Dropped TV channels, and network contracts explained

by Attorney General Rob McKenna, TechFlash

Washington residents, like viewers throughout the country, are caught in the middle of money-related spats between local TV stations and cable and satellite providers. New Year’s Eve was the deadline for many broadcasters and providers to reach what are called retransmission agreements. Many of them successfully negotiated new pacts or extended existing deals. But others hit roadblocks.

Our office has heard from customers who are upset about DISH Network’s decision to drop Fisher Communications stations from its lineup. Stations no longer available to DISH customers in Washington since Dec. 18 include KOMO and KUNS in Seattle; KIMA and KUNW in Yakima and KATU out of Portland, Ore.

Other consumers weighed in about Charter Cable’s dispute with Belo Corp., which owns KING in Seattle. As of the time I’m writing this, Charter and Belo have reached a tentative agreement that will allow Central Washington viewers to keep watching KING.

But DISH and Fisher remain at a standoff. Unfortunately, consumers usually have few options in these cases aside from switching service providers or using an antenna or the Internet to watch shows no longer available from their cable or satellite company.

How stations make money

To understand why this is happening, it’s helpful to understand the differences between types of channels and how they make revenue. Cable and satellite providers have always paid channels such as ESPN, HBO, Nickelodeon, etc., to carry their programming. The channels make their revenue through commercials and, in some cases, “subscriber fees” that are collected directly from the cable or satellite company, which passes the cost on to you.

But broadcast TV is available to viewers for free over the airwaves; you can pick up their signals with an antenna. Federal Communications Commission regulations require that locally licensed television stations must be carried on a cable provider's system. But here’s the catch – this rule only applies if a TV station wants the cable provider such as Comcast or Charter to offer its programming under this provision.

Local broadcasters also have the option to negotiate a fee or other compensation for their programming, which many do. The federal law provides that once every three years broadcast stations may elect between must-carry and retransmission consent. The stations, seeking to make up for diminishing dollars from advertisers, are choosing retransmission and asking for more money.

Until the cable operator and the television station reach an agreement, the cable operator is prohibited from carrying that station's signal. Spokane residents who subscribe to Time Warner Cable probably recall that FOX-affiliate KAYU was dark from Dec. 14, 2006, through Feb. 1, 2008.

Rules for satellite services are similar, except that companies like DISH and DirecTV aren’t legally mandated to provide local broadcast stations to subscribers. If they choose to carry one local network affiliate, then they have to carry them all – unless a station opts to negotiate a fee.

Government agencies have limited authority

State attorneys general have stepped in when cable or satellite companies use deceptive marketing or fail to disclose all fees or material terms, such as informing customers of when pricing or programming changes might occur.

But barring allegations of violations of the Consumer Protection Act, the Washington Attorney General’s Office doesn’t have the authority to take enforcement action when companies change their programming.

While a federal law requires cable companies to notify customers within 30 days of changes in the programming lineup, satellite companies aren’t included under this law.

The FCC is generally not authorized to participate in discussions between television stations and cable systems regarding retransmission consent agreements. Furthermore, the FCC cannot tell a cable operator which stations or program services to delete in order to comply with the must-carry requirement.

Consumer options

When you signed up for cable or satellite service, you entered into a contract. If a provider violated the terms of that agreement, you may have the right to take legal action.

But customer agreements sometimes give providers the right to change programming without permitting customers to avoid a penalty if they cancel. To avoid unpleasant surprises, consumers need to carefully read the small print in service contracts before committing to a long-term contract.

If your cable or satellite provider doesn’t offer local stations as part of your subscription, you can install a rooftop antenna or rabbit ears to receive local stations over-the-air.

After Feb. 17, 2009, however, you may need additional equipment.

If you’re a satellite TV subscriber and can’t receive a signal even with an antenna, then you might qualify as an “unserved household” and be eligible to receive distant signals. If you live near Seattle but can’t receive KOMO, for example, your satellite company may let you watch an ABC-affiliated station in another city. They may not be the case if you are a cable subscriber. Rules allow networks and affiliates to enter into agreements that prohibit cable providers from duplicating signals in certain markets.

Cable companies may be required to black out duplicate programming, regardless of whether the station is carried by the cable company. The rule applies to stations within 35 miles of a cable system in the top 100 market areas and 55 miles in smaller markets.

Some television programs are available for free over the Internet, either from the network or a third-party provider such as Hulu.com.

Digital TV switchover

On Feb. 17, broadcast TV stations will stop sending signals over analog airwaves.

Analog TVs will need to be connected to a digital converter box, attached to cable or satellite service or replaced with a digital TV. If you want to receive free, over-the-air programming with an analog TV, you’ll need a digital-to-analog converter box.

The government offers coupons to help you buy one, but there is now a waiting list. Cable companies are not required by the government to transition their systems to digital, and can continue to deliver channels to their customers in analog.

If a cable company makes the business decision to go all-digital, it must ensure that analog customers can continue to watch their local broadcast stations. Those customers may need a different type of cable receiver.

Comcast has said that some of its subscribers will need to install a digital box this spring in order to receive certain channels. Since satellite TV service is digital, subscribers shouldn’t notice a difference.

Rob McKenna is Attorney General of the State of Washington.

article originally published at http://www.techflash.com/Dropped_TV_Channels_Understanding_network_contracts3790....

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