a lot of sure cash.

Knowing Sinclair, I think the first part is correct.

Agreed, Network TV.

And all the future retrans deals will just be minor skirmishes setting up the war between the CBS O&Os and the big cable operators.

That's the thing. While Mediacom might not have had the juice to say no, Comcast and some of the really big boys can - especially now that a line in the sand has been drawn and Comcast dared to step across it.

The Business of Television
Sinclair on Comcast Deal:
A Shift in the Retrans Paradigm
(From the Evening Bridge from mediabizcorp.com) March 9, 2007

Comcast and Sinclair reached a retransmission consent agreement allowing for delivery of the broadcaster's stations by the cable giant.
Soon after the deal was announced, Sinclair released a statement saying it expects revenues generated from retrans contracts to reach $53 million, up from previous guidance of $48 million.

"In our opinion this agreement, together with other agreements we have entered into recently, does in fact represent a shift in the retransmission consent paradigm," said Sinclair President and CEO David Smith. "

This view is well supported by the expectation of $53 million in retransmission consent revenue. In fact, we would be more than happy to waive the confidentiality clause included in the agreement with Comcast and disclose the specific terms to the general public."

The Sinclair news release describing the deal said it called for carriage of "...certain other multicastchannels which the stations located in Comcast markets may broadcast in the future."

Now let's see if the Comcast folks will agree with Sinclair to waive the confidentiality clause so we can see how well it actually held Sinclair's feet to the fire. (Don't hold your breath.)

Multicast carriage is worst case scenario for us.

$5 million bump in revenue sounds like $0.125 per month per sub in addition to multicast carriage (less if there are Comcast systems with multiple Sinclair stations)

That's also assuming some Comcast cash wasn't already projected in the original $48 million.

The deal was just mentioned on WBFF Fox45 news.

Now let's see if the Comcast folks will agree with Sinclair to waive the confidentiality clause so we can see how well it actually held Sinclair's feet to the fire. (Don't hold your breath.)To be fair, there were at least 23 markets in which Comcast stood to lose an affiliate of at least one of the seven major English-language networks. In 13 of those markets, Comcast could have lost at least two of them.

Of those, Comcast could have lost ABC in 7 markets*, along with 1 CBS, 1 NBC, and 10 Foxes. In 17 markets, they could have lost at least one of the "Big Four," and Comcast systems in two of those markets stood to lose both an ABC and a Fox.

* - edit: Sinclair actually owns 8 ABCs, but two stations serve different geographic areas of the Champaign-Decatur-Springfield, IL market.

Cashing In or Not: Sinclair, Comcast Settle


By Mike Farrell & Linda Moss 3/9/2007 4:58:00 PM

With barely one day to spare, Comcast and Sinclair Broadcast Group Friday reached an agreement that will allow about 3.4 million of the cable operator’s subscribers to keep viewing Sinclair’s TV stations.

While terms of the retransmission-consent deal were not disclosed, Comcast said it did not pay cash for the right to carry Sinclair’s television signals.

“Comcast has achieved its objective of not paying cash for broadcast carriage that would need to be passed on to our customers,” executive vice president David Cohen (pictured) said in a prepared statement. “Consistent with our existing agreement with Sinclair and all of our other retransmission-consent agreements, comparable value is being exchanged.”

But Cohen’s contention was quickly disputed by Sinclair. “I would say he has seriously mischaracterized the deal,” Sinclair general counsel Barry Faber said in an interview.

Faber added that the company updated its projections for revenue from retransmission payments from Comcast and other cable operators this year to $53 million from its original projection of $48 million, partly as a result of this agreement.

The four-year deal, which expires March 1, 2011, calls for Comcast to carry multiple digital channels Sinclair is currently broadcasting in Richmond, Va., and Baltimore, as well as certain other multicast channels in Comcast markets that the stations may broadcast in the future.

The new deal also involves advertising and co-marketing agreements, including Web opportunities, as well as advertising and cross-promotion opportunities on both companies’ properties.

“We have always been willing to discuss exchanges of value with broadcasters,” Cohen said in an interview. “We have had with Sinclair an existing exchange of value where we’re paying cash but receiving marketing and advertising benefits back from Sinclair that are comparable in value to the payments we’re making. We were able to make a deal consistent with that model.”

But Faber said, “No way does what we gave them equal the value of what they’re giving to us. Our policy is that we get paid for retransmission consent, and simply giving us cash in exchange for inventory worth the same amount of cash, I wouldn’t have gotten anything.”

