An Ignoble Experiment

2. Fans' antitrust case against MLB, NHL, pay TV moves a step closer to trial

Broadcasters, increasingly dependent on retransmission fees paid by pay TV providers--and in turn covered by pay TV subscribers--don't like an idea being floated around the Senate Commerce Committee that would give subscribers the choice of paying for broadcast services individually.


At left, Sen. Rockefeller; right, Sen. Thune. (Source: senate.gov)

Commerce Committee Chairman Sen. Jay Rockefeller (D. - West Va.) and ranking member Sen. John Thune (R. - S.D.) would like to see a "Local Choice" attachment applied to a revised Satellite Television Extension and Localism Act (STELA).

"Local Choice would empower consumers by allowing them to choose the commercial broadcast content that they want to pay for as part of their pay TV subscription, while ensuring that local broadcasters continue to receive full market value for their content," a Commerce Committee staffer said in a story carried by The Hill.

The tenuous nature of that "full market value" provision no doubt played a large part in the broadcasters' opposition, as voiced in a statement by National Association of Broadcasters EVP of Communications Dennis Wharton.

"NAB has always supported a clean reauthorization of STELA and we do not believe this bill is an appropriate vehicle for reviewing the retransmission consent process," Wharton said in the statement.

The NAB also questioned the timing of the change "given the shortness of time between now and the end of the Congressional session."

As expected, the proposal garnered support from the American Cable Association, whose members have long bridled under broadcasters' retransmission fees and the increasing number of blackouts that happen when local cable providers and broadcasters can't agree on a price.

"The approach taken by Sens. Rockefeller and Thune is to put consumers first. It will permanently remove consumers from retransmission consent disputes and provide consumers with more choice in the selection of TV station programming than they have seen in decades," ACA President-CEO Matt Polka said in a press release.

For more:
- The Hill has this story
- the Boston Herald has this story
- the NAB issued this statement
- and the ACA has this press release

Read more about: Senate Commerce Committee
back to top

This week's sponsor is Clearleap.

By Jim Barthold

Comment |

3. Viacom-Cablevision antitrust battle escalates with fraud allegations

Unhappy sports fans won one in their antitrust lawsuit against Major League Baseball, the National Hockey League, Comcast (NASDAQ: CMCSA) and DirecTV (NASDAQ: DTV) when a federal judge rejected an effort by the defendants to dismiss the case.

The decision by Manhattan Court Judge Shira Scheindlin could push the case into a courtroom where broadcast restrictions on sports would be examined, a Reuters story said.

The sports fans filed suit because they are unhappy with what they consider "anticompetitive blackouts" of certain games based on which regional sports networks have exclusive rights to broadcast the baseball and hockey games in their areas. The fans complained that these blackouts let professional sports leagues charge premium prices for out-of-market games.

Sports blackouts and sports broadcasting agreements in particular have become hot buttons among subscribers who balk at paying more to watch home teams--if they can get the games at all. DirecTV and Dish Network (NASDAQ: DISH), for instance, can't cover professional sports in the Philadelphia market because Comcast holds the broadcast rights. And the Los Angeles area has roiled throughout the baseball season over a deal the Dodgers cut with Time Warner Cable (NYSE: TWC) for its SportsNetLA channel.

In making here decision, Scheindlin rejected an MLB argument that it was protected from antitrust claims thanks to a 1922 Supreme Court ruling as well as arguments by both sports leagues that their broadcasting restrictions were justified on "pro-competitive grounds.

Comcast and DirecTV claimed they had no role in creating the restrictions but Scheindlin brushed that aside by calling the two programmers "more than passive participants."

It wasn't "a surprise that the court accepted that the leagues and their media partners are subject to the antitrust laws," Ned Diver, the sports fans' lawyer told Reuters. DirecTV told the news agency it doesn't discuss pending legislation; Comcast and the sports leagues didn't respond to requests for comment.

For more:
- Reuters has this story

Read more about: MLB
back to top

By Jim Barthold

Comment |

4. Broadcast, cable advertising numbers flat in Q2, creating concern

The ongoing nasty antitrust court battle between Viacom and Cablevision (NYSE: CVC) has escalated with Viacom now alleging that Cablevision committed fraud when the two companies signed a carriage deal in 2012. Viacom wants that contract with the cable company to be rescinded.

The dispute revolves around a difference of opinion, according to a story in The Hollywood Reporter. In December 2012 the two companies signed an agreement, but two months later Cablevision filed a suit alleging Viacom engaged in a "per se" illegal agreement by bundling more desirable networks with less valuable ones and threatening a "10-figure penalty" if Cablevision didn't carry both.

Viacom, in turn, said Cablevision got a discount on the top networks if it carried the others, and that Cablevision had a "secret plan" all along to balk at the carriage deal.

The matter has gone back and forth in court since then, with U.S. District Court Judge Laura Taylor Swain declining to void the licensing deal until Viacom filed a denial-filled answer to Cablevision's claims--along with a counterclaim of its own. The counterclaim is detailed in court documents that cited "Cablevision's fraudulent conduct--including both express misrepresentations and fraudulent omissions--in inducing Viacom to enter into an elaborately negotiated affiliation agreement."

Cablevision never really intended to follow that agreement, according to the filing, which noted that "at the time Cablevision signed the agreement, Cablevision intended to claim it was invalid, illegal and unenforceable despite Cablevision's contrary express representations to Viacom in the agreement. And, upon information and belief, at the time Cablevision signed the agreement, it planned to challenge the agreement on that basis in order to invite the Court to rewrite it for its benefit."

The dispute comes down to whether or not Cablevision can get a discount on the premium Viacom channels without also carrying the second-tier channels that include Palladia, MTV Hits and VH1 Classic.

Cablevision issued a statement to the Hollywood Reporter that called Viacom's latest claims "baseless" and "a transparent attempt … to delay and distract attention from Cablevision's valid antitrust claim against Viacom for illegal channel tying."

For more:
- the Hollywood Reporter has this story
- see Viacom's filing

Read more about: Cablevision
back to top

By Jim Barthold

Comment |

5. South Dakota co-op targets rural areas with fiber, cable TV

It's difficult where to assign blame, but traditional media companies, especially broadcast and cable TV, are hardly setting the world afire with their advertising numbers.

National TV advertising revenues rose only 0.2 percent in the second quarter, a number that was the worst since the recession, MoffettNathanson analyst Michael Nathanson said in a story reported by the New York Post. Nathanson's numbers were, at the least, troubling, including one that showed cable outlets climbing only 3.7 percent to $5.98 billion from $5.77 billion.

These numbers were enough to lead the Wall Street Journal to call the June quarter "one to be forgotten."

Those who would assign blame for the quarter can easily point to digital outlets, including Google (NASDAQ: GOOG), Facebook (NASDAQ: FB) and Twitter, that posted strong gains in ad revenues.

As for traditional media, Nathanson said the jury is still out on whether this is a one-time thing or a trend.

It's a trend, said Pivotal Research analyst Brian Wieser in the WSJ story.

"There isn't any kind of radical or enhanced secular change going on right now beyond the trends that have been going on for many years," he wrote in an article quoted by the Journal.

WPP's Kantar Media analyst Jon Swallen agreed that this is a "continuation of how the ad market has been behaving and performing over the last three-and-a-half years."

And Lance Vitanza, managing director and partner at CRT Capital Group even dredged some sunshine from the gloom, noting that the ad market is "doing better right now than it was in Q2."

For more:
- The New York Post has this story
- The Wall Street Journal has this story (sub. req.)
- Broadcasting & Cable has this story

Read more about: ad revenues, Advertising
back to top

By Jim Barthold

Comment |