Statement of the American Television Alliance
ATVA appreciates the opportunity to submit this statement for the record to the Subcommittee on Communications and Technology for the hearing entitled “Lights, Camera, Subscriptions: State of the Video Marketplace.” ATVA represents companies, associations, and public interest groups committed to ensuring the American consumer maintains access to affordable and robust TV programming options.
We thank the Committee for asking our member, ACA Connects, to testify at today’s hearing. We would like to offer three thoughts on the video marketplace on behalf of our broader membership.
- The video marketplace is financially unstable in large part because of a vicious cycle of increasing programming costs and decreasing subscribership facing traditional pay-TV operators. This situation, in turn, negatively impacts consumers.
- The decades-old retransmission consent regulatory regime is broken. This broken system harms not only pay-TV subscribers but increasingly harms broadcasters and the viewers who rely on them.
- We continue to believe that Congress should fix retransmission consent, which has become a systemic driver of many of the problems in the pay-TV marketplace.
1. The video market place is unstable.
From the viewer’s perspective, of course, this is truly a golden age in television content. Never have Americans had more choices and more ways to get video programming. But the truth is that traditional pay-TV services like those offered by ATVA members have long been the financial engine supporting the entire video ecosystem—including some of these newer services offered directly by programmers. Highly regulated pay-TV providers are stuck in a vicious cycle, threating consumers of all video services.
Again, pay-TV has been the engine upon which all parts of the video system rely. As pay-TV loses subscribers, the rest of the ecosystem becomes less financially stable, which in turn leads to more consumer disruption. Already, for example, regional sports networks have either declared bankruptcy (in Arizona) or given their rights back to the teams (in Pittsburgh). This disruption will only continue.
2. Retransmission consent is broken.
Retransmission consent can only be described as broken. Prices continue to go up astronomically—for programming that is less valuable by the day (because much of it is available elsewhere). According to SNL Kagan, retransmission consent fees have increased 877% since 2010, from $1.25 billion to $12.2 billion in 2020. According to the FCC, each subscriber paid more than $200 per year for “free” broadcast stations, an annual increase of 30% per year. If you increase SNL Kagan’s 2020 fee by 30% per year through 2023, you get a roughly 2,000% increase from 2010.
Consequently, broadcaster blackouts continue at a record pace, with 253 blackouts so far this year. Current disruptions include Nexstar Media Group blacking out DIRECTV and Hearst Television stations going dark on DISH. Just last week, Disney blacked out Charter Communications. Tens of millions of your constituents missed the beginning of the NFL season because broadcasters insist on charging more for a less valuable product.
Broadcasters, moreover, continue to skirt or violate the law. The biggest of them, Nexstar, has entered into sham arrangements with its “sidecar” companies Mission and White Knight to become even bigger. Mission and White Knight nominally own their own stations, but Nexstar controls every aspect of their operations. Nexstar lists Mission’s and White Knight’s stations as its own on the Nexstar website. And Nexstar even consolidates its stations’ financial results with those of Mission and White Knight in SEC filings. These actions violate the law and FCC regulations, and they enable Nexstar to charge inflated prices to consumers.
This cycle of ever-increasing programming fees and migration of viewers to streaming services is unsustainable across the video ecosystem. It is now starting to affect broadcasters (which are not carried on services like Netflix and Amazon) and the viewers who rely on broadcast programming. In the end, no one wins, and the biggest loser is the American consumer.
3. Congress and the FCC should reform the outdated retransmission consent regime.
Congress created retransmission consent over thirty years ago. We think it is time for reform.
Majority Leader Scalise, for example, has long proposed eliminating retransmission consent entirely and replacing it with the normal copyright regime that applies to other programming. In 2021, he and Congresswoman Eshoo introduced the “Modern Television Act” that would combine Mr. Scalise’s more deregulatory approach with significant blackout protections. Another approach is a broadcast “a la carte” model. This would get traditional pay-TV providers out of the business of being middlemen between broadcasters and viewers. Essentially, every television station could charge whatever it wanted, pay-TV providers would have to offer viewers the station at that price, and viewers could choose whether to pay for each station. Broadcasters would thus decide how to balance maximizing fees with maximizing viewership—without pay-TV providers getting stuck in the middle. Consumers could decide how much they want to pay for “free” broadcast content.
On the FCC side, Congress should urge the FCC to address evasion of its regulations. We would like to see the FCC focus in particular on the sham “sidecar” arrangements described above, starting with Nexstar. Congress can also encourage the FCC to close loopholes in its ownership rules. With respect to national ownership, the FCC should eliminate the outdated UHF discount. With respect to local ownership, the FCC should close the multicast and low-power loopholes, clarifying that no entity can affiliate with two or more of the top-rated networks in a market.
Thank you for holding this important examination of the current video landscape. ATVA is committed to working with Congress to modernize video rules and ensure American consumers have affordable access to robust and diverse programming.