• by Wayne Friedman , May 8, 2009

TV stations are now getting millions from retransmission deals from cable operators. Have they been responsible for cable operators passing on these costs to consumers?

The American Cable Association asserts that cable subscription rates have risen as a result of "excessively large retransmission consent gains" -- blaming the money that TV stations have received in recent years from cable operators to carry their signals.

The National Association of Broadcasters disagrees, saying the cable operators' gross profits increased to $62.99 per subscriber per month in 2006 from $48.96 per subscriber per month in 2003 -- an increase of $14.03 per subscriber per month.

But this was not in line with cable operators' growth in overall programming expenses, including retransmission fees -- which have risen to $18.47 from $15.63 -- a small increase of $2.84 per subscriber per month.

"With cable's profits rising five times as much as their programming expenses, it is absolutely illogical to claim that retransmission consent plays a significant role in the continued escalation of cable subscription rates," said Dennis Wharton, NAB executive vice president.

The NAB said a recent study noted that retransmission consent fees are a tiny addition to cable operators' cost -- accounting for only two-tenths of 1% of cable revenues today, with estimates that they will never rise above 1%.

The ACA says the NAB study is skewed to just the big cable operators; it's not representative of the small to mid-size cable operators that are members of the ACA.

Taking issue with the NAB study, Matthew Polka, president/CEO of the ACA, said in a statement: "The study is based on data that the NAB collected from four large publicly traded cable operators that each serve many millions of customers.

"Because no ACA member was included in the portion of the NAB study that compared programming costs to profits, it's an irrelevant response to ACA's May 7 release that documented excessively large retransmission consent gains by several local TV station groups."