Sen. Daniel Inouye (D-Hawaii) is urging the U.S. Dept. of Justice and the Federal Trade Commission to probe whether top cable TV companies are engaging in illegal collusion by taking a uniform hard-line stance against cash retransmission-consent payments to broadcasters.
Inouye chairs the Senate communications subcommittee and is the original sponsor of retransmission consent. That provision, tucked into the 1992 Cable Act, allows broadcasters to try to wheedle cash out of cable operators for TV station signals that heretofore have been received for free.
Inouye, in a letter to the CEOs of top cable companies in the U.S., said he has asked for the antitrust investigation “to assure a free and vigorous marketplace.”
The Hawaii Democrat said he also may hold hearings on the issue when Congress returns in September. Inouye noted in his missive that cablers “are obviously free to choose not to negotiate with broadcasters.”
However, he pointedly told the cable execs, “I trust I need not remind you that it is one thing if your parallel strategies are a coincidence, and something quite different if the similarities result from factors other than chance.”
The Inouye letter was hailed as welcome news by broadcasters, many of whom have run up against a stone wall in retrans negotiations with cable operators.
“Obviously, we’re pleased,” said Gary Chapman, head of Providence, R.I.- based LIN Television Corp. “I’ve sensed there are a lot of conversations going on between large MSOs. I don’t know if it’s retransmission-consent-related or not, but it leads one to believe that all of this (the tough no-cash stance) is not a coincidence.”
Peter Desnoes, chieftain at Chicago-based Burnham Broadcasting, said, “I have absolutely no basis to make an assertion” that cablers are illegally colluding. However, if it’s not collusion, he said, there’s clearly a “subversion of the intent of Congress” since cable execs are refusing to discuss cash payments.
Although in recent weeks there have been a handful of cash retrans deals that involve small and medium cable companies, the nation’s top MSOs — including Tele-Communications Inc., Time Warner and Continental Cablevision — have adamantly resisted cutting straight cash deals.
Inouye said he finds cable’s solid “no pay” position “particularly interesting” in light of statements made during the cable reregulation debate that retransmission consent would cost the cable industry “exorbitant amounts” of money.
Inouye noted that TCI’s own study released last year claimed that cable operators would be forced to fork over $ 1.67 per subscriber per month to pay for retrans.
TCI spokeswoman Lela Cocoros said her company has not yet received the Inouye letter. Nevertheless, she said TCI “has struck its own (non-cash) deals with broadcasters all over the country. We don’t understand the concerns” of Inouye.
Marc Nathanson, head of Falcon Cable TV in Los Angeles, questioned whether an antitrust investigation is worth the effort. “Cable companies don’t have to conspire on retransmission consent,” said Nathanson. “All they have to do is look at the bottom line and see they can’t afford to pay.”
Nathanson said that given the fallout from FCC rate regulation, “it’s impossible for us to pay more money” to broadcasters.
Some cable industry insiders were speculating the Inouye investigation request may have been prompted by a recent meeting between Inouye and CBS topper Laurence Tisch. Tisch was on Capitol Hill last week and met with several lawmakers, including Inouye.
However, an Eye web representative denied that Tisch had any role in prodding Inouye to act.