Comcast’s existing deal with Sinclair was set to expire March 10. If the two parties hadn’t reached agreement, Comcast was in danger of losing the right to carry Sinclair’s 37 stations in 23 markets -- mostly affiliates of Fox, MyNetworkTV and The CW -- in markets such as Baltimore; Pittsburgh; Minneapolis-St. Paul, Minn.; Nashville, Tenn.; Richmond, Va.; and Tampa. Fla.

Cable operators across the country were keeping a close eye on the negotiations. Sinclair has been one of the more aggressive station groups pressing for cash for retransmission consent.

Sinclair just concluded a three-month battle with midsized cable operator Mediacom Communications, in which cash is exchanging hands. Mediacom agreed to pay an undisclosed amount of cash per subscriber for the right to retransmit Sinclair TV signals to about one-half of its 1.4 million subscribers. The Wall Street Journal reported the range of the monthly payment to be 40-50 cents.

Cable operators in the past have said that if Comcast agreed to pay cash for the Sinclair signals, it would represent a fundamental shift in retransmission-consent negotiations.

“Those who would say that there is a sea change occurring in retransmission consent are premature in their assessment,” Cohen said.

Faber said he was “shocked” by some of Cohen’s comments. “Contrary to what Mr. Cohen has to say, we don’t do deals where we’re not paid for retrans,” he added.

“We will stand on the statement that comparable value has been exchanged,” Cohen said.

While terms were not disclosed, Sinclair had more to lose in a protracted battle with the nation’s largest cable operator. Sinclair stations represented just 15% of Comcast’s total 24.2 million-subscriber footprint, while the Comcast markets accounted for more than 30% of Sinclair’s total advertising revenue. In addition, Comcast carries another Fox station in the Baltimore-Washington, D.C., market, so losing Sinclair’s Baltimore Fox affiliate would have little effect on the cable operator.

The Comcast deal marked the third retransmission-consent pact Sinclair has closed this year with cable companies. In January, Sinclair signed a retransmission-consent deal with Time Warner Cable covering analog and digital signals for 35 stations in 22 markets, reaching 6 million subscribers. And in February, the broadcaster inked its deal, for cash for carriage, with Mediacom.

http://multichannel.com/article/CA6423098.html?display=Breaking+News

The Business of Television
Cash in Question in Comcast, Sinclair Retransmission Deal
By Jon Lafayette Television Week March 9, 2007

Comcast and Sinclair Broadcast Group reached an agreement on retransmission consent, but disagreed on whether one of the largest broadcasters received cash from the nation’s biggest cable operator.

In a statement, Comcast said it “achieved its objective of not paying cash for broadcast carriage that would need to be passed on to our customers.”

But Barry Faber, VP and general counsel of Sinclair, said Comcast’s statement “mischaracterized” the deal.

After completing the Comcast deal, Sinclair said it raised its estimate for 2007 retransmission revenues to $53 million from $48 million. The company said the $48 million figure included an estimate of how much it would get from Comcast.

Mr. Farber said the Comcast statement “is not a denial that Comcast agreed to pay cash, but instead represents a claim that any such payment will not need to be passed on to subscribers.”

He offered to provide a copy of the retransmission agreement, if Comcast was willing to waive a nondisclosure provision.

Sinclair has been one of the more aggressive broadcasters in seeking retransmission consent from cable operators, and it succeeded in winning payments after a long battle with Mediacom last month.

Today's deal comes after the companies extended their previous retransmission agreement.

CBS recently reached agreements with a group of smaller cable operators in which the broadcaster was getting about 50 cents per subscriber for its retransmission consent.

Mr. Faber said the Comcast deal, and others that have recently been signed, represent a sea-change in the relationship between broadcasters and cable operators on retrans.

Comcast had no comment beyond its statement. CEO Brian Roberts has said the company’s policy is not to pay cash for retransmission consent.

The deal covers the analog and digital signals of 37 stations in 23 markets owned or operated by Sinclair. The agreement also provides for carriage of digital multicast signals currently broadcast in Baltimore and Richmond, Va., and certain other multicast channels Sinclair stations may broadcast in the future.

http://www.tvweek.com/news.cms?newsId=11690

Interesting. So here is where things stand:

Comcast says it abided by its policy of not paying for retransmission rights.

Sinclair says it got paid for its retransmission rights.

And Sinclair says it will be happy to waive its confidentiality agreement and make the contract public.

Comcast has no further comment.

