As fights over retransmission fees happen more often and become more contentious, Time Warner Cable’s (s TWC) director of digital communications Jeff Simmermon argues that they are no longer isolated incidents but an industry-wide problem that might require government or regulatory intervention. That’s the key takeaway from a pretty candid post that Simmermon put up on the cable company’s “Untangled” blog yesterday.
Simmermon quotes extensively from a Bloomberg article we also cited the other day, which points out that the number of television blackouts due to retrans disagreements has grown to its highest number in a decade — and there are surely more to come.
While Time Warner Cable isn’t directly involved in any of the disputes that are mentioned by Bloomberg, Simmermon writes that it’s only a matter of time before the pay TV provider has its own “tense and difficult negotiations” with broadcasters, which could happen as soon as later this year. His argument is that subscribers who switch providers due to these retrans spats will likely have to endure other fights and possible blackouts at whatever pay TV company they end up with.
“This supports something we’ve said all along — You can run but you can’t hide,” Simmermon writes.
But the bigger issue isn’t about losing individual subscribers every time a programmer comes along and tries to assert its leverage by withholding content from a cable distributor — it’s about the fact that broadcasters are threatening these tactics on everyone. Simmermon concludes: “[T]his is everyone’s problem, and it’s going to get worse until Congress or the FCC step in.”
This isn’t the first time Time Warner Cable has appealed to the public to paint broadcasters as the bad guys in these public retrans fights. During its negotiations with Fox (s NWS) late last year and Disney (s DIS) earlier this year, it launched an online marketing campaign asking subscribers whether it should Roll Over or Get Tough against cable programmers. With that campaign it sought to educate consumers about where the money from their cable bills goes, arguing that 40 percent of its revenues goes to programmers and 54 percent goes to infrastructure, leaving it “only” a 6 percent profit margin.
Time Warner Cable also helped lead the creation of the American Television Alliance, an industry consortium of pay TV operators and independent cable programmers that is trying to enlist support from Congress and the FCC to stop these retrans fights.
Of course, broadcasters are trying to use retrans fees as a way to prop up their businesses in light of flat advertising revenues and declining ratings numbers. As I wrote previously:
“Broadcasters say they need retrans fees to continue producing high-quality original programming, and that might be true. But there’s probably no reversing the larger trends that are affecting their audience. So while they may seek to get paid for their programming, they’ll be doing so at the same time they’re becoming less important to viewers, advertisers, and ultimately, the cable companies they’re seeking retrans fees from.”
With that in mind, though, the absolute worst thing that programmers could probably do is to black out their programming, a tactic which not only alienates their distribution partners, but could prompt audiences to find content elsewhere.
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