Broadcast TV as we know it will cease to exist unless cable TV operators give in to demands for higher retransmission fees: That’s the gist of a statement that News Corp. (s NWS) Deputy Chairman, President & COO Chase Carey will give before the United States Senate Subcommittee on Communications tomorrow.
The prepared statement, which we were able to obtain ahead of time, calls for the government to stay out of retransmission fee negotiations like the recent dispute between Cablevision (s CVC) and News Corp.-owned Fox. Senator John Kerry (D-Mass.) is currently drafting a retransmission reform bill to prevent any future blackouts, but Carey argues that any such bill would “clearly tip the balance of negotiations toward distributors.”
That would mean less additional money for broadcasters, which Carey believes would directly impact the quality of programming. “If we can’t sell our content for a price that allows us a fair return on our investment, we will no longer be able to invest in the high quality content that viewers enjoy,” his statement reads. One of the first items on the chopping block would be sports coverage, which has already seen a migration towards ESPN and other cable channels. He continues:
“Additionally, local news, which is very expensive to produce, could be eliminated entirely or become less local in nature, as advertising alone can no longer cover the hefty production costs. Broadcast channels would become much less desirable, and broadcasters and the people they employ and the viewers they serve, would be irreparably harmed.”
Those are some heavy guns right there. Local news is important to every Senator trying to get reelected, and sports was at the center of the dispute between Cablevision and Fox. Cablevision viewers missed out on some major sports broadcasts on Fox during the two-week blackout, which caused for Kerry and others go get involved.
Speaking of blackouts: Carey is also trying to downplay the severity of this gun-to-the-head negotiation tactic, saying that a cable TV outage due to technical issues is “about 10 times more likely” than a retrans blackout.
It’s worth noting that Carey doesn’t mention online streaming offerings at all, but he does seem to have a soft spot for cord cutters and other cable holdouts. Fox recently told Cablevision customers how to get its programming with an over-the-air antenna, and Carey complains that lower retrans fees would be “for the more than 30 million Americans who rely exclusively on over-the-air television.”
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