Interesting. So here is where things stand:

Comcast says it abided by its policy of not paying for retransmission rights.

Sinclair says it got paid for its retransmission rights.

And Sinclair says it will be happy to waive its confidentiality agreement and make the contract public.

Comcast has no further comment.

The silence is deafening, isn't it? I think the comment in the movie "All of the President's Men" is, "It is a non-denial denial."

Cash for retrans or comparable value? Who knows, who cares. You say tomayto, I say tomahto.

The key for Comcast customers is the part that says they didn't pay cash "that would need to be passed on to our customers."

As far as I'm concerned there were no "good guys" in this struggle. But I do think it's clear, Comcast is not Mediacom, and Sinclair did not want to push it as far this time.

Cash for retrans or comparable value? Who knows, who cares. You say tomayto, I say tomahto.

The key for Comcast customers is the part that says they didn't pay cash "that would need to be passed on to our customers."

As far as I'm concerned there were no "good guys" in this struggle. But I do think it's clear, Comcast is not Mediacom, and Sinclair did not want to push it as far this time.

What you say may be true, but then why does Comcast NOT want the terms out there to prove their point? Sinclair seems to have no trouble with being shown up, if it is true that cash is not being paid for carriage, which would undermine their whole strategy going forward.

Here is my take on it. I have absolutely NO inside info and only what has been posted here. It would seem to me the whole deal was structured to allow both sides to get what they want, to make it look like Comcast isn't paying so they don't have to raise rates and Sinclair does get something on the bottom line, which is all either one really cares about. Comcast IS paying but it is structured to look like they aren't. (I think they call it creative finance.) This way Comcast gets to say they didn't, Sinclair gets to say they did and no one is lying. Then you take the Comcast PR that leaves it foggy with some statements that go against the agreement and Sinclair takes Comcast to task about it and Comcast is caught, knows it and just goes away.

Bottom line here is everyone got what they wanted and came out looking halfway decent.

That's probably about right. Just like so much of business and politics, it's all about the spin. But even if all the terms were made public there would no doubt be differences of opinion over the value of what was exchanged.

I guess any agreement that allows both sides to claim victory is a good one.

Even better when the consumer doesn't feel any effect, hondo21!

Insight’s Willner Calls for Tax to Aid TV Stations
By Ted Hearn MultiChannel News 3/12/2007

Washington -- A federal tax designed to subsidize local TV stations should replace the current system that allows TV stations to help their finances by demanding cash for carriage from cable operators, Insight Communications CEO Michael Willner (pictured) said Monday.

Willner said his TV tax proposal would ensure a second revenue stream for broadcasters while relieving cable operators from having to pay for programming that is offered to the public free-of-charge.

“Set up a way of collecting a tax. If you want people to pay for broadcasting, collect it from everybody evenly. They do it in Britain,” said Willner, a panelist at the annual Cable Television Public Affairs Association Forum 2007 here.

Insight is the ninth-largest U.S-based cable operator, with 1.3 million subscribers, mostly in the Midwest.

In recent years, TV-station groups have become more aggressive in using their legal right to withhold their signals to demand cash payments. Recent examples include Sinclair Broadcast Group's three month standoff with cable operator Mediacom Communications.

Willner indicated that the TV tax would fund a federal royalty pool, similar to the one used to compensate sports leagues and Hollywood studios.

“This would be in lieu of retransmission consent, and all broadcasters would share in the pool,” said Willner, who didn't suggest the size of the tax. “We’ll collect it. We don’t care -- but as long as everybody gets [taxed] equally.”

National Association of Broadcasters executive vice president of communications Dennis Wharton called the proposal “laughable” and said the “NAB isn’t interested in raising taxes on American citizens.”

The tax would alter a regulatory mandate that works to the disadvantage of cable companies, including the requirement that every cable subscriber must purchase the program package that includes local TV signals, Willner said.

“The reality is, the system is broken," he added. "It really doesn’t work because what it’s doing is charging certain parts of the population to watch over-the-air television while it doesn’t charge other parts of the population.”

http://www.multichannel.com/article/CA6423671.html?display=Breaking+News

National Association of Broadcasters executive vice president of communications Dennis Wharton called the proposal “laughable”..........and then some....

Let me guess.. Left Wing Media Wacko? Oh, sorry, didn't mean to insult the Left Wing Media Wackos that Willner is one of theirs. I don't think THEY would claim him.

The Business of Television
Counting retrans cash
Television Business Report 3/12/2007

There are various ways to do the math on the Sinclair-Comcast retransmission consent deal, but the bottom line is that the broadcaster is getting paid for its signal carriage.

