DirecTV announced this week that it was exploring the possibility of adding an over-the-air receiver to its set-top box. That part isn’t new; some DirecTV boxes had OTA capabilities over a decade ago, and my Dish Network receiver has an OTA adapter. What’s new is the reason DirecTV is re-exploring this addition: It wants to avoid retransmission fees.
As TVBlog writer David Goetzi wrote, this tactic would be unquestionably legal, although that doesn’t mean the broadcast networks wouldn’t question it. And as Goetzi put it, this should be a scarier prospect than the Aereo streaming service that’s got the networks filing lawsuits. If every cable and satellite company started using OTA to circumvent retransmission fees for a large percentage of its viewers, those networks might find themselves cut off from revenue they’re now depending on.
If this scenario ever looked imminent, what would the networks do? My guess is that they would pull back on their retransmission fee increases in exchange for promises to keep OTA out of the cable set-top box. Surely cable companies would prefer a known, lower retransmission payment rather than the upfront cost, uneven OTA experiences and service calls that would result from thousands of OTA antennas. Still, a new upper limit on retransmission money would wreck some of the business plans networks have been showing investors.
The deeper question is whether retransmission fees are appropriate. Broadcasters have a monopoly on the public airwaves they occupy. The ability to send ads, with a few intervening programs, over the air to every TV set used to be quite valuable all by itself. When cable companies made it easier to pick up OTA channels, broadcasters wanted a piece of that cable bill, and they persuaded Congress to see it their way. Now at each renewal, each station gets to wrestle with each cable system, often as part of the inevitable parent company’s desire to add more of their cable channels to the lineup at higher prices. That doesn’t sound like it’s in the public’s interest.
Just imagine if anyone was free to retransmit any OTA signal using the Canadian model of royalty payments. With today’s connected world, soon anyone would be able to watch any station. Royalties would flow to the content producers according to the popularity of their programming whether they’re in New York or Billings MT. The viewing public would benefit from an incredible cornucopia of choices. The only folks who would get less money would be those folks who negotiate ever-escalating retransmission agreements. Everybody else would be happy. Wouldn’t that be nice?