Monday, December 29, 2008

Local TV vs Cable...We Lose

Over the last month, several of our Grand Junction TV stations have been placing a 'crawl' message on the screen, warning viewers that they could lose the station's programming if they receive it via certain cable TV systems.

This includes
Bresnan Communications, which provides cable service to the majority of the population of what is known as the Grand Junction-Montrose Designated Market Area (DMA). The DMA is the television market as defined by the A.C. Nielsen Company, and plays a large role in what we are able to see on TV locally.

The Sentinel's Mike Saccone did some cursory reporting about this last week, in
one story about Bresnan's lack of an agreement with KREX, and another about an agreement reached with KKCO for what is called Retransmission Consent, or to allow Bresnan the right to re-transmit the station's signal over their cable system.

This represents a change in strategy for these local TV providers, who previously gained access to the local cable system through federal regulations, administered by the
FCC, that require cable companies to grant access to their system to those local broadcasters who serve the DMA or local area in which the cable system resides. This regulatory strategy is called Must Carry.

The difference between the two strategies is that the station negotiates a fee for Retransmission Consent from the cable or satellite provider. This fee is what appears to have been a matter of contention between the stations and Bresnan, with the stations attempting to
leverage public pressure as the agreements approach expiration.

I spoke with General Managers Dana McDonald of
KKCO and Ron Tillery of KREX earlier this month. Ms. McDonald stated that they were asking less than 2 cents, per subscriber, per month from Bresnan. As Bresnan has approximately 28,500 subscribers in the Grand Junction area, this amounts to roughly "less than" $570 per month, or $6840 per year, just for Grand Junction.

I also contacted Shawn Beqaj, VP of Public Affairs for Bresnan, by email. He declined to comment on pending contract negotiations.

I question the accuracy of these numbers, because I can't see the logic behind either the local stations or Bresnan endangering their relationships with each other, or their customer and viewer base, over what appears to be a fairly small sum. The total amount including the Montrose cable system will undoubtedly increase, but I still wonder what other issues are festering along with this one.

Ms. McDonald told me that KKCO's pursuing a fee instead of Must Carry status is largely the result of a fundamental change in the way that network affiliates obtain programming from the networks they are affiliated with. Up until last year, the network paid the affiliates to assure that their programming reached a particular market area. Now it's the other way around, with affiliates paying the networks for access to their programming.

Mr. Tillery didn't disclose what fee that KREX was asking from Bresnan, but stated that their request for a fee extends only to their Grand Junction and Montrose stations, and not KREG in Glenwood Springs. KREG is on the
Comcast cable system up there through Must Carry, as Glenwood is in the Denver DMA.

By the way, Glenwood is a pretty nice place if you're a TV consumer; you can get two Grand Junction stations there, along with all of the Denver channels. Ahhh, choice; what a concept.

The local affiliates hold exclusive and rather jealous sway over their respective market area's access to network-originating programming, along with syndicated programming that the station buys (Oprah, Dr. Phil, Judge Judy) and the original programming (mostly news) produced by the station itself. Now that they're paying for the network programming as well as the syndicated stuff, it's not really surprising that the locals are pursuing revenue streams at every opportunity.

I believe that Bresnan will eventually relent and pay the fees. It's either that or watch the stations deny Retransmission Consent, and the programming disappear. Per Mr. Beqaj, the cable companies can't get the programming elsewhere without approval from the local market incumbent, so the network and other programming is lost to the subscriber. That won't be pretty if it happens.

I also believe that the local stations have held too much power in their respective market areas for too long. Must Carry gave KKCO the right to bump Denver's KUSA from the Grand Junction channel lineup after their inception in 1996. This brought about many complaints about the loss of superior statewide news coverage, as well as pre-season Bronco games.

To KKCO's credit, they have built an impressive local news division and web presence, and have worked with Denver stations in the past to get the Broncos in pre-season mode. This is evidenced by their position atop the holy scripture of TV success, the
ratings book.

Now that the local stations are foregoing the guaranteed access of Must Carry with the fee-for-service model of Retransmission Consent, their ratings and the public response to their crawl message probably got their agreement with Bresnan sealed. I still miss
9 News, though.

KREX and CBS were responsible for the removal of Denver's
KCNC "News 4" from cable a few years back. In response to an apparently significant outcry, we now get Denver news via KDVR "Fox 31", re-broadcast on KFQX, which is owned and operated by KREX. So if you like your Denver news, maybe it's time to pick up the phone and tell Mr. Tillery and his staff what you think of their gamesmanship.

Bresnan is by no means innocent in this process. They have positioned themselves and their network to be a provider of all manner of content, via several tiers of analog and digital TV service, and their domination of the broadband Internet market locally cannot be ignored. They're well positioned to continue to innovate for the mutual benefit of themselves and the consumer, and their rapid response to problems is impressive; witness their response to the
KREX fire earlier this year.

However, the placement of
NFL Network in a premium tier of sports channels, along with the absence of channels such as Sundance Channel in favor of a channel devoted strictly to the sale of jewelry, illustrate to me some questionable thinking as to programming choices.

Add to this the waste of scarce analog spectrum on two home shopping channels, and you start to wonder how much our current cable lineup is worth the money we pay for it every month.

One contributor to today's
You Said It made a very salient point:

It’s now been more than two years since my family dropped all satellite and cable TV services. What’s left is DVDs, free shows on the Internet and what little is worth watching over the air. You don’t really realize, until you do without, how much much living you can do when you’re not staring into television’s “vast wasteland.”

I don't know if I would go as far as this person, but I'm wondering if all of the digital channels, video on demand, and DVR capability are really worth it. Those who provide these kinds of services obviously think so, and are concocting all manner of services to leverage both cable and other information pipelines, such as fiber optic networks and even the Internet, to make sure we consumers are kinds of on-demand movies, services, and other programming.

These types of services are where the true profit potential of a cable company lies; not in re-transmitting local channels, providing public access channels and paying large amounts to carry popular cable networks like CNN, Fox News and ESPN. The revenue from local ad insertion may help as well, but not that much.

These developments also embellish the importance of a free, neutral, and unencumbered Internet, which ironically carries streaming versions of local and network TV programming to many consumers via the same Bresnan cable that is being argued over now.

I believe that it's necessary to have some form of local access to television, either over the air or via a local system such as cable. The upcoming
DTV transition will also play a large role in how the public interacts with its' local stations. I'm contemplating buying an HDTV, and with it an outside antenna so that I can pull in the local digital signals. It will be interesting to see what the locals do with the additional channels that digital modulation affords them; KKCO has already shown some initiative in this area.

I'm still disappointed in both sides of this debate, but from what I can find out I feel that most of the blame belongs to the local TV stations. Attempting to use access to their signal as a form of blackmail to grab more cash from the cable guys (and eventually the consumer) speaks poorly of how they are responding to their government-mandated commitment to serving the public interest. I intend to let them know about it, and I hope that many in our area will join me.

Have a great week ahead.

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