PHILADELPHIA – Stay tuned for more fee disputes threatening local television stations on cable TV lineups.
Broadcasters hurt by declining ad revenue are demanding more fees from cable and other subscription TV providers to carry the stations. The providers are resisting, and in the latest tussle, Cablevision Systems Corp. dropped the ABC station in New York in the hours leading to Sunday’s Oscars telecast.
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More such blackouts loom as several networks and various providers across the country have contracts set to expire this year, including one covering major ABC stations in Time Warner Cable Inc. markets. All signs point to down-to-the-wire talks that could leave viewers scrambling for other ways to watch their favorite shows and major sporting events.
“There’s a lot of money at stake,” said Robin Flynn, an analyst at SNL Kagan. “There are a lot more fights coming up.”
Such disputes used to be limited to cable channels such as CNN and ESPN, as they have long been paid per-subscriber fees by the providers. But in recent years, stations that are broadcast for free over the air have demanded such fees from cable TV and other providers as well.
That began first in smaller markets, with affiliates that are not owned by the networks but carry their programming. Now, the networks are demanding such fees for the stations they do own, especially in the larger markets such as New York and Los Angeles.
More than 3 million Cablevision customers in New York, New Jersey and Connecticut lost New York’s ABC station on the day of the Academy Awards, one of the year’s most-watched programs. It wasn’t restored until the two sides reached a tentative deal. Viewers missed the first 15 minutes of the awards show.
The major broadcast networks, such as CBS, ABC, NBC and Fox, used to give cable TV and other operators those rights in exchange for getting some of the providers’ slots for commercials, which broadcasters resell to advertisers. Sometimes, the providers agreed to carry new cable channels owned by the network’s parent, such as ABC owner Walt Disney Co., in lieu of a cash payment.
The providers prefer such in-kind payments because they want to conserve the cash to invest in cable lines, trucks and set-top boxes.
Flynn, the media analyst, expects fees for network-owned TV stations and affiliates combined to reach more than $1 billion this year. That’s up from more than $750 million last year and $500 million in 2008.
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