Broadcasters Resort to Falsehoods and Distortions to Smear Scalise’s Video Reform Bill

The National Association of Broadcasters has circulated an email about Rep. Steve Scalise’s video reform bill in an attempt to discourage any support. The email contains numerous falsehoods and distortions. They are desperate to protect the retransmission consent system that harms consumers and serves to benefit only them. There are more TV blackouts than ever and retrans fees are skyrocketing. Consumers deserve video rules written in this century.

Here are the NAB’s claims:

CLAIM: “This bill would eliminate a station’s ability to collect retransmission consent payments from cable and satellite operators for reselling a local television broadcast signal. The impact of this kind of legislation would be very harmful.”

TRUTH:  The bill would simply make broadcasting like HBO, ESPN, or any other form of programming.  Just as cable and satellite need copyright licenses to carry HBO, they would need copyright licenses to carry broadcast programming.  All that would change is that the government and the FCC would no longer set the rules-and would no longer tilt so-called “market” negotiations in favor of broadcasters.

CLAIM: “Broadcast television is unique among media platforms in that it offers locally-focused news, community reporting, emergency services and sports for free to communities across the country. This public service is enabled by the current legal framework, which allows broadcasters to negotiate fair, market-based compensation for the value of their signals.”

TRUTH: To begin with, broadcasting is not “unique” in any way.  Numerous forms of media including pay-TV providers provide local news, emergency services and sports to local communities.  (As CBS CEO Les Moonves said on December 10, 2013, “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.”) The current retransmission consent system is neither “fair,” nor truly “market-based.” In fact, broadcasters benefit from significant government subsidies before entering negotiations including “must buy,” “must carry,” sweeps period protections, syndicated exclusivity, and network non-duplication provisions.   This bill would eliminate these rules, but would also eliminate statutory copyright licenses that benefit cable and satellite.  Everybody would operate on a truly level playing field.

CLAIM: “The carefully balanced system of “local” broadcast service established by Congress ensures that pay-TV companies offer their subscribers access to these local broadcast stations, rather than a distant network signal.”

TRUTH:  We think local service is valuable too.  We think that, in a free market, consumers will want their local service.  That is what the Scalise bill would accomplish.  But today’s system forces subscribers to watch local channels even if they would prefer some other alternative — even if, for example, the local affiliate airs only in standard definition.  Why shouldn’t consumers be able to choose if they want to watch the ABC affiliate from Kansas City or the ABC affiliate from Chicago? Or both?

CLAIM: “While broadcaster retransmission consent costs represent only a fraction of an average pay-TV provider’s operating costs (only two cents of every dollar), retransmission consent revenues are a crucial source of funding for your television broadcasters, and are critical to local TV stations’ ability to provide local news, community and emergency information, as well as top-quality entertainment programming for viewers.”

TRUTH: Local, off-air television has always been free.  This is why it is so widely distributed.  And this, in turn, is why broadcast networks have historically been able to command such high advertising rates.  Only in recent years have retransmission consent fees become a real issue for subscribers.  Retransmission consent essentially amounts to a “television tax” that pay-TV consumers must pay for “free” local programming. These pennies add up to billions of dollars. The latest projections from SNL Kagan show that broadcasters will earn at least $7.6 billion in retrans revenues by 2019, compared to $3.3 billion this year.

CLAIM: “Broadcasters are reinvesting these revenues in their newsrooms for the benefit of all viewers:

*  in 2012, the average size of a newsroom staff across the industry grew to its highest level in history.

*  the number of full-time employees in newsrooms reached 27,605 (the third-highest total on record).

*  in 2011, more than 45 percent of tv stations reported an increase in the amount of news they aired.

*  on average, broadcast stations air 5.5 hours of news per weekday.”

TRUTH:  This is a dubious claim at best.  Philip Napoli, a professor at Fordham, says this:  “[D]espite dramatic increases in the retransmission consent revenues that broadcasters are receiving, there is little evidence that these revenues are being used by broadcasters to enhance their provision of local news and public affairs programming.  Instead, the overwhelming body of research indicates that retransmission consent revenues are used to support the national broadcast networks.”  For more information, see here.

CLAIM: “The draft bill being distributed by Rep. Scalise would upend the legal framework that allows locally-focused broadcast television to thrive.  While well intentioned, Rep. Scalise’s bill would have the unintended effect of jeopardizing these important revenues that fund the creation of local news.”

TRUTH:  Again, the Scalise bill would do nothing more than treat broadcast television like every other form of video watched by American subscribers.  HBO, ESPN, and even Netflix have managed to “thrive” in a free market system.  If broadcasters cannot, they have only themselves to blame.

CLAIM: “Broadcasters do not oppose an examination of the existing video laws and recently lauded Energy & Commerce Communications and Internet Subcommittee Chairman Greg Walden who recently announced an effort to update the country’s communications laws. However, we do not believe the proposal being pursued by Rep. Scalise is the right course and would result in significant harm for our state’s local television stations.”

TRUTH: This is nonsense.  Broadcasters have lobbied for years to protect retransmission consent and other video laws. To claim they “do not oppose an examination of the existing video laws” is absurd.