Are Broadcasters Really That Special?

Broadcast networks aren’t that different from the cable networks. Why should we assume that to be true?

Well, for starters, consider these December comments from CBS CEO Les Moonves: “There’s an old-fashioned way of thinking that broadcast — you can get it over the air and therefore [it is] different than a cable network.”

And then, of course, there’s the experience of the consumer. The average consumer doesn’t really think there’s any great distinction between watching broadcast or cable.

So if consumers don’t see a distinction and agree with Mr. Moonves that it’s an “old-fashioned way of thinking,” the key question becomes this: why does the government treat the two – broadcast and cable – so differently?

In consumer messaging, especially during retransmission consent disputes, broadcasters have increasingly been trying to equate themselves with cable networks. A typical refrain goes like this: “CBS is more valuable than the USA Network, in terms of what we should get paid for our content.” That’s Moonves from the same December Q & A session. “By and large, they’re running repeats of ‘NCIS’ while we’re running originals… and that’s why the [retransmission] value is coming up faster with broadcast networks than with cable networks.”

But here’s just one key difference between CBS and USA Network. When a pay-TV provider agrees to carry the USA Network for, let’s just say, $1 per subscriber, the pay-TV provider is able to offset some of the cost of that fee by inserting advertisements. However, when a pay-TV provider carries CBS, the government prohibits the pay-TV provider from inserting its own ads.

Why should the government care whose ads run during a television program? Great question, but there is no real answer.

One of the broadcasters’ primary arguments when it comes to retransmission consent is that these disputes are “free market” and the government shouldn’t intervene. Yet, when advertising cannot be negotiated because the government says so, hasn’t the government already intervened?

There are a litany of other special exemptions to illustrate what a farce the broadcasters’ “free market” argument is, from “must buy” to “syndicated exclusivity.” Read more here.

Back to our question of why the government treats the broadcasters differently. It’s undoubtedly because the broadcasters have lobbied Congress and the FCC for decades to carve out special exemptions and subsidies.

So perhaps the more important question is this: in 2014, why should the government continue to give special treatment to broadcasters?