Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, April 9, 1990 TAG: 9004070248
SECTION: EXTRA PAGE: E6 EDITION: METRO
SOURCE: JOHN BURGESS THE WASHINGTON POST
DATELINE: WASHINGTON LENGTH: Medium
Legislation to charge cable companies for retransmission was introduced in the Senate Thursday, to the delight of the National Association of Broadcasters. If enacted, it would open up a major new stream of income to supplement advertising. It could also drive rates up for most cable subscribers.
Not many people expect this bill to pass. Even its sponsor, Sen. Daniel Inouye, D-Hawaii, said he doesn't necessarily favor the idea - he said he merely thinks it ought to be discussed. And with many members of Congress already feeling the political heat from constituents who complain of rising cable rates, any idea that would raise them further is not likely to be highly rated. The bill could turn out to be important mainly as a tactical feint in a fight between two large, competing and paradoxically intertwined industries, $14 billion-a-year cable and $26 billion-a-year broadcasting. The balance of power is shifting year by year in cable's favor and broadcasters are looking hard for ways to safeguard their position.
"Since cable was established, they have been using and building their systems on the backs of broadcasters and paying broadcasters nothing," NAB President Edward O. Fritts said yesterday. " . . . Cable has taken those signals for free and sold them for a huge profit."
James P. Mooney, president of the National Cable Television Association, had a different view: "We think it's both brutally anti-consumer and remarkably cynical for people who so frequently describe themselves as free television. . . . Cable rates will go up but the consumer will get nothing new."
While they once had a monopoly over home video entertainment, broadcasters today face competition from cable, VCRs and satellite dishes. Their share of viewership has slipped steadily, from 70 percent in 1983 to 57 percent last year, according to the media research firm Paul Kagan Associates. Despite the loss of market share, however, broadcasters remain highly profitable as an industry - far more profitable, in fact, than cable companies still paying the bills for wiring more than half the country.
Broadcasters' new approach on cable has been spearheaded by CBS, the lowest-rated of the three networks and the only one that has no investment in cable. Broadcasters argue that their industry is being unfairly undermined by cable, which they depict as an unregulated monopoly that is getting much of its programming for free. They are also pressing Congress to resume regulation of cable rates that were largely allowed to float free in 1984.
The cable business was born more than 30 years ago as a means of piping TV stations' shows to areas where broadcast signals didn't reach. In most places a mutually beneficial arrangement evolved: Broadcasters' shows were carried to more homes, allowing the broadcasters to charge more for advertising, while cable companies got free programming that they could channel to customers for a fee.
But squabbling began as soon as cable companies in some small communities wanted to carry signals of stations from big cities instead of those from local TV stations. In 1966, at the behest of local broadcasters, the Federal Communications Commission put rules in place requiring cable to carry all local stations. The law also calmed some broadcasters' fears that cable companies would charge them for carrying their signals.
In the 1980s, the "must-carry" rules became more irritating to cable as it emerged as an industry in its own right, carrying an increasingly diverse selection of exclusive programming. Why carry three local ABC stations, cable systems asked, when customers would rather have one ABC station and two new cable channels?
In 1987, a federal court struck down the "must carry" rule, citing First Amendment grounds, among other things. Since then, cable and TV have been sparring over what if anything to put in the rules' place, with Congress looking on. On Wednesday, cable and public TV reached a deal to continue "must-carry." Cable and commercial TV, however, have been moving further apart, with broadcasters now trying what they call the "if carry, must pay" approach.
Under the bill, if a cable company chose to carry just one local station, it would have to carry them all and pay for them all. The cable industry is calling it "must carry, must pay."
Says Larry Gerbrandt, senior analyst at Paul Kagan Associates: "This is an issue that's going to be around for some time because the solutions are not simple."
by CNB