Peter Callaghan: Viewers have new ways of putting the ‘free’ back in free TV

Staff WriterDecember 10, 2013 

Rooting for a winner in the ongoing battle between cable companies and local television stations is like picking a favorite when the Red Sox play the Cardinals in a World Series.

Can both lose?

When the Red Sox win again, though, it doesn’t cost me a cent. Each time the cable providers and the so-called over-the-air TV stations have another fight over the fees viewers are charged to watch “free” TV, people who get their sports, news and entertainment via cable pay more.

What is especially galling is that customers are not allowed to know how much of their rate increases are due to increased demands by stations like KING, KOMO, KIRO, KSTW and KCPQ. The amount of retransmission fees is a secret.

This remains true even when an argument over how high the fees will rise leads to service disruptions, as it did for customers of Tacoma’s Click Network a year ago. The News Tribune is still in the midst of litigation that resulted when it invoked the state Public Records Law to get copies of contracts between KOMO and the other local stations and taxpayer-owned Click.

KOMO, and just about everyone else in the broadcast and cable industry, sued Click and The News Tribune to block access to the contracts. The case is still pending.

The KOMO-Click war mirrors battles across the country involving broadcasters on one side and the cable and satellite providers on the other. At one time, local stations were thrilled that cable providers delivered their programs – and ads – via a clear signal to thousands of homes. Over time, however, the stations began charging for the privilege. And now, facing declines in advertising revenue, these retransmission fees are becoming a bigger piece of their profits.

National consulting firm SNL Kagen estimates that the amount America’s local stations will get from cable and satellite viewers will total $5.5 billion by 2017 compared to $2.36 billion last year. And what did they collect a decade ago? That would be $15 million (with an M, not a B).

All that for something called “free” TV. (And yes, newspapers have increased subscription rates for papers and for Web access, but we own up to them). Do you know how much you pay each month for KONG?

In these fee battles, however, the TV stations always win because they have a clear PR advantage. Who is going to support a faceless cable company in a war with local media darlings Jean Enersen and Dan Lewis (even though these local darlings work for national corporations)? Most customers figure the cable providers are ripping them off, partly because they sometimes are but partly because the providers are not allowed to tell customers how much of their bill goes to the TV stations.

Keeping customers in the dark is the motivation behind the aggressive legal attempts to keep The News Tribune from getting those contracts. To fight back, some cable providers are beginning to add a line to bills – the total of all the retransmission fees it collects for local TV stations. The amount paid for each station is hidden but the total can at least indicate how fast the fees are increasing.

There are still ways to get “free” TV for free – a digital antenna. According to an analysis by GfK Media, the number of viewers who use them is climbing – from 46 million in 2011 to 54 million in 2012. That’s 17.8 percent of households.

There’s also an emerging technology offered by companies such as Aereo and Film On X that capture over-the-air signals and stream them to customers for much less than even basic cable. TV stations are fighting these services in court because they don’t get retransmission fees from these viewers. But so far the courts agree that they are a form of over-the-air reception because the companies have a tiny antenna in their servers for each customer.

The services are not yet available in the Seattle-Tacoma market. But they are a sign that the rates consumers pay for TV – transparent or not – have reached the tipping point.

Peter Callaghan: 253-597-8657
peter.callaghan@thenewstribune.com
@CallaghanPeter

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