German cable fee row escalates

Jörn Krieger ©RapidTVNews | 25-06-2012

German public broadcasters ARD and ZDF have carried out their threat and cancelled their carriage contracts with the country's three largest cable operators - Kabel Deutschland, Unitymedia and Kabel BW - with effect from 31 December 2012.

Cable customers now face the loss of public TV channels if the dispute isn't resolved by the end of the year.

The payment of carriage fees to the cable operators dates back to the time when Germany's federal post office Bundespost built up the cable infrastructure with support from the broadcasters, said Karola Wille, director general of ARD affiliate MDR.

Since the acquisition of the cable networks by financial investors and the analogue switch-off in Germany the framework conditions have fundamentally changed, argued Wille. "The cable operators receive valuable channels from us which enable them to very successfully market their cable subscriptions. Support from the public broadcasters' licence fee income is no longer in line with market requirements."

According to ARD, the business models of cable operators are different from those of signal distribution via satellite or DTT: consumers aren't charged fees for the reception of channels transmitted on these infrastructures. Also, satellite or DTT network operators don't have customer relationships, in contrast to cable operators. The business models are therefore not comparable, according to ARD.

ZDF's director general, Thomas Bellut, also stressed that the broadcasters' channels ultimately make cable networks attractive for further products such as pay-TV, telephony and Internet, which cable operators commercialise to their customers. "Carriage fees are outdated,” he said, “It can't be justified any longer to pay fees to companies which make money by marketing our channels."

At the same time, ZDF points to the unique situation Germany had so far experienced. "As far as we know, in no other comparable European country do cable operators charge fees both to TV broadcasters and their cable customers."

With the cancellation of the contracts, this dispute, which has been running for months, reaches a new climax. ARD and ZDF currently pay almost €60 million in carriage fees in total per year - for historic reasons, only to the three largest market players. The other cable companies, IPTV operators and Internet platform providers distribute the channels without payments.

Cable customers don't have to fear losing all public channels on 1 January 2013, however, as the distribution of ARD/ZDF's main channels is prescribed by the federal broadcast law which grants them "must carry" status. What's possible, however, is that cable operators could remove some of the channels not falling into the "must carry" category, for example regional channels from ARD affiliates (Dritte Programme) outside their designated regional coverage area. As this could lead to protests and cancellations from angry cable customers moving to DTH satellite, IPTV or DTT; but it is unlikely that the cable operators would actually do this on a large scale.

At this stage, it's unclear how the cable carriage row will end. Once thing is for sure, though, if ARD and ZDF obtain more favourable conditions for cable carriage, then the commercial broadcasters will also want to benefit from this. The competitors insist on the equal treatment of all market players and already point to the "prohibition of discrimination" (