Cablevision and local station battle could signify coming cable rate hike

The dispute between Cablevision, the United States' fifth largest cable company, and New York ABC affiliate WABC-7 was tentatively resolved yesterday evening in time for the Academy Awards telecast, and the ABC blackout for Cablevision subscribers did not last 24 hours.

"ABC7 and Cablevision have made significant progress and have reached an agreement in principle that recognizes the fair value of ABC7, with deal points that we expect to finalize with Cablevision. Given this movement, we're pleased to announce that ABC7 will return to Cablevision households while we work to complete our negotiations," a statement from WABC-TV said yesterday.

Though resolved for the time being, this heated disconnection and re-connection is another example of the much larger-scale fight between content owners, local station affiliates, and the cable monopolies.

There are many who believe this fight will only result in all of our cable bills going up.

Broadcasters want to brace their weakened advertising revenue and shrinking viewership by negotiating higher retransmission fees from cable companies. These fees are frequently expressed as a per-subscriber charge, and the negotiating price thus far has been $1 per month per viewer.

That's the retransmission price that Fox tried to get from Time Warner Cable late in 2009, and reportedly the same price WABC sought from Cablevision. On New Year's day, Fox and Time Warner reached an agreement on the fees, but the amount of money was not disclosed.

Analysts at the time said the deal opened the door for a $5 billion increase in overall cable fees.

According to the Federal Communications Commission, "Every three years, broadcast stations must decide whether to demand carriage on local cable systems without receiving compensation or elect to negotiate a retransmission consent agreement. In return for allowing a cable system to carry its signal, a television station may require the payment of a fee or other consideration (for instance, carriage of another programming service or advertising time). Any new or additional costs incurred as a result of retransmission consent agreements may be passed through to cable subscribers."

Over the weekend, when it still appeared the Oscars would be blacked out for some New Yorkers, President and CEO of the American Cable Association Matthew Polka issued a statement, reading in part: "The Federal retransmission consent regime is a badly broken system that permits signal pulling and flagrant price discrimination against smaller cable companies that consumers should not be forced to tolerate."