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Time for Cable and Satellite Carriage Elections, and the Stakes Have Never Been Higher
October 1, 2011 marks the triennial deadline for full power television stations (and a few lucky qualifying LPTV stations) to send their written must-carry or retransmission consent elections to each of the cable and satellite providers serving their market. The elections made by this October 1st will govern a station’s carriage rights for the three-year period from January 1, 2012 to December 31, 2014, and the impact of these elections will be far more significant for individual TV stations than any made before.
To understand why, keep in mind that in the early days of must-carry/retransmission consent elections, the lack of local competition among cable providers allowed them to take a “my way or the highway” attitude toward television broadcasters. As cable subscribership soared, and local cable providers faced little or no competition for subscribers, broadcasters had little choice but to make their programming available for retransmission. Because cable providers were in a position to refuse to pay cash for retransmission rights, the largest broadcasters were limited to negotiating for non-monetary compensation (e.g., obtaining carriage for an affiliated program service, which led to the launch of Fox News, among others). Smaller broadcasters typically did worse, as they had a weaker negotiating position and little need for non-monetary compensation like guaranteed carriage of a non-existent second channel. These were the days before digital multicasting made such additional local channels at least plausible.
Faced with these challenges, many stations just elected must-carry, which guaranteed cable carriage while avoiding the need to engage in prolonged negotiations likely to result in little gain. That all changed with the arrival of satellite television providers, who provided competition to cable, and more importantly, needed local TV signals to take market share from cable providers. Both of these developments were critical to creating a free market for the retransmission of broadcast programming. First, because they lacked cable’s monopoly position, satellite providers were willing to pay cash to obtain the broadcast programming that would allow them to compete for subscribers. Second, as subscribers left cable for satellite, cable providers suddenly had to compete for subscribers, and couldn’t do it without ensuring continued access to local broadcast signals.