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Posted at 4:15 PM ET, 11/17/2010

Lawmakers weigh TV fees bill, some call television market broken

By Cecilia Kang

The chairman of the Senate Commerce Committee scolded television cable providers and broadcasters Wednesday for getting mired in fee disputes that he says have harmed consumers.

Sen. John "Jay" Rockefeller (D-W.Va.) said the failure to control the disputes was a symptom of broader problems in the TV market. There is a "race to the bottom" among news services that offer polarizing views, he said. He also criticized cable and satellite firms that bundle hundreds of channels to sell to consumers at ever rising prices.

"We need slimmed-down channel packages that better respect what we really want to watch," Rockefeller said. "And we need to find ways to provide greater value for television viewers at a lower cost, because people are tired of always escalating rates."

He said cable and satellite prices have risen at a pace three times that of inflation in recent years.

The comments came in a hearing on retransmission consent negotiations between broadcasters and cable/satellite firms. The fee disputes involved in some of those negotiations have led to television blackouts, such as Fox's signal blackout to Cablevision viewers for two weeks in October.

Sen. John Kerry (D-Mass.) has issued a draft bill that would restructure retransmission consent laws. The legislation would enable the FCC to determine if negotiations are done in good faith before allowing broadcasters to pull signals.

"Our constituents should not be pawns," Kerry said in the hearing.

Cable service providers such as Cablevision and Time Warner Cable support the bill. But analysts say broadcasters have a strong position in negotiations, as they are able to pull signals, and have been pushing for higher fees.

By Cecilia Kang  | November 17, 2010; 4:15 PM ET
Categories:  Comcast, Consumers, FCC, cable  
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Dear Rockefeller.

We need new catalysts for quality POLITICIANS. I hunger for quality politicians. I'm TIRED of politicians blaming everything they do on the press. There's a litte bug inside me that wants to see you leave congress...Out, gone, goodbye. If you were to leave, it would do the taxpayer a big favor, and would improve political discourse.

We don't need "slimmed down" channel packages (just because it overwhelms you, it doesn't mean we are overwhelmed). What we need is a SLIMMED DOWN gov't. Less politicians, more channels.

And we need a way to find a better value in gov't, because people are TIRED of always escalating gov't. and Kerry don't have a clue.

Posted by: cabby29 | November 18, 2010 8:56 AM | Report abuse

John "Jay" Rockefeller wants to do away with FOX News and PMSNBC because he thinks an informed electorate is a bad thing. People who know what is going on and what they are doing tend to not like what is going on and what they are doing. Tell this guy to leave the media alone and let the market work.

Posted by: moonwatcher2001 | November 18, 2010 10:08 AM | Report abuse

While Rockefeller's remarks on news outlets are disturbing, his total misunderstanding on WHY cable rates and packages continue to escalate in price is much worse.

Since we are involved in the cable television business as well, I can tell you that the number one barrier to smaller more focused packages at more reasonable rates is not the cable or satellite companies. It is the programmers. They DEMAND that their large groups of stations all be placed on the most widely available tier and that the price not be singled out in any way. ESPN has about 8 channels that cost a substantial amount collectively and most are watched by less than 5% of the customers. We once did an internal study and if only the people who watched ESPN were responsible for the rights fees we pay, they would have to pay the equivalent of about $60 just for ESPN. When the inevitable attrition occurred, it would be way over $100 per month. How much longer do you think billion dollar rights fees would continue? Viacom controls MTV, Nickelodeon, VH1, TVLand, Country Music Television, Spike, Comedy Central, and EPIX. Some of those have sub-channels that must also be carried on your most available tier. Any one of those we could do without, but the exclusion of all of them moves us into a niche player at best.

We are currently forced to offer over 90 channels on our basic tier because we are forced into these basic tier arrangements. Each of those have a cost that is escalating at an astronomical rate. Lately, the local off air channels have entered into the same sort of extortion as the satellite providers. That's right. Free off-air stations are forcing us to pay them for us to carry their stations in our package that allows viewers to actually see the local signals even in marginal areas. We used to be able to carry these for free. The first rounds of negotiations last year resulted in fees of over $5 per customer and I have heard that the latest demands can take that over $15 per customer or even more.

Oh sure, we don't HAVE to pass those fees on. We could just go out of business since it is a money losing business right now anyway. Even the large companies are having a hard time keeping up with the rights fees increases. Small guys like us have no chance. If you actually try to fight one of the big players, they simply say pay up or take our programming off. Satellite or multiple landline providers take away all of our leverage in negotiations.

Yeah, boo hoo. No one feels sorry for the cable company. But you should know WHY cable rates are increasing so quickly and it is not the cable company. You might also think about it next time you see ESPN outbid everyone for every significant sports event for television. It is your money they are using, whether you watch sports or not.

Posted by: rozell99 | November 18, 2010 11:15 AM | Report abuse

Maybe they should pay more attention to why colleges get to raise their rates at over 10x the inflation rates over the past 20 years or so & not worry so much about TV.

Posted by: sdcelli | November 18, 2010 11:21 AM | Report abuse

The government owns/controls the airwaves. Broadcasters operate at the pleasure of the owner. That's why the president can preempt every channel for an address if he wants. Not because the broadcasters are providing a patriotic service, but because the owner said 'do it'. If the government wants broadcasters to offer different packages and lower costs, then just tell'em to do it or pull their plug. They say they might go out of business if they do, the government says you definitely will of you don't. It's REALLY that simple. That's about as socialist as I'll get. Note to broadcasters: You guys should do something about this 'who owns the airwaves' bit. I don't think the government should have it all - some for national security - but the whole bailiwick is a little dictatorial don'cha think?

Posted by: LieToMe | November 18, 2010 12:03 PM | Report abuse

Programer's & the Cable and Broadast Industries are going to have to realilze that Consumers are tired of paying big bills for channels they have no interst in, in order to recive a few that they are interested in.There's a reason thre's momentum in people cutting the cable coax, and doing without 100's of useless channels.

Posted by: Hattrik | November 18, 2010 7:12 PM | Report abuse

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