Retrans rebuffed
In hard-line remarks before a gathering of D.C. communications lawyers, the head of the nation's third-largest cable multisystem operator issued what he called a "loud and clear statement so no one miscalculates our position."
Continental joins Tele-Communications Inc., the nation's largest MSO, in publicly stating its refusal to make retrans payments.
Broadcasters face a critical June 17 decision on whether to seek must-carry protection from local cable operators or roll the dice on retransmission consent. Stations selecting the retrans option are free to extract cash payments from cablers; however, the cable operator is under no obligation to pay for the signal. If negotiations between the two parties collapse, broadcasters can bar cable operators from carrying the signal.
Hostetter said the must-carry/retransmission consent provision included in last year's cable reregulation bill sets up the potential for "massive, massive subscriber dislocation." Continental's decision not to pay for local TV station carriage was sealed when the FCC decided that initial retransmission consent costs may not be passed on to consumers, Hostetter said.
"Where the rationality lies in a policy which says that broadcasters can seek retransmission fees ... but cable operators cannot recover these costs from subscribers totally eludes me," said Hostetter. "No business can be expected to sign up for new costs without having any means to recoup them." Moreover, Hostetter said it is "hard to justify" paying for broadcast signals that can be obtained universally free of charge. Hostetter also took a shot at broadcasters attending the recent National Assn. of Broadcasters convention, where attendees indicated there is a growing industry coalescence around retransmission consent. "The macho that came out of the recent NAB convention was not the least bit constructive," said Hostetter.
Hostetter's remarks were softened by the pledge to sign "long-term carriage contracts" with TV stations that provide "significant local programming" and are willing to opt for must-carry. Carriage will be guaranteed even if the Supreme Court declares must-carry to be unconstitutional, he said.
However, Hostetter's offer is not likely to mollify network affiliates and strong independent stations that presumably would not be threatened with being yanked from a cable system even if must-carry rules are tossed out in court.
Hostetter also indicated Continental would be amenable to discussing non-cash compensation to broadcasters opting for the retrans route.
