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ABC Affils: Dump Retrans and More Sports Will Migrate to Pay Platforms

7/23/2012 10:37 AM Eastern

ABC affiliates told Congress in a letter on Friday that if they are not allowed to have a dual revenue stream -- advertising and retrans cash -- more big ticket sports programming will move to cable.

That argument is in a sweet spot for legislators, who have on more than one occasion pressured media outlets to resolve program disputes when high-profile games, particularly with local teams, may not be available to constituents.

The affiliates' message came in a letter to the chairman and ranking member of the Senate Commerce Committee in advance of the July 24 hearing on the 1992 Cable Act.

Those stations said it would be difficult to overstate the importance of retrans to their continued viability. They say that without retrans, they will not be able to afford expensive sports programming or produce local news, sports, weather, public safety and public interest programming.

They say that since Disney, which owns ABC, gets a reported $5-plus per sub per month for ESPN from cable and satellite operators, as well as "substantial" commercial inventory, Disney now asks for both inventory and a programming fee from affiliated stations.

"Disney otherwise, understandably, will place its most expensive and popular programs on cable and satellite," they say. "Understandably," because Disney has a fiduciary duty to maximize the return on that investment. And with a bunch of competing platforms, they can pick the best distribution deal.

As a result of that changed marketplace, say the stations, they have to be able to charge fees to their competitors for "retransmission and resale" of their signals.

"Two revenue streams will always trump one," they argue. The affiliates also say that the retrans/must-carry regime represents laws "that prohibit cable and satellite companies from pirating, retransmitting, and reselling the signals of local television stations without their consent," and that it is imperative for Congress to keep those protections in place.

September