Des Moines Business Record, IA
11-12-06
Who will blink first?
By Jason Hancock
jasonhancock@bpcdm.com
Fans of the Fox television network's "24," "The Simpsons" and "American Idol"
who subscribe to Mediacom Communication Corp.'s cable service may soon find
themselves missing out on their favorite programs.
Negotiations between the cable company and the owners of the local Fox affiliate
over rights to retransmit the station's signal on the cable system have stalled. On
Dec. 1, Mediacom subscribers likely will lose network, syndicated and local
programming carried by the Sinclair Broadcast Group's KDSM unless the
companies reach an agreement.
With the cutoff date looming, KDSM began running an announcement along the
bottom of the screen during popular programs suggesting viewers should take
advantage of a newly announced deal whereby Sinclair will pay Mediacom
customers $150 over 15 months to switch to satellite television.
Court papers filed by Mediacom last month accuse Sinclair of violating federal
antitrust laws by unfairly linking the retransmission of 13 stations that Mediacom
says it's willing to pay for with nine stations that the company says it doesn't want
to carry. Sinclair lawyers have countered by describing the dispute as a simple
matter of Mediacom not wanting to pay what their stations are worth.
Mediacom had hoped a federal judge in Des Moines would block Sinclair from
banning its channels from being rebroadcast on Mediacom's cable systems until
there is a ruling in the antitrust case, but U.S. District Judge Robert Pratt refused.
"It's a high-stakes game of chicken," said Jeffrey Blevins, assistant professor
of journalism at Iowa State University, where he teaches classes on electronic
media law and policy. "And both sides have something to lose."
Mediacom officials have complained in court proceedings that they'll lose
customers for a year or more if people abandon cable for satellite. Likewise,
Sinclair concedes that its stations' advertising rates could suffer in the short term
if they lose access to thousands of cable homes.
"It is unfortunate that our viewers are stuck in the middle of this negotiation,"
KDSM General Manager Mike Wilson said in a statement. "It is also unfortunate
that Mediacom doesn't want to pay for an asset - our station's signal - which they
want to use in order to sell their services to you."
"Sinclair remains willing to negotiate with Mediacom regarding the right to
continue to carry our stations' signals," Sinclair said in a separate statement.
"Although Sinclair continues to regret any inconvenience caused to its viewers,
Sinclair does not believe it is fair for Mediacom to refuse to pay for programming
which it uses to attract and retain fee-paying subscribers." Mediacom said it has
made several fair offers, which Sinclair has rejected. In a statement to
customers on the company's Web site, Mediacom Regional Vice President Steve
Purcell said Sinclair's actions are penalizing cable customers "who will ultimately
bear the cost and inconveniences of Sinclair's extreme behavior." Purcell said
Mediacom has improved the picture quality KDSM by investing millions of dollars
in its delivery system. He is encouraging viewers to contact KDSM to voice their
concern and advertisers to seek other broadcast stations in the area.
Essentially its federal lawsuit against Sinclair Broadcast Group is about
Mediacom being forced to purchase channels it doesn't want as part of a
package deal.
"We believe this all-or-nothing scheme violates antitrust law," said Rocco
Commisso, Mediacom's chairman and CEO. "Sinclair is holding our customers
hostage in the Des Moines market in exchange for carriage of other stations in
markets half a continent away." Blevins said in the past, cable companies didn't
have to pay for broadcast stations, only cable-only stations. But in recent years,
many companies have begun negotiating deals with cable providers requiring
them to pay retransmission fees to be allowed to broadcast their stations.
"As unpopular as it may be, Sinclair certainly is within their legal rights to ask for
this payment," he said.
This dispute may be a side effect of the Telecommunications Act of 1996, which
Blevins said increased the number of stations companies are allowed to own.
"If Sinclair owned fewer stations, I really don't think they would have very much
leverage," he said.
But with the size of the market, Mediacom has more to lose than Sinclair, Blevins
said.
"Fans of Fox programming will find a way to watch Fox programming," he said.
"They will buy an antenna or switch to satellite. So I really don't see their ad
revenue being affected by this. Mediacom, on the other hand, stands to lose
subscribers that will be under contract with another company long after this
dispute is settled."
The size of the Des Moines television market could also be significant, he said,
because it could have been chosen by Sinclair to make a stand about
retransmission fees.
"With a market this size, they aren't worried about losing an amazing amount of
viewers and ad money," he said. "I don't think they would be quite so tough in
negotiations in a larger market, like New York."
So in the game of chicken, Blevins said he thinks Mediacom will blink first. He
also said this legal battle will be watched by media ownership groups all over the
country.
"They will definitely pay attention to this, because this could set a precedent for
them to follow from now on," he said.