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Tuesday, September 02, 2014
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Published: Tuesday, 2/4/2014 - Updated: 6 months ago

40 hear of Channel 24 dispute

Meeting involves Sinclair’s attempt for $2 a customer

BY JON CHAVEZ
BLADE BUSINESS WRITER
Sinclair Broadcasting Group executive vice president Barry Faber speaks during a town hall meeting at the Park Inn in Toledo. Sinclair Broadcasting Group executive vice president Barry Faber speaks during a town hall meeting at the Park Inn in Toledo.
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About 40 people attended a “town hall” meeting on Monday hosted by Sinclair Broadcast Group Inc., owners of NBC affiliate WNWO, Channel 24, to hear comments from a Sinclair official on a dispute that has resulted in the station no longer being carried by Buckeye CableSystem.

Barry Faber, a Sinclair vice president and general counsel, spoke for about an hour and then answered three questions from attendees.

Sinclair ordered Buckeye CableSystem to stop retransmitting Channel 24 when the previous contract between the two companies expired on Dec. 16. Under federal law, Buckeye cannot pick up WNWO’s broadcast signal and send it to cable customers without WNWO’s permission.

The two sides have been attempting to negotiate a new contract, and Mr. Faber said a negotiating session is set for today.

But during the town hall meeting, Mr. Faber said, “There’s a chance we’re not coming back” to Buckeye unless the dispute is resolved to Sinclair’s satisfaction. He said customers who want NBC and WNWO should “think seriously” about switching video content providers “because you’re going to miss our programming.”

Buckeye CableSystem and The Blade are both owned by Block Communications Inc.

Under the expired contract, Buckeye was paying about 24 cents per cable customer per month to send WNWO’s signal.

Mr. Faber said it is untrue, contrary to Buckeye’s position, that Sinclair wants to be paid $2, an eight-fold increase over the previous rate. “We’re asking for less than that,” he said.

However, later in the meeting Mr. Faber also said, “Do I think $2 is an appropriate cost? Yes, I do.”

Brad Mefferd, Buckeye’s chief administrative officer, said that "Sinclair’s last offer to us was $2. Our chairman made a creative offer to them, which after a few days was declined. We will continue to negotiate."

Mr. Mefferd declined to say what that offer was, but stated that such an increase could not be absorbed.

“If every channel wanted eight times more than what we’re now paying, that would be extremely detrimental to our costs and to our customers’ costs," Mr. Mefferd said. “We want to carry WNWO and we know our customers want it. But we’re very sensitive to price and what this will eventually cost our customers."

The cable company argues that WNWO’s viewership is much lower than the other Toledo TV stations and doesn’t warrant a big fee increase.

According to Buckeye CableSystem data, the number of minutes that Buckeye CableSystem viewers spend tuned to the news broadcasts of WNWO is just one-third of the minutes customers spend tuned to WTOL, Channel 11, and WTVG, Channel 13.

Mr. Faber presented data at the meeting showing that, at 24 cents, WNWO is getting paid less than cable channels like ESPN or USA who have far fewer viewers than Channel 24. However, he acknowledged after the meeting that ESPN and other cable channels are “exclusive,” meaning they cannot be received free over the airwaves like WNWO.

The average cable company pays ESPN $5.50 a month for each subscriber, Mr. Faber said in a previous interview.

Mr. Mefferd said comparing WNWO’s contracts to ESPN and other exclusive cable channels is misleading.

“Yes, you can’t get ESPN free over the airwaves. But beyond that, cable channels like ESPN give us air time to sell our own ads. Cable providers can recoup some of their costs that way. Broadcasters like WNWO don’t allow you to do that,” Mr. Mefferd said.

Also, Mr. Faber said he does not know how much other local stations, like Channels 13, 11, and 36 are receiving from Buckeye. “But I can tell you that 24 cents is not even close to the market rate,” he said.

Mr. Faber added that under retransmission deals currently being negotiated, TV stations are receiving far higher payments than they were six years ago when the FCC agreed that cable providers had to starting paying local stations for retransmitting their signals. “Retrans is an emerging market. I have no idea what the other stations are getting, but unless their deals were negotiated yesterday, their rates are going up when their contracts expire,” he said.

Mr. Mefferd said that negotiations have been going on far longer than six years — since the passage of a bill by Congress in 1992 that allows stations to make retransmission deals, or elect to be a “must carry” for a cable system.

Only three audience members asked questions, one unhappy with Buckeye’s service, and another pleased with it. A third person asked if there were other issues besides money involved in the negotiations.

Mr. Faber said that, in addition to negotiating a new price for retransmitting WNWO, Sinclair would also like assurances from Buckeye that it will carry a new Sinclair cable news station that it wants to develop. Sinclair is attempting to buy seven TV stations owned by Allbritton Communications and plans to use them to start an all-news cable channel. Buckeye “Carrying that [news] channel is also on the table,” he said.

Mr. Mefferd said, “They want it to be part of Buckeye's obligation to help launch whatever that is. But nobody knows what it will even look like, and what will that do to our costs?

“They had a press conference to get their side out and they have a right to do that. But we’re just fighting as hard as we can for our customers because we are concerned about the eventual cost to our customers,” Mr. Mefferd said.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.



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