“So did you watch the Oscars last night?”
You probably heard that question at least 20 times around the water cooler this morning, and followed it up debating the merits of Avatar vs. The Hurt Locker or Jeff Bridges (who will always be “The Dude” to me) vs. Colin Firth…unless you were one of three million households in New York City, in which case you were fuming that Cablevision and ABC conspired to keep the Academy Awards off your TV screen. In a last-ditch effort to not alienate all their viewers, the two companies — which had allowed ABC service to Cablevision subscribers to expire at midnight the night before the Oscars — got ABC back on Cablevision under an “agreement in principle” about the time Christoph Waltz was accepting the best supporting actor award.
How two of the largest entertainment companies in the country (ABC you know; Cablevision, in addition to being the nation’s fifth largest cable company, owns Madison Square Garden and Radio City Music Hall) could work together to keep the biggest night in entertainment from viewers would seem to boggle the mind.
Cable operators provide local terrestrial broadcast stations over their cable systems under a “must carry” rule, paying carriage fees to provide free-to-air local channels. This arrangement — a leftover from the birth of the cable era in the 1980s — is how you can get your local affiliate on your cable box. But now that “everyone” has cable (87 percent of households in the U.S. subscribe to satellite or cable), terrestrial providers have noticed that they could be charging cable providers for as much as they are paying for the Home Shopping Network. Needless to say, while cable providers want rates to reflect what they feel is the cost of providing a free-to-air channel, local stations want to have the special relationship they have with viewers priced into their carriage fees.
With the conversion of free-to-air analog signal to digital broadcast TV — indistinguishable in quality from the basic cable signal — the stakes seem to have gotten higher. The first shots in this particular war rang out among the New Year’s fireworks, when Fox Television and Time Warner Cable came to a last-minute agreement on providing Fox TV (and the bowl games it broadcast) to 13 million Time Warner subscribers. Fox was looking to get one dollar per subscriber from Time Warner, while the cable provider hoped to continue paying in the neighborhood of the existing nickel-per-customer fee structure.
As local broadcasters are a patchwork across the country, their carriage fee agreements come up for renewal on an irregular basis. The game of chicken was played again this past week between ABC and Cablevision — and with no agreement and neither side blinking, the cars crashed. New York area Cablevision viewers were the losers, though I’m sure Time Warner subscribers and local bars were very popular last night.
The impasse raised the attention of Sen. John Kerry and the Senate Commerce Subcommittee on Communications, Technology, and the Internet — who unsurprisingly thought this was as head-slappingly bad an idea as the rest of us — but the Federal Communications Commission (FCC) has jurisdiction over the issue. FCC media bureau chief William Lake emailed a tepid statement yesterday urging “both parties to quickly reach a resolution for the benefit of viewers.” Rather than taking a passive role with service providers, content providers, and consumers, the FCC should have taken a proactive role in this issue. The goal should have been to keep the players involved from grandstanding in an attempt to gain an undue advantage, and bring them both to the table in search of a solution beneficial to both parties and — most importantly — us viewers.