SOURCES: NCTA TAKES UP RETRANS FIGHT

As the American Cable Association has attacked broadcasters' retransmission consent rights in Washington over the past year, the National Cable & Telecommunications Association—representing the nation's major operators—has sat quietly on the sidelines.

No longer, it appears.

According to broadcast lobbyists, the NCTA has joined the small operators represented by ACA in demanding that Congress water down the retrans law, which requires that cable operators get the permission of broadcasters before carrying their signals.

"We are operating on the assumption that NCTA is engaged on retransmission consent at its very highest levels," says NAB EVP Dennis Wharton.

To that, NCTA's top spokesman Rob Stoddard gives a terse response: "No comment."

But "no comment" is a long way from NCTA's protestations of neutrality in the ACA-led retrans fight that it has maintained for the past year.

Although all operators are alarmed by broadcasters' increasing success in using retrans consent to extract payments from operators, NCTA had decided to sit out reform efforts because cable programmers that it also represents have benefited from retrans just the way it is.

Multimedia companies like Disney, Fox and NBC have used the retrans rights of their broadcast stations to secure carriage for their cable networks.

But NCTA's deference to its programming members has apparently given way in the face of broadcasters' growing demand for retrans cash.

After a bitter, multi-state retrans battle, Sinclair Broadcast Group earlier this month forced Mediacom into a settlement that reportedly includes hefty payments to Sinclair. During the negotiations, Mediacom had to drop Sinclair signals from its systems—a move that cost it 7,000 subscribers.

Neither side would confirm cash was involved in the deal, but Sinclair told security analysts two weeks ago that it expects its total retrans revenue to grow 90% in 2007 to $48 million. Sinclair and other broadcasters also receive retrans payments from satellite operators and, in some cases, telephone companies.

Since it split off from Viacom with its cable programming, CBS has been insisting that it will settle for nothing less than cash in all future retrans deals.

Last week, it announced that it had inked deals with nine operators covering one million subscribers. CBS is reportedly receiving as much as 50 cents per sub per month in the deal, although neither side would confirm that.

Just yesterday, in a conference call with security analysts, CBS CEO Les Moonves said the deals with the nine operators were just a start.

"We see more and more of the MSOs getting on board," Moonves said. "Have you noticed that these nine MSO deals were done without a whole lot of noise? There weren't big newspaper ads. There weren't big fights. There wasn't anything pulled off the air. So, the MSOs are realizing that it's better to get along than to fight. Yes, the big [retrans contracts] are up in '09 and '10, but you'll see us doing a number of deals before then."

"MSOs are already paying for [broadcast] networks," Moonves said. "You can disguise it under other things. If you are paying $3 for ESPN, you're really paying $2.50 for ESPN and 50 cents for ABC."

Broadcasters have made defense of their retrans rights a top priority. This week, heads of state broadcast association came to Washington to lobby their state delegation under the aegis of the NAB. Retrans was high on their list of issues.

ACA's small operators have not been alone in the retrans fight in Washington. Several large operators, including Insight, Mediacom and Cox, have also been active.

Even with NCTA involved, reforming retrans is a tall order.

Speaking at NAB on Tuesday, House Energy and Commerce Committee Chairman John Dingell (D-Mich.) underscored his support for retrans.

"I still believe that you should have that right," Dingell told broadcasters to a round of applause.

But the chairman also said he would "keep a close eye on negotiations." 

He said he hopes that broadcasters and cable operators will "keep in mind that they have the responsibility to serve the best interest of consumers while they're conducting their negotiations."

Led by Matthew Polka, ACA has been effective in gaining some congressional attention on the matter. It claims more than 1,000 members serving some 10 million cable homes.Following the Sinclair-Mediacom deal earlier this month, ACA intensified its efforts.

ACA is behind a Feb. 16 letter to FCC Chairman Kevin Martin from Rep. John Peterson (R-Pa.), co-chair of the House Rural Caucus.

"The current [retransmission consent] rules are causing significantly higher costs for rural providers and higher rates for rural consumers," the letter says. "Small, rural video operators need regulatory relief so that they can continue to provide video services to their customers at reasonable rates.

"If the small cable operators in my district are forced to pay for broadcast signals, my constituents will suffer, in the form of higher basic cable bills," it says.

TV broadcasters are countering that message.

"We need to make sure that members of Congress understand that this is a private negotiation," NAB President David Rehr says.

"We're not asking them to take our side when there's a fight with our cable competitors and distributors," he says. "Similarly, we don't want them to take cable's side. We just want them to allow the market to work as it's supposed to work."