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ACA Blasts LIN TV's Blackout Of Mediacom Cable Customers

The American Cable Association blasted LIN TV for staging a signal blackout to pressure cable company Mediacom Communications to pay excessive amounts of cash for retransmission consent. LIN's decision to force Mediacom to drop its signals on Aug. 31 affected thousands of consumers in several markets, including Mobile-Pensacola, Ala.-Fl.; Grand Rapids, Mich.; Green Bay, Wis.; and Ft. Wayne, Terre Haute and Lafayette, Ind.

"LIN TV's decision to black out Mediacom cable customers is deplorable and should serve as a warning to the Federal Communications Commission to expect much more of the same as cable operators prepare to renew thousands of retransmission consent contracts that expire at the end of the year," ACA President and CEO Matthew M. Polka said. "It's clear that the broadcasters aren't going to temper their behavior this year just because the FCC has a retransmission consent rulemaking going on. New rules are needed from the FCC, and needed soon."

One day into LIN's blackout, Mediacom Chairman and CEO Rocco B. Commisso sent a letter to FCC Chairman Julius Genachowski urging the national media regulator to push harder for new rules governing retransmission negotiations between television stations and pay-TV providers.

"Twice in the past five years, I have tried to stand up for consumers by resisting exorbitant demands for retransmission consent fees. And twice the FCC put the interests of broadcasters ahead of those of the viewing public," Commisso wrote.

In a statement responding to attacks by the National Association of Broadcasters, ACA defended Mediacom's position that retransmission consent fees are spiraling out of control and that the problem will get only worse.

"Contrary to NAB's own self-serving statistics, an SNL Kagan study said retransmission consent fees are expected to reach $3.6 billion by 2017, double the current level.  LIN TV itself reported a 50% increase in ‘digital revenues.'  Here's what LIN's President & CEO Vincent L. Sadusky said in July: ‘We are pleased to report 5% revenue growth, which was driven by our 50% increase in digital revenues. Our growth in digital is a result of our interactive strategy and ability to secure higher retransmission fees from pay television service providers, which offset the slow economic recovery...' ACA's statement said.

ACA pointed out that when TV stations and other programmers increase their fees, the retail price of pay-TV service goes up.

"NAB needs to get its math right, because the simple truth according to another recent study is that higher marginal programming costs lead to higher prices for consumers.  Period.  If retransmission consent fees and other video programming costs rise, then those cost increases will lead inevitably to higher prices for cable TV and higher prices paid by consumers," ACA said. "It's pretty clear NAB needs to charge the battery in its calculator."

Putting LIN's blackout of Mediacom in the proper legal context, ACA explained that broadcasters are exploiting regulatory advantages that allow them to inflict harm on consumers with impunity.

"Carriage talks between broadcasters and cable operators rest upon federal rules that were enacted nearly 20 years ago when the market was very different.  Unless the retransmission consent rules are modernized, American television viewers served by cable companies will see more of broadcasters' `blackmail or blackout' strategy because the regulations subordinate the interests of consumers to the needs of price-gouging TV station owners," ACA said.

ACA noted that the FCC could use a pending retransmission consent rulemaking to restore balance to the market.

"Blackouts by broadcasters provided free spectrum by taxpayers are intolerable. The FCC should use its pending rulemaking to establish new rules that not only ban blackouts but also prevent two or more separately owned TV stations in the same market from banding together to coordinate retransmission consent strategies designed to fleece the cable operator.  Moreover, FCC rules won't restore sanity to the market until broadcasters are stopped from discriminating against small and mid-size cable companies, which are forced to pay much higher retrains fees per subscriber than their larger pay-TV rivals in the same market," ACA said.

ACA concluded that broadcaster blackouts are increasing in frequency and result in real consumer harm.

"Broadcasters are fond of saying that 99% of retransmission consent deals get done without a fuss. Of course, that's as logical as saying the Hindenburg made it 99% of the way across the Atlantic Ocean without a fuss. It's a totally misleading statistic, a red herring. Just ask the Mediacom customer staring at a blank TV screen courtesy of LIN TV, a federal licensee charged with serving the public interest," ACA said.

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