25 Years Ago Congress Tried to Punish Cable

By Paul S. Maxwell Paul Maxwell Report Archives

It didn’t work out quite that way, not right away … but the Cable Act of 1992 did have unintended, reverberating consequences for cable, satellite, telco and television.  Read on to be reminded of all the Act did.

The Act allowed companies other than cable operators the ability to distribute so-called cable networks.  C-band satellite delivery of non-scrambled network programming had legally been okay since a 1984 act, but there was no provision allowing satellite delivery of bundled networks.

The Act, in overriding a Supreme Court decision, allowed local TV broadcasters to choose between demanding a cable operator carry its signal or require the operator to get permission … the so-called “retransmission consent.”  The National Association of Broadcasters won a big war of words with the National Cable Television Association -- not least because TV stations and local politicians had (and have) a mutually beneficial relationship.

And the Act regulated cable subscription rates.

The Cable Act of 1992 was the only time President George Herbert Walker Bush was overridden by Congress.  Nobody in Congress liked cable companies much.  Broadcasters had lobbied for the right to negotiate carriage with operators.

But cable operators weren’t buying it right away.  In particular, Dr. John Malone and TCI outright refused to either bargain or pay subscriber fees.  Other operators thought that was a great idea.  Malone, though, told Rupert Murdoch and other national broadcasters that maybe, just maybe, TCI might pay fees for additional channels.  And lo!  The channels began to appear, along with a whole bunch of new fees, which is why there are so many channels you don’t watch.  Broadcasters kept adding more; and cable operators could justify ever-increasing rate hikes.

But in 1999, the new small-dish satellite operators -- who weren’t covered by the ’92 Cable Act -- needed local signals to compete with cable … so they offered to pay to carry local channels (for which they, naturally, charged extra).

All the while, the new networks kept coming.  It wasn’t until 2005, though, that broadcasters had the leverage to actually get cable operators to pay real cash instead of having joint promotional efforts of trading out for ads.  Nexstar’s Perry Mook bargained hard and won.  Operators began paying retransmission fees just like satellite.

And ever since then, broadcasters have soaked cable and satellite subscribers for as much as $40 billion (that’s a “b”).  That’s according to S&P Global’s Kagan unit.

Just think.  $40 billion for “free,” over-the-air TV.  And the broadcasters’ battle for ever-more money continues as retransmission fights keep resulting in blackouts at various cable and satellite and now telco services.

So it’s not just because of cable that cord-cutting keeps growing as more and more consumers decide they really don’t need all those channels – to say nothing of those ever increasing fees.  In recent retransmission fights, Altice USA and Disney settled after long negotiations; no blackout.  But Lilly temporarily yanked its Puerto Rico station off DISH during the aftermath of Hurricane Maria!!  It’s back, at least for those few homes which can still get television.  But really, how did some executive make that decision in the first place? 

Just asking.

Random Questions

Will AT&T + Time Warner happen by the end of this month?  (I think “yes.”)

Are NFL ratings this season a disaster?  (Maybe, but their losses track with other groups of programming.  Problem seems to be live TV that’s losing traction.)

Is the end of the NFL happening in La La Land?  (There haven’t been so many empty seats since the USFL -- a 1980’s experiment that our current President basically killed by refusing to stick to the terms of the agreement.)

When will some company re-package all of the single marquee channel services (ABC + CBS + FOX + NBC + HBO + Showtime + Starz) into a day-after “all access” major network package?  And, more to the point, what will it cost? (Just a reminder: a la carte generally costs more.)

Will Comcast, as its wireless and skinny bundles inside the Comcast footprint grow, stay inside … or go everywhere?

Why did schools stop teaching civics?

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