"As the largest cable MSO, Comcast has the most leverage when it comes to retransmission agreements. The fact that Comcast is paying Sinclair cash indicates that broadcast television is highly valued, and we believe that this agreement paves the way for other television broadcast groups' negotiations," Wachovia Capital Markets analyst Marci Ryvicker said in a research note.

According to Ryvicker, Comcast has 3.4 million cable subscribers in the 23 markets covered by the new four-year retrans agreement. No terms were made public, but immediately after the deal was cut, Sinclair raised its 2007 guidance for revenues from retrans payments by five million bucks.

While that does include some recent deals with smaller MSOs, it is clear that most of the increase is from Comcast. TVBR did some quick math and, with about 10 months left in this year, we came up with Sinclair getting about 14.7 cents per sub per month from Comcast.

Ryvicker looks at it a little differently, calculating 5.5 million subscriber payments because of the duopolies that Sinclair has in most of the Comcast markets, "we believe that, inclusive of Sinclair's duopolies, the company is getting an incremental 10 cents per subscriber (we do not know what Sinclair received in the past, but we do not believe it was much). We are increasing our '07 revenue and EBITDA estimates by 0.7% and 2.1% respectively," Ryvicker told clients, also boosting her EPS estimate for this year by three cents to 35 cents.

TVBR observation:

Whether you call it 10 cents or 15 cents, Comcast is still paying a lot less than the 40 cents that Mediacom, a much smaller MSO, is rumored to have had to cough up. And it is well below the 50 cents per sub target that Les Moonves has set for CBS to get when its retrans agreements come up for renewal.

But the important thing is that Sinclair is getting paid. Even the biggest MSO of all cannot get by without paying something for broadcast TV retransmission rights.

Especially now as the cable companies are pressing hard for customers to upgrade to more expensive HD tiers, it would be ridiculous for an MSO to try to get those higher monthly payments if the HD service does not include the Super Bowl or the Olympics.

And since the Super Bowl rotates among three networks, that means NBC, Fox and CBS are all must-have HD channels. Doing without "Desperate Housewives" or "Grey's Anatomy" on ABC is also hard to imagine.

The world has indeed changed and the cable MSOs are adjusting to the new reality.

Defining When Cash Is Cash — and Isn't

A Retrans Deal's Value Is in the Eye Of the Beholder

By Mike Farrell 3/19/2007

The battle of semantics this month surrounding the retransmission-consent deal between Comcast and Sinclair Broadcast Group begs the question: In these deals, just what is meant by “cash?”

Comcast was first to announce its retransmission-consent deal with Sinclair on March 9, stressing in interviews that it had adhered to its policy of not paying cash to broadcasters for retransmission.

But the company selected its words carefully. Comcast executive vice president David Cohen said that the multiple-system operator's policy is to not pay cash for retransmission consent that would be passed on to consumers — a point that was quickly attacked in a Sinclair press release, which claimed that Comcast's contention that the deal is merely an exchange of equivalent value is a “mischaracterization.”

Defining cash
The argument is not new. For as long as broadcasters have been seeking retransmission consent, they have claimed to have received cash for carriage from cable operators, direct-broadcast satellite service providers and now telephone companies. For the most part, it has mainly been the cable operators that have denied they are paying cash for retransmission consent.

Webster's defines cash as “ready money; money or its equivalent (as a check) paid for goods or services at the time of purchase or delivery.”

At Comcast, cash for retransmission consent means just that — the operator pays cash strictly for the right to carry the signals of a broadcaster and receives nothing else in return. At Sinclair, the definition is the same. Again, Comcast says it does not pay cash for retransmission. Sinclair said it does not consider money paid for advertising spots to be cash for retransmission consent.

So, by its accounting, Sinclair is getting “cash.” Shortly after Comcast made its announcement, Sinclair went as far as to revise its 2007 retransmission-revenue forecast from $48 million to $53 million to drive home its point. Sinclair said that part of the reason for the revision was due to the recent signing of the Comcast deal. Sinclair's general counsel, Barry Faber, would not break out how much of that $53 million is advertising revenue and how much is retrans cash.

In its 2006 10-K annual report, filed March 9, Sinclair reported $25.4 million in retransmission-consent revenue for the year, $20.5 million in cash and $4.9 million in local and regional advertising. So it appears that Sinclair draws a distinct line between cash compensation and advertising sales.

So who's right? Maybe both.

