Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, September 1, 1993 TAG: 9309010144
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: MELANIE S. HATTER STAFF WRITER
DATELINE: LENGTH: Long
So local television stations and cable operators - each side using a different spin - are warning subscribers that they may be about to lose some of their favorite channels.
That's because last year, the networks - led by CBS - lobbied to add the "retransmission" option to the Cable Act of 1992 passed by Congress last fall. This meant that broadcasters could ask cable operators for payment for retransmitting their signals. Some broadcasters are asking, and some cable operators are saying no.
Cable companies and TV stations have until Oct. 6 to settle on some form of compensation. If agreement isn't reached by then, some channels on some cable systems will go dark.
For decades, cable operators have picked up programs sent out over the air by broadcasters and re-fed them to their subscribers without paying. This arrangement suited both parties because it gave broadcasters larger audiences for their shows and commercials, and gave cable operators a cheap source of programming.
But CBS successfully argued that the cable industry was airing something it hadn't paid for.
Depending on how much bargaining power they thought they had, TV stations had two choices: The "must carry" option, which guaranteed them a spot on the cable system, but without compensation; or "retransmission consent," meaning cable systems that wanted their programming must pay for it.
Among Roanoke area stations, only WDBJ Television Inc. (Channel 7) has demanded cash. The station's general manager, Bob Lee, announced in July the company would ask 17 cable operators that currently carry its programs for 57 cents per subscriber per month.
Fox Broadcasting Co. affiliate WJPR/WVFT (Channel 21/27) struck a deal with Cox Cable Roanoke Inc., which means subscribers will continue to get the Fox network on channel 8 in Roanoke, Vinton and parts of Roanoke County.
All public television stations, including WBRA (Channel 15) in Roanoke, opted for "must carry." So did WEFC (Channel 38), an independent religious station carried on 20 Western Virginia cable systems.
WSLS (Channel 10), and WSET (Channel 13) have chosen the "must carry" option on some systems and payment from others. Along with WDBJ and the Fox stations outside the Roanoke Valley, they are negotiating with cable operators.
If they don't settle by Oct. 6, it's likely negotiations will continue but those channels will go blank on cable systems until a decision is reached.
Some viewers may be able to use an antenna to capture those signals. Switches that will enable viewers to flip from cable to the antenna can be purchased from appliance stores for about $5 to $13, depending on quality. Some cable companies may sell or rent them.
WDBJ last month received notices from Booth American Corp. - parent of Salem and Blacksburg cable systems - indicating it intends to delete Channel 7. However, Richard Lesley, executive vice president and chief operating officer of Booth American, said the notice was just a legal formality in case they don't settle by the deadline.
"It's muscle flexing," says Robert Spekman, a professor at the Darden Graduate School of Business Administration at the University of Virginia. Spekman doesn't expect local channels to disappear from the cable systems because they're too valuable to the viewer.
"The bottom line is advertising dollars," Spekman says.
Television stations on cable can offer advertisers a larger audience, while cable companies increase the number of subscribers by offering a greater variety of programming.
"We're searching for that magical win-win situation," said Gretchen Shine, vice president and general manager of Cox Cable Roanoke. If a deal isn't made and channels go blank "we think some viewers will disconnect."
She said her company will continue to talk after the deadline and plans to leave the channels blank until an agreement is made.
Broadcasters and cable companies say they are optimistic.
"By no means have the negotiations broken down," Shine said.
However, "I feel like the classic insurance salesman," said James DeSchepper, general manager at WSLS. "I know even before the call that it's no sale," but he continues to keep talks open.
Cox Cable Roanoke is not averse to paying the stations in some way other than cash, such as promotional spots. "The new regulation says `compensation,' it doesn't say `cash,' " Shine said. "There are any number of things. All of those things have a value."
It's the "exclusivity factor" - paying for a network means only Cox subscribers can get it - that has Cox Cable Roanoke refusing to pay cash, she said.
Cable companies pay for other networks - WDBJ reports that national average payments range from 4 cents per subscriber for C-Span to 60 cents for ESPN. Cable companies do not reveal those figures, saying they are part of confidential contracts with the cable networks.
But with those payments, say the cable companies, they get two minutes per hour to insert local commercials on the network, which cannot be received by someone who does not have cable service, even though the local stations' programs can be received with an antenna.
For WDBJ's Lee, the basic argument is that Congress has said broadcasters' signals "should not be free to someone who wants to resell it."
And, he said, most viewers with cable watch the local stations. A 1993 report by Nielsen Media Research shows that in Roanoke County households with cable, local stations get 68 percent of the viewing. More than 60 percent of households in the Roanoke-Lynchburg market have cable service.
Despite publicly asking for 57 cents per subscriber per month, Lee said he has not stipulated the payment must be in cash. He is willing to discuss other forms of payment but "most of what's on the table at this point has been hollow," he said.
Lee said some of the cable companies are taking potshots at the broadcasters with on-air announcements and fliers. In retaliation, WDBJ began airing commercials distributed by the National Association of Broadcasters that show programs such as "Seinfeld," "60 Minutes," "Star Trek" and the Super Bowl being wiped off the screen, leaving only static. It says "Local TV. It makes cable worth watching."
Lee himself appeared in another ad telling viewers his station is asking for 2 cents a day from cable operators.
Cable systems, of course, complain that it doesn't tell the complete story. The 2 cents, multiplied by each subscriber, adds up to thousands of dollars, they say, $355,680 a year in the case of what Lee is asking from Cox Cable Roanoke.
Salem Cable TV Co. is airing commercials with Atlanta's Turner Broadcasting System Inc. Chairman Ted Turner explaining that subscribers could lose local channels if an agreement is not reached, says Salem's General Manager Jim Matthews. Cox Cable Roanoke Inc. is running similar 30-second announcements.
Salem Cable TV recently sent notices to customers that said: "The new law makes it possible for every local TV station to demand to be on our channels. In fact, if there are no open channels available in our line-up, the local TV stations can even force us to drop popular cable programming services.
"If we were to pay the stations, sooner or later our customers will bear this cost. We simply do not believe it is fair to pay for programs that you can receive free with an antenna. . . . We want to carry all local stations, but will do so only if we can minimize the cash payment and receive equal value to the amount of consideration sought by each station."
Other cable companies are sending similar notices. Some broadcasters call them cheap shots against the affiliates, but Matthews says the commercials are simply a means of getting information to subscribers.
Kelvin Bowles, president of Atlantic Metrovision Corp. in Franklin County, said he plans to begin showing commercials explaining the situation. He said his customers are confused by WDBJ's announcements. "It insinuates that cable companies are threatening to drop them," he said.
Nor is Bowles happy with the deal offered by Fox. The network offered to let cable systems have its programming for free if they also picked up a new Fox network, FX, to be launched on March 1. Fox says FX will be the first general entertainment network that will interact with its audience.
WSLS is not airing any commercials on the issue. Neither is WSET, said Jerry Heilman, general manager of the Lynchburg-based station.
by CNB