Bridge Span 13-10: Consumers Kept in the Dark About Going Dark in LA and NYC

Mark Twain once quipped, “All you need in this life is ignorance and confidence, and then success is sure.”  If Twain is right then advertising, and now social media, has allowed us an unprecedented look into the world of success, the world of fact-free confidence.  The recent very public scuffle between CBS and Time Warner Cable highlights one example.


The world of video delivery is an increasingly complicated, ever changing, competitive place.  More and more competitors gain relevance such as Netflix and Redbox, even while most people receive their video “free,” such as CBS, via broadcast, or “pay tv” such as SportNet, via a cable or satellite provider. 


The world of broadcast is heavily regulated including by the 1992 Cable Act, and specifically “retransmission” rules, that govern how video distributors carry signals from local broadcasters.   These signals are supposed to be free, whether received over a “cable” or via an antenna on a roof, and these days such programming is free online as well.   The retrans rules, in part, provide a gun for broadcasters to put to the head of the distributors, such as the cable companies, as the broadcasters can force the distributors to pay for and show their content under something called the “must carry” rule.  Ultimately these restrictions have caused various policy disputes and contract fights between the parties.  The result is that the public in some markets are threatened with program blackouts.


The world of “pay tv” is entirely different – unregulated and free market.  Channels come and channels go.  No one is forced to carry any programming, as they are obligated to do with broadcast signals.  In a free market you might end up with shut down scenarios as content owners and content distributors haggle over new contracts, but it is clear that if programming ends it is because the two parties could not reach a business deal good for everyone.


So what is going on between CBS and Time Warner Cable?  CBS has, without shame, taken to advertising, crying victim even as they demand a 600% premium from distributors.  Viewers are left as the collateral damage of the CBS goal to make $1 billion in retrans revenue, a goal to profit $1 billion dollars from “free,” already ad supported, television.  This leaves distributors with the option of giving more cash to CBS for “free” content or walk away, and possibly be forced to show the programming anyway.  Not much of a choice.


Even worse is the intentional confusion foisted on consumers, taking advantage of the public ignorance of the arcane rules of retrans.  Some have taken to social media to decry Time Warner Cable without the slightest understanding of the government’s twisted “marketplace.” 


They compare the world of heavily regulated, government distorted market of “free” tv, with the real world, free market world of “pay tv.”  It is a ridiculous comparison.  When a consumer pays for a premium channel such as SportsNet they are paying for content that is made available through the distributor under contract with SportsNet.  Only subscribers to pay television get this content.  Paying for “free” television and paying for otherwise unavailable content – it is comparing, well, free to regulated.  


CBS programming is available free over the air and online to anyone, and yet CBS puts a gun to the head of the distributor and holds the audience hostage.  The consumer loses in every scenario –  either not receiving CBS on their pay television service or ending up paying for “free” television, all while CBS runs ads trying to lay the blame on others. 


CBS sure seems confident, playing on the ignorance of its consumers.  Maybe they believe that is their recipe for sure success.

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