October 5, 2012
This actually is not the product of the free market, but instead of government regulation.
The law responsible for this requirement is the Cable Television Consumer Protection and Competition Act of 1992, which went into effect twenty years ago today, when Congress overrode President George H.W. Bush’s veto of the bill.
Often called the “Cable Act of 1992” for short, the law in fact is a “reregulation” of the cable industry.
Congress believed that this reregulation was required because, due to certain provisions of the Cable Communications Policy Act of 1984 that deregulated cable rates across the country, the average monthly cable rate had increased almost three times as much as the Consumer Price Index.
In other words, when the government left rates to the free market, the rates skyrocketed.
Congress construed this result to be a consequence of a distinct lack of competition in the cable industry, and the 1992 Cable Act was its answer.
As mentioned earlier, the Act is the government regulation responsible for requiring cable providers to carry local broadcast channels, with the caveat that broadcast networks can’t charge cable TV companies license fees for the program content retransmitted on the cable network.
This alternative is known as “retransmission consent.”
Retransmission consent is what happens when a local TV broadcaster opts out of must-carry, and instead chooses to require a cable network to obtain the broadcaster’s consent.
This “consent” usually needs to be purchased.
As could probably be intuited, those broadcasters that the cable networks actually want to carry are almost always the ones that opt for retransmission consent.
Thus, the price of the broadcaster’s consent is negotiated.
But when those negotiations fall through, we get “blackouts” of the broadcast signal on cable networks.
These blackouts are often heavily cited by cable networks, who largely oppose retransmission consent, to claim that it is a broken system.
The broadcasters, however, claim that retransmission consent is “one of the great Washington public policy accomplishments of the intervening two decades.”
The debate has been ongoing since the passage of the 1992 Cable Act, and, given current efforts to repeal must-carry and retransmission consent rules, it doesn’t look to be ending anytime soon.
On a more historical note – and one related to our current presidential election season – the fact that President George H.W. Bush’s veto was overridden by Congress was embarrassment enough – especially right in the middle of election season.
But worse yet was that he was unable to convince any members of his own party in Congress to stand with him and prevent his veto from being overridden just added insult to injury.
This failure on the part of the President may have contributed to his eventual defeat in the 1992 elections or it could have merely been a symptom of a larger dysfunction within the presidency (though both are probably true to some extent).
Either way, the legacy of the Cable Act of 1992 doesn’t only extend to broadcast TV rights, but also to President Bush’s 1992 electoral loss.