Small Operators Balk At ‘Discriminatory’ Carriage Fees

Negotiations between operators of small groups of cable systems and the suppliers of their local broadcast television signals this year will “leave bodies on the street,” according to Patrick Knorr, the head of a set of systems based in Kansas and the chairman of the American Cable Association, which lobbies on behalf of more than a thousand operators of relatively small cable systems. These operators are facing the prospect of signing agreements that are “500 percent” as expensive—on a per subscriber per month basis—than large nationwide operators of cable systems for the right to retransmit local broadcast programming on their networks, according to Knorr. A typical independent operator may serve just 5,000 subscribers in a given market; all ACA members nationwide serve about 7.5 million subscribers. The four largest multichannel service providers—Comcast, DirecTV, Dish Network and Time Warner Cable—each serves more than 13 million subscribers. Operators of national broadcast networks, such as CBS, and of local TV station groups, such as Sinclair Broadcasting, are now pushing for payments of as much as $1 a subscriber a month for the carriage of local TV programming and the national programming that is run in primetime and drivetime. But small operators end up paying more than large operators, sometimes as much as 20 times as much, according to ACA lawyer Chris Cinnamon. This amounts to “retransmission consent price discrimination,” Cinnamon said.
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