“I think they might both be finding a way to both be telling the story accurately, in the nuance of what they're saying,” said one cable executive who asked not to be named. “You have to read between the lines.”

In an interview shortly after the deal was announced, Cohen explained the different definitions possibly could come about because Sinclair may value its advertising at a lower rate than Comcast.

“When we get a $100 ad from him [Sinclair] we value it at $100,” Cohen said. “He may say, 'It's not worth $100 to me because we don't sell all of our advertising anyway. And so it may be worth only $30 to me.' At the end of the day, the value that we have received back is comparable. When I say it's comparable, I'm not playing games by saying that I'm inflating the value of what we're getting back in order to make that statement.”

Sanford Bernstein cable and satellite analyst Craig Moffett was equally puzzled, adding that it all comes down to the value assigned by each company.

“Value is in the eye of the beholder,” Moffett said. “From the perspective of Comcast, the $100 of advertising is $100 of advertising. It's irrelevant whether Sinclair would have otherwise sold it or not. From the perspective of Sinclair, the economics are completely different. If they would have sold it [the advertising] anyway, the incremental value is essentially zero. If they otherwise wouldn't have sold it, the incremental contribution is 100%. Only Sinclair really knows.”

While cable operators may be paying what they believe to be a fair price for advertising spots, one cable operator who asked not to be named said the money spent on advertising as part of a retrans deal is often money the operator would not have spent in the first place.

Thick nuances
“I think cable operators are in fact having real hard-dollar value extracted from them in return for retransmission consent,” said the cable executive who asked not to be named. “However, they are getting other value-added services in return for that, as opposed to just paying cash,” which can translate to marketing services or something as simple as getting the operator's logo on a news crawl.

The nuances start to become thicker, however, in examining what those services are and how both sides value them.

“Let me tell you what cash is not — if somebody said to me 'I'll give you $1 million, but you have to give me commercial inventory on your stations worth $1 million,'” Faber said. “I didn't get any cash for my retrans [in that scenario]. And I don't do deals like that.”

Faber said for larger cable operators, sometimes the company will agree to include advertising, but only equal to what the operator has historically spent with the broadcaster. For example, if a cable operator typically spends $1 million on advertising with a station group and does a $10 million retrans deal, Sinclair may say $1 million of that deal is for advertising, to appease any operator concerns.

“What happens sometimes with cable guys is, there is certainly a lot of desire not to have documentation that says they're paying us cash for retrans,” Faber said.

True value
So, if a cable operator wants the deal to state that a $10 million retrans deal consists of $1 million in advertising and $9 million of video-on-demand rights, he has no problem with that.

Faber said that video-on-demand rights — mainly for local news broadcasts — have little value to his stations, but may have greater value for the cable operator. Whether the cable operator wants to say that the bulk of the cash paid for retrans was actually for VOD rights doesn't matter to him. But there is little question about its true value, he added.

“Let's say I had elected must-carry,” Faber said. “If I called them up and said 'How would you like to buy my VOD rights for $9 million?' I'm very confident that nobody is going to pay me that for it. But if that's how they want to memorialize it in an agreement because, for whatever reason, the optics of it work for them, I'm OK with that. To me money is money and I don't really care how the agreement allocates it. In my view it's for retrans.”

But that doesn't mean that VOD has no value to Comcast. The Philadelphia-based operator is one of the biggest purveyors of on-demand programming — most of it free to subscribers. Comcast sees on-demand content as a key tool for keeping its subscribers from defecting to satellite or other competitors. So even if a small group of subscribers stays with Comcast — paying an average of $100 per month — in part because they are able to watch the 6:30 p.m. local news at 8 p.m. on demand, then that VOD deal has a real value.

Could cable operators be paying $100 for $30 worth of advertising? The answer may truly be in the eye of the beholder.

http://multichannel.com/article/CA6425792.html

And here is the footnote to Sinclair vs Mediacom:

Due to sharp increases in the fees we pay to broadcast stations and cable networks, we find it necessary to adjust the rates for cable services. Effective with your next billing statement, your Broadcast Basic service rate will increase $3. 00 per month. Your Expanded Basic rate will increase $1.00 per month. We greatly appreciate your business.

And here is the footnote to Sinclair vs Mediacom:

But remember, it's "fair" that YOU should pay for what is actually passed out free. I forget exactly why it's "fair" and why you should WANT to be "fair", but it seems as if someone on this thread has explained it in the past.

