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What's Behind Rising TV Rates
and What You Can Do About It

Many are concerned about the rising cost of their TV service. We at Nittany Media share your concerns about this and would like you to understand what is really behind this problem, as well as the need for legislative reform to correct the inequities that drive it.

The reason our rates have gone up is that the costs we are charged for cable TV networks like ESPN, FOX Sports, CNN, TNT and MSNBC, as well as broadcast TV stations have been rising dramatically in recent years. We have had little choice but to pass a portion of these increases to our subscribers. Frankly, these programming costs are getting out of hand.

Nittany Media has been at the front lines of the fight to keep TV affordable, having appealed to members of Congress for legislative reform of the pay TV market. We can't do this alone. Now is the time for you to join us in speaking up to our federal legislators asking for change.

Here is some important information about this issue and what you can do with us to make a difference:

The video market has dramatically changed since the Cable Reform Act of 1992. The laws have not.

  • Satellite TV and telephone providers now offer robust competition to cable.

  • Online video delivery services, like Netflix, Amazon and Hulu have grown to 30 million customers.
  • The programming market has consolidated into just five media conglomerates who control the big 4 networks (ABC, NBC, CBS, and Fox) and dozens of the most popular cable channels.
  • Despite this fundamental evolution in the video market, much of which was never anticipated by Congress, the existing rules governing the market fail to recognize the market problems for pay-TV providers like Nittany Media and their subscribers.

Retransmission consent laws regulating the use of broadcast TV stations on cable TV systems are now broken.

  • Rapidly escalating retransmission consent fees: These are the fees that broadcast TV stations charge cable operators like Nittany Media to re-broadcast their free over the air station on cable TV. According to SNL Kagan, broadcasters’ retransmission consent revenue jumped a whopping 1597% since 2006 (from $215 million to an estimated $3.648 billion in 2014, source American Television Alliance). These outrageous increases are on the backs of cable companies like Nittany Media and their subscribers.

  • Blackouts: In 2013, millions of Americans went without access to their local broadcast signals after TV station owners cut off programming to cable operators 110 times. This was a 817% increase over 2010.
  • Anti-competitive practices: Separately owned, same market broadcasters, who are supposed to compete against each other, are colluding in the sale of retransmission consent to pay-TV providers in a number of television markets by coordinating their negotiations. Available evidence shows that when broadcasters engage in this behavior, they can extract higher fees than if they negotiate separately.
  • HARM: Unable to absorb these outrageous higher costs, pay-TV providers Nittany Media have little choice but to pass retransmission consent fees along to their customers.

The sports programming market is also broken.

  • Rapidly escalating sports fees: National sports networks (and regional sports networks) aggressively bid against one another for the rights to air the most popular sports leagues’ sporting events. Networks bid extraordinary amounts knowing they can pass on their costs to pay-TV providers like Nittany Media, who need to offer their sports networks to remain competitive in the market. Accordingly, ESPN is the most expensive cable network at $5.54 per subscriber according to SNL Kagan. The fee is expected to grow to $6.95 per subscriber by 2016.

  • Obligations to sell expensive sports programming on basic tiers: Despite these high and escalating prices, sports networks require pay TV providers like Nittany Media to put this programming on their basic tiers.
  • HARM: With the expensive sports programming on basic tiers, the high costs for this programming is thrust upon all the subscribers of all pay-TV providers, whether they want the programming or not.

Nittany Media would love to offer you our customer “a la carte” channel selection (you pick and pay for only the channels you want). After all, why should you pay for channels you don't want? Unfortunately, program providers won't let us do that.

  • Because fewer, more powerful media companies control most of the cable TV networks, we are faced with an “all or nothing” programming proposition. For instance, the company that owns Nickelodeon (Viacom) also owns MTV and forces us to carry (and our customers to receive) both. This practice is known as program bundling.

  • We don't have a choice, so you don't have a choice. Nittany Media would like the freedom to offer you a choice in the channels you receive. But a change in law is necessary to make that possible.

The Time for Reform Is NOW


Lawmakers from both parties now acknowledge that existing rules governing the pay-TV market are antiquated and causing harm to consumers. Some propose removing outdated rules to reduce regulatory impediments to competition. Others talk about the need for new rules to ensure there’s a more competitive market.

We ask you to encourage the House Energy & Commerce Committee and the Senate Commerce Committee to hold hearings on the following subjects:

  • The 1992 Cable Act, including the rules governing the retransmission consent market.
  • The sports programming market and its impact on the rising cost of pay-TV service in the basic tiers.
  • The forced “bundling” of cable network channels, which prohibits cable operators like Nittany Media to offer “a la carte” programming to its subscribers.

Here are some helpful resources for Action:


 

 

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