Western North Carolina is in the middle of a nationwide contractual dispute between the cable provider and the broadcasting superpower. In short, Sinclair has threatened to pull its stations from Mediacom cable systems — including the local ABC affiliate WLOS Channel 13 — unless Mediacom pays “millions of dollars” for Sinclair’s services (the companies are not disclosing negotiation specifics). There are 22 stations in 12 states serving approximately 700,000 customers that are affected by the dispute with Mediacom.
In some markets, the loss of Sinclair’s stations simply would cut re-runs such as “Roseanne,” “Sex in the City,” or “Everybody Loves Raymond.” While offering what may be popular and familiar programming, the stations do little to provide what viewers actually need — news, weather.
And in larger cities such as Pensacola and St. Louis, where ABC affiliates WEAR Channel 3 and KDNL Channel 30 are threatened, viewers at least can choose to watch NBC and CBS affiliates to get their local news.
But in Western North Carolina there are no other choices. WLOS is and has been the sole broadcast provider of local high school sports, breaking news stories, weather alerts and community features. If Mediacom and Sinclair do not settle their differences, then Mediacom subscribers will be forced to go without an ABC station or go to a satellite system.
“I would probably switch,” said Tammy Schilly, manager of The Print Haus in Sylva.
Buying a new system such as DirecTV or DISH Network satellite would be worth it to keep ABC — home to “Grey’s Anatomy,” “Desperate Housewives,” and “Extreme Makeover: Home Edition” as well as local news — as long as the cost wasn’t too high.
“If it was something real crazy, I would probably just deal with it,” Schilly said.
However, satellite service may actually be cheaper for many customers. A DirecTV system with one receiver and the Total Choice Basic Package, which includes 155 channels, runs $39.99 per month, said Julia Queen, office manager at Skyview Satellite Systems in Sylva. The Family Choice Basic, which offers fewer channels, costs $29.99 per month. And the only thing customers have to pay at the time of installation is sales tax, which for one receiver is $10.40.
Dish Network is offering an incentive for those who make the switch from Mediacom — $10 off their bill for the first 10 months.
“I’ve had dozens and dozens of phone calls from viewers in Henderson County saying that they wanted to get more information about the $100 rebate and they will go to satellite,” said WLOS general manager Jack Connors.
And at Western Carolina University, where Mediacom holds the current contract for cable services, the company could potentially lose thousands of customers — college students in residential dorms — if its channel lineup changed.
“I can’t really say that we would do anything if that happened,” said Jeff Bewsey, associate director of auxiliary services. “We’re getting ready to bid a new contract anyway. Whoever receives the bid of course that would be looked at.”
Renegotiation also is an option for Macon and Jackson County governments, which awarded the franchise contracts to Mediacom for local service. But it could be a while. Sylva’s contract with Mediacom doesn’t expire until Oct. 1, 2015.
Meanwhile, what could potentially keep some customers hooked on cable is the ability to package services. Like many cable systems, Mediacom also offers high-speed Internet service. With digital cable, Mediacom Online is $45.95 per month.
Who the dispute affects
Nationwide Sinclair owns and operates, programs, or provides sales services to 58 television stations in 36 markets. The company’s news franchise includes 31 stations. Of the 22 stations affected by the dispute with Mediacom, 13 are local news carriers.
Mediacom is the sole provider of cable service in Jackson and Macon counties. Haywood is serviced by the cable giant Charter Communications, and the smaller Carolina Mountain Cable, which services rural communities. Similarly, Swain County’s cable service comes from the Colorado-based Rapid Acquisition Company, which also specializes in servicing small rural communities.
As of July 2006, Jackson County had 3,192 cable subscribers or 23 percent market penetration into the 13,880 households, as determined by Nielsen Media Research reports. In Macon County there were 3,377 subscribers or 25 percent market penetration into the 13,510 households. The two counties have the lowest penetration rates in the four-county region.
Overall, Nielsen Media Research data shows that cable subscriber numbers are on the decline. Western North Carolina’s television service is largely affected by the region’s mountainous terrain. Town populations are small compared to the outlying areas of each county where cable service is not an option. Those television viewers must either purchase a satellite system or rely on what they can get with a basic antennae. In 2005, WLOS lost its lease on a piece of land in Sylva the station used for its translator site for 30 years. Now an antennae can’t pick up the station.
Also, the picture quality on satellite systems is better, Connors said. This difference will only be intensified when the satellite market goes to high-definition, which most likely will occur locally within the next year.
The local market already has one of the highest satellite system penetrations of any of the top 50 markets in the U.S.
“There’s now over a quarter million homes that get their signals from satellite,” Connors said.
Regardless of picture quality or technology, the effect of losing the only “local” news station in WNC would be far reaching. The Greenville-Spartanburg area stations just simply aren’t the ones the WNC police look to for crime coverage, community agencies use for their calls for holiday donations, or parents and athletes watch for sports highlights.