$48 a year now, with a promise of more in the future. Maybe the folks with antennas will want to be "fair" also. They could just mail in $4 a month so that they, too, could be "fair."

But remember, it's "fair" that YOU should pay for what is actually passed out free. I forget exactly why it's "fair" and why you should WANT to be "fair", but it seems as if someone on this thread has explained it in the past.

$48 a year now, with a promise of more in the future. Maybe the folks with antennas will want to be "fair" also. They could just mail in $4 a month so that they, too, could be "fair."
For the consumer nothing really changed except the price went up.

Those who were paying for local channel still are as they have been. No consumers who was getting free local channels lost that ability.

Odd that they increased the broadcast basic tier $3.00, but the expanded basic tier (which also includes all the locals) only increased $1.00. Must be the lack of competition at the Broadcast Basic level.

There are accounting rules (and IRS rules) that payments and receipts better match up on both sides of the ledger as to what they are for. When 2 Companies account for them in different ways, well, go talk to Enron and Worldcomm about that.

However, if Comcast wants to pay $100 for a $30 spot, that is actually worth more than $100 to Sinclair.

Huh????

As noted pages and pages ago - the price of spots is dependent on demand. If everyone is scrambling to get on in October prior to an election, then the price is going way up for everyone.

Or take the airplane scenario. There are x number of seats on the plane. If the early seats are sold for for the cheap rate of $200, as seats fill up the quicker the fare moves up and they max out at 3x $200 in First Class.

If in this case the early seats (that would have been $30 seats) - are sold but the seats are filled at $100 - that means the other people that would have purchased the $30 seats normally cannot get them - and now must pay $60 for seats - or 2x what they would have originally had to pay.

In other words, there is pressure on the entire inventory - there are less seats - and the $30 seats sold for $100 - so the price went up for EVERYONE on the plane.

If a Network could sell in the May Upfronts at 3x the going rate, it would be like heavens opened up.

So, while I think the when is cash = cash debate is ridiculous from an accounting and auditing standpoint, if Comcast wants to push the markets rates up higher by paying upfront $100 for $30s, then god love them. It means Ford, GM, Verizon, Sprint, McDonalds, Coke and everyone else just went up in what it costs them to advertise as well.

The switch was flipped by Charter Cable for WLOS-HD in the Western Carolinas this morning. Took one month after agreement to happen, but it's finally here! Now, WMYA-HD should become available in the near future.

The switch was flipped by Charter Cable for WLOS-HD in the Western Carolinas this morning. Took one month after agreement to happen, but it's finally here! Now, WMYA-HD should become available in the near future.

Amazing! It took WGME HD in Portland ME less than one HOUR to appear on Time Warner Cable after the agreement was signed. TWC was ready and waiting. Of course, this is Maine and people might move a little quicker here.

Amazing! It took WGME HD in Portland ME less than one HOUR to appear on Time Warner Cable after the agreement was signed. TWC was ready and waiting. Of course, this is Maine and people might move a little quicker here.

Or, WGME already had a fiber run into the TWC facility in S. Portland, and they just had to turn in on. :D

Or, WGME already had a fiber run into the TWC facility in S. Portland, and they just had to turn in on. :D

When you stop to think about it, if WGME (Sinclair) had already run fiber into to Time Warner facility in So. Portland, it must have tipped the negotiating hand that Sinclair was playing at the time. When you have already made that kind of commitment and investment, you are very likely ready to sign on the dotted line.

On the other hand, it is true that TWC only had to push a button to start carrying the channel.

I do suspect, however, that it might be a little difficult in some areas to just kid the cable company to push the button. Some of the posters indicate that their local cable offices barely know what's going on around them.

When you stop to think about it, if WGME (Sinclair) had already run fiber into to Time Warner facility in So. Portland, it must have tipped the negotiating hand that Sinclair was playing at the time. When you have already made that kind of commitment and investment, you are very likely ready to sign on the dotted line.
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Don't read too much into it! That fiber was put in quite awhile ago (18 months+)and I wouldn't even speculate who foot the bill to put it in. I just got a tour of the facility a while back and there it sat, wating word "from above"

The other networks are not sinclair owned. The relevance is that Sinclair is using the excuse that Adelphia is making money off of their signal and not passing the money on to them. But that is not true because Adelphia passes the networks HD signals for free via ClearQAM.I'm sure someone has already mentioned this (I'm late to the thread) but I would like to point out that not all tv's and set-tops have a QAM tuner, and of those that do there a percentage of users who aren't technically savvy enough to understand what it is or how to use it.