Ergen Blasts Retrans System At Hearing
Congressional hearings can go in some maddening directions. Executives can travel thousands of miles eager to debate a topic of national importance, only to have supercilious politicians in total control use the attention to move in irrelevant directions.
On Wednesday, the ridiculousness was on display thanks to Texas Rep. Joe Barton (R), who took time during a “Future of Video” hearing to pat himself on the back for nudging college football to adopt a playoff system. Memo to the gentleman from Texas: money was the driver.
During the rest of taxpayers’ time, members of a House subcommittee on communications and technology got down to business with industry executives from many precincts, debating issues such as the state of the retransmission consent process, rising cable bills and the legitimacy of Dish Network’s Auto Hop feature. Other issues included broadband data caps and over-the-top distribution.
Executives testifying included Dish Network Chairman Charlie Ergen, Hearst Television CEO David Barrett and National Cable & Telecommunications Association (NCTA) CEO Michael Powell.
Committee members allegedly were interested in whether legislation is needed to address the shifting video landscape.
Here’s a report card:
--Dish Network Chairman Charlie Ergen is a compelling debater. Wish he weren’t so invisible.
On the matter of the retransmission consent process -- where stations can command carriage payments from cable, satellite and telco TV operators – he was rather straight-forward on which side he thinks holds the upper hand.
“Local broadcasters are a government-sponsored monopoly,” he said.
Tired of paying the escalating fees, Ergen referenced shared services agreements that allow stations to negotiate as a group – a matter the FCC is evaluating. When stations “utilize their market power” and engage in such “mischief,” he said Dish is at a dish-advantage.
Representatives on the committee seemed to be concerned that a lack of retrans payments might hurt station revenues and reduce local programming. Yea, right … Ergen said.
The underlying Ergen argument:
First, much of the retrans dollars don’t go to the stations, but are passed on to the networks. Second, stations have a deal-revenue stream and collect ad dollars, along with the carriage fees, and seem to have done all right for a long time. Third, despite retrans payments having risen so much, Ergen said many stations have cut back on local news, instead allowing other stations to program their newscasts, which can reduce voices in the marketplace and original content.
Regarding the Auto Hop -- the fledgling Dish DVR enhancement that allows users to zap all commercials in prime-time programming from the Big Four networks -- Ergen offered two defenses, one muscular, the other weak.
The matter is in court, but from a lay point of view, Ergen’s argument that Auto Hop simply takes DVR functionality and makes it easier, holds a ton of water. If DVRs were illegal that would be one thing, but better customer service is supposed to be revered.
“We’ll fight the good fight for the consumer on that,” he said.
Ergen also suggested Auto Hop offers parents a chance to protect their children from ads for “junk food and alcohol.” Specious. Auto Hop doesn’t record Saturday morning cartoons and beer ads aren’t a heavy presence during dramas and comedies.
--Hearst’s David Barrett should stay in Washington. He’d be an excellent diplomat. He’s tough, but seems to be a consensus builder.
He said Hearst negotiates retrans deals by itself and doesn’t look for leverage via combinations with other stations. (Presumably that means it won’t join any initiative where NBC cuts deals on behalf of affiliates.) As Ergen was trashing others for “unfair bargaining,” he acknowledged Barrett negotiates in good faith.
Barrett maintained that retrans dollars are critical for a “21st century media company” to fund local programming, including multicast channels and newscasts. The news argument may be a bit flimsy, though, because some stations have gone with more news as a less-expensive alternative to syndicated fare.
On Auto Hop, he told the committee it could chop enough station revenues that “you will lose local stations’ ability to provide the kind of coverage that’s important to you in your district.”
Barrett gets points for a sense of humor. At one point during the hearing, he forgot to turn on his microphone and said: “I’m a TV broadcaster, I should know that.”
Send him to Moscow.
--NCTA chief Michael Powell made a credible argument why cable prices are increasing – at least by looking at long-term hockey-stick graphs. He indicated more channels and services such as DVRs make a comparison unjust.
If the statistics are right, it’s at least worth considering his comments that cable prices come out to about 21 cents an hour (based on eight hours of viewing a day). He said that would be less expensive than Netflix. (He might have pointed out how Netflix had a mass price bump last year.)
Powell also said any industry that doesn’t take into account consumers’ economic struggles does so “acting at its peril” and cable operators are experimenting with various lower-priced tiers.
(Time Warner Cable recently revealed low consumer uptake for one of those packages.)
--Rep. Diana DeGette (D) of Colorado, the home state of Dish, put forward a reason that might generate mass protests in favor of Auto Hop. She pointed out during election season, the system could allow for welcome zapping of negative political ads.
Later in the hearing, Michigan Rep. John Dingell (D) suggested to Ergen it could curtail candidates’ ability to get their messages out.
DeGette over Dingell in a landslide on this one.
--Dingell, who has been in Congress forever, might benefit from a lesson in civility. He asked Ergen a series of questions, but would hardly let him answer.
He also mistakenly referred to the Dish Chairman as “Mr. Hopper.”
That might stick.