“I would imagine that is a fair assumption to make that if they couldn’t follow their local teams that would be frustrating,” said Smoky Mountain High School football coach Dale Galloway, of the effect loosing WLOS would have on Mediacom subscribers.
As a coach, Galloway said he’d prefer to encourage people to just go ahead and go to the game rather than wait for the 11 o’clock news’ sports reel. Even so, just a few seconds of fame on the local news is an ego boost for players.
“They’re always real proud of that,” Galloway said.
And in Macon County, Reva Allman, administrative assistant to the superintendent of schools, said she would begin looking into alternative ways to get the message out about school closings in the event of inclement weather this winter.
“We contact every available media source that we have access to,” Allman said.
WLOS is the only TV station on her list that’s even in state.
What the dispute is about
The law requires that all cable systems must obtain television stations’ permission to carry their programming.
There are two types of permissions — must carry, in which a cable system carries programming but may put it anywhere in the channel rotation, and retransmission consent, in which the cable system and station negotiate the terms of their contract. Most agreements are based on retransmission consent, Connors said.
Cable companies rely on broadcast channels such as ABC, NBC and CBS as the leaders in their sales efforts. Most people wouldn’t subscribe to cable if they couldn’t get the networks, and the networks often tend to be the most popular channels.
“Well over half of the viewing in this area is to broadcast networks,” Connors said.
Consequently, the network stations should be paid the same way as any other cable channel, Connors said.
The argument isn’t specific to Mediacom and Sinclair. Many systems’ retransmission deals expire at year’s end. Federal rules require cable companies to give subscribers 30 days notice that a station may go off the air.
But after more than a year of negotiating, Mediacom has taken the fight to court and to the Federal Communications Commission. According to columnist John M. Higgins of Broadcasting and Cable, a trade magazine for the industry, court filings show that Sinclair called for a range of costs. One price schedule requests 36 to 40 cents per subscriber monthly for systems carrying any of the company’s ABC, CBS, NBC and Fox affiliates, and 10 to 12 cents to carry affiliates of The CW or MyNetworkTV. Another price schedule proposed costs at half that amount, Higgins writes in a Nov. 13 column.
It isn’t so much the final price that’s the problem, as it is the potential for the fight to set a precedent, encouraging other broadcasters to ask for even more, Higgins writes.
However, Mediacom maintains that Sinclair is the one being difficult.
“They want us to pay them for us to provide their signal, their channel, their programs to homes in those areas,” said David Kane, Mediacom’s regional vice president.
The company has offered Sinclair the option of taking a deal Mediacom made with another station and molding it to suit the broadcaster’s needs, or vice versa, mold a deal Sinclair made with another cable system to fit a deal with Mediacom, Kane said. Mediacom negotiated a deal with 475 other broadcasters.
“That speaks volumes right there,” Kane said of Mediacom’s ability to make deals with other broadcasters.
It’s a sentiment echoed on Mediacom’s “befairsinclair.com” Web site.
“Unfortunately, Sinclair has rejected all of our fair market-driven offers and continues to demand exorbitant compensation, penalizing also you — our valued customers — who will ultimately bear the cost and inconveniences of Sinclair’s extreme behavior,” reads a letter to customers.
Rather than the proposed impact of Mediacom simply not carrying ABC — law prevents cable companies from picking up non-local broadcast affiliates — Medicom insinuates there is another option. If the company is forced to pay Sinclair’s desired amount, cable bills will go up. A higher cable bill could essentially have the same effect as the threat of not carrying ABC altogether — customers switching to satellite systems. To keep that from happening, Mediacom asks on its Web site that customers call WLOS general manager Connors to encourage Sinclair to accept Mediacom’s offer.
It’s an interesting bargaining tactic. What if Ingles asked its customers to call Horizon Organic to lower the price of milk? Or Belk’s asked shoppers to call Tommy Hilfiger and ask the designer to use lower quality denim so jeans would be cheaper?
But according to columnist Higgins, the tactics suit the players.
“The Mediacom-Sinclair fight is nasty. Mediacom CEO Rocco Commisso looks and speaks every bit like the Bronx Italian former nightclub owner that he is .... Sinclair’s gruff CEO, David Smith, seems to revel in provoking fights. He is not part of the broadcasters’ ‘club’ and doesn’t seek to be,” Higgins wrote.
Pushing for resolution
Mediacom regional vice president Kane said that the battle with Sinclair isn’t over yet.
“The game plan is to get Sinclair back to the negotiations table,” he said.
But if you want something, you have to decide what it’s worth to you to have it.
“When you write the check at the end of the month, who do you write the check to?” WLOS general manager Connors asked. “It’s not to WLOS, it’s to Mediacom. The people that I write the check to for any product that I buy, those are the people that I have leverage with.”