Retransmission Fees: Who Is Winning?

As I have mentioned recently, one of the big topics for 2012 will be the dispute over retransmission fees. Cable and satellite service providers complain that the content producers are holding their customers hostage in order to extort larger fees for the rights to rebroadcast their copyrighted programming. The result has been blackouts of channels — sometimes for extended periods of time — when the previous retransmission contracts expire.

On the content producer side, they are seeing their revenues dwindle from other sources, so they see retransmission fees as a way to recoup their losses. The subscription television services are the ones who draw angry reactions from consumers, however, as their television service bills keep rising year after year. The increased fees are forcing cable and satellite to consider unpalatable options such as lower-priced channel bundles. They could even be forced to offer a la carte pricing.

While the situation is not clearcut, the recent earning news from News Corporation indicates that the retransmission wars may be providing a big windfall for the content providers. The company reported that it experienced “a greater than 100% increase in retransmission consent revenues.”

With the economy the way it is, it seems strange that the rules let a company double its revenues just for providing the same content as before. It appears that part of the problem is that there is no competition permitted in the current rules, and there may be too much leverage given to the content providers.

With numbers like these from News Corp and continuing problems with extended blackouts, it looks like something is broken in the system and this may be the year that it’s bad enough that the FCC or Congress will decide to fix it.