It’s been about two weeks since I attended Consumer Electronics Week at NYC, watched 3D TV on big screens and small, and met with local TV entrepreneur Jack Perry. TV is still very much on my mind.
Perry’s company Syncbak provides a new revenue source for local TV stations and network affiliates: retransmitting their content over the Internet, but only to subscribers in the local viewing area.
And I should add, this is a less contentious source of revenue, say compared to retransmitting a TV signal over a cable network.
During the weekend, I learned from The New York Times that a Fox affiliate in the Ozarks couldn’t come to terms with the Fox parent company. At issue was KSFX’s (Springfield, Missouri) own retransmission agreement with an unnamed cable operator.
Fox wanted a greater cut of the revenue that KSFX receives for allowing its signal (local news and Fox programming) to be seen by cable viewers.
As the Times article points out, these retransmission agreements between network affiliates and cable and satellite companies now run to over a $1 billion per year.
The big TV broadcasters then work out reverse compensation arrangements with the local stations to divert some of that money there way. Most of the times the local stations come to terms. So the KSFX breakdown was a little unusual.
For those following the money flow it goes something like this: local stations pay the big broadcasters for their content and receive exclusive rights within the broadcasting area. They in turn monetize their content by signing retransmission agreements with the cable operators, who are restricted from carrying the same network programming from another affiliate.
The big TV broadcasters then double dip by getting a cut of the retransmission revenue through their separate reverse compensation contracts.
Retransmission consent may have started out with good intentions by Congress and the FCC: to allow the public access to local programming.
But over the years it has become a battleground, in which the combating parties occasionally make national headlines: Fox blacking-out the World Series to Cablevision customers in a dispute over retransmission fees.
The FCC to the rescue!
Back in March, our nation’s communications regulator very conveniently initiated a Notice of Proposed Rule Making on retransmission consent.
Many of the underlying issues in the Fox-KSFX dispute are put on the table in this filing: good faith negotiations, exclusive geographic rights, the public policy of localism, and finding the right path—free market vs regulation—in valuing copyrights.
In reviewing this NPRM, I notiecd the FCC barely makes mention of the Internet as a retransmission medium.
In the short term, subscription revenue from web viewers of live TV streams should go straight into the local broadcasters’ pockets.
At least for now.
Related articles
- Cable Over the Air (technoverseblog.com)
- Networks Want Slices of a New Pie (nytimes.com)
