Pay what?

Press releases
By JEFF INGLIS  |  December 15, 2010

How much would you pay to watch TV programs you can already get for free?

This month, WMTW (the Hearst-owned ABC affiliate on Channel 8) and WGME (the Sinclair-owned CBS affiliate on Channel 13) are asking you, their viewers, to call your pay-TV provider and declare your willingness to do just that.

Both stations pay big bucks to the federal government for permission to broadcast over the public airwaves, using the new digital-TV signals that can be detected by up-to-date televisions and antennas. The stations are also carried on several pay-TV networks, including TimeWarner Cable and DirecTV. Most TVs these days can handle doing both — it's really easy to switch between your cable box, your DVD player, and your video-game console.

But the bulk carriers don't want you to do that — they want to keep you locked in to their systems. So they pay the local stations (or their corporate parents, at least) for the privilege of providing local shows to viewers in the station's geographic coverage area. The bulk carriers, naturally, pass on those costs to their audiences — charging viewers for the privilege of watching TV they could have at no cost, if only they were willing to press a button on their remotes.

WMTW's deal with DirecTV and WGME's with TimeWarner both expire December 31, and both stations have issued notices to viewers saying their bulk-carrier channels may go dark if the behemoths don't pony up, often to the tune of millions of dollars.

For example, executives at WGME parent Sinclair minimize their rate increase by describing it as "less than a penny a day per subscriber." But do the math: both WGME and TimeWarner estimate that 250,000 to 300,000 TimeWarner subscribers could be affected in Maine alone — that's right around a million dollars of increase (neither party will disclose the present payment amount). Of course, this is really one behemoth pushing another to get money from you: the Sinclair deal covers 32 other TV stations around the country, and whatever TimeWarner ends up paying will ultimately be covered by TimeWarner customers in their monthly cable bills.

And let's put that extra "penny a day per subscriber" into individual terms. Sinclair is asking TimeWarner to approve charging you an extra $3.65 a year to get access to TV signals Sinclair already distributes at no charge over the airwaves.

Is that a big boost to Sinclair? Yep. Does TimeWarner skim off a percentage for its own coffers? Bet on it. And what do you get? Nothing more or less than what is already being broadcast to your home. (Satellite, cable, and over-the-air providers bicker about relative "reliability" during thunderstorms and the like, but you're generally more likely to lose TV access because of a power outage than anything specifically related to how video gets to your home.)

Of course the other thing it gets for the local TV station is a whole pile of additional prospective viewers, which boosts advertising prices. WMTW president and general manager David Abel says 20 percent of his station's audience watch using DirecTV. Losing access to those viewers would require him to slash his advertising rates, which are higher for stations reaching more people.

Throwing that into the mix makes this financial equation even more fascinating: WMTW and WGME want you to pay DirecTV and TimeWarner more, to allow those carriers to pay the stations more, to give the stations more viewers, for which they can then charge advertisers more, a cost covered by the advertisers raising their own prices. You're paying for the privilege of watching television ads that make everything in your life more expensive. How does that feel?

Jeff Inglis can be reached

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