Michelle Clancy | 12-08-2013
While the Time Warner Cable-CBS row over retransmission fees drags on, the cable MSO faces yet another issue: a group of customers has filed a lawsuit against it over the retrans-related blackout of WTMJ-TV in Milwaukee. As retransmission fee disputes continue to adversely affect consumers, the FCC is mulling whether to act.
Filed on 8 August in Milwaukee County Circuit Court, the breach of contract suit seeks unspecified damages for one day's credit for each customer for every four hours without service. The plaintiffs also are seeking class-action status, which could spell serious trouble for the cableco.
WTMJ-TV is one of six local TV affiliates owned by Journal Broadcast Group that have been blacked out since 25 July, when the two parties failed to find common ground during retransmission renegotiations. TWC said that the broadcaster is asking for a 200% increase from the previous agreement.
Consumers are losing out: TWC customers were blocked from conventionally watching the 9 August NFL preseason game between local heroes the Green Bay Packers and the Arizona Cardinals. However, TWC did carry Telemundo's Spanish-language version of the game.
Six stations (WGBA (NBC) and WACY (MNT) in Green Bay; WTMJ in Milwaukee; KMTV (CBS) in Omaha; and KMIR (NBC) and KPSE (MNT) in Palm Springs) are for now dark for TWC customers.
Meanwhile, it's clear that retrans is not an issue that's going away any time soon. TWC's primary current nemesis, CBS, is the top retrans increaser out there, on pace to quadruple the retransmission fees it gets from its affiliates and pay-TV, to reach $1 billion by 2016. That's according to research late last year from Todd Juenger, an analyst at Sanford C Bernstein.
CBS itself said that it won't hit the $1 billion mark until 2017, but Juenger expects that by 2016, CBS will receive $1.22 per subscriber per month for the 37 million subscribers to its stations.
Moreover, FOX and ABC will follow a similar trajectory, although NBC won't be so lucky, thanks to the fact that its largest distributor is its owner, No 1 pay-TV operator Comcast.
CBS hit $250 million in retransmission fees last year, Juenger said. And, CBS-owned TV stations now receive between 75 cents and $1 a subscriber per month in the markets covered by the current negotiations, according to RBC Capital Markets analyst David Bank. The result? CBS stock has increased by 65% in the last year.
A coalition of cable programmers and distributors – the American Television Alliance – says the FCC "has sat on the sidelines for too long" to fix a system that is "clearly broken." The FCC apparently agrees, with FCC Acting Chairwoman Mignon Clyburn saying that she's "ready to consider appropriate action" if CBS and TWC can't kiss and make up.
"Quite frankly I am deeply disappointed that the parties seem to be unable to reach a retransmission agreement," she said. "I am really distressed that consumers and viewers are being adversely affected, and my primary concern remains with them. We will continue to urge both parties to stay and resolve in good faith this issue as soon as possible."
She added that the FCC is "actively monitoring the status of this particular dispute and is in touch with both parties."