Understanding Retransmission (Retrans) Fees
/The following information provides an overview of FPB's retransmission fees from broadcasters over the years. The final outcome of current negotiations with the individual network broadcasters are still being decided; FPB believes the information below will help customers get a better understanding of the process. The estimated fees for 2015-2017 are based on the possibility of keeping all seven networks.
FAQS for Retransmission Consent
Q: Why does the Frankfort Plant Board Cable (FPB) carry the broadcasters they carry?
A: Going back to the beginning of cable TV in Frankfort in 1952, FPB Cable’s forerunner Community Cable Inc., carried any broadcaster it could pick up and retransmit. In those days TV stations were available from Louisville and Cincinnati. As Lexington TV stations came on in the mid to late 1950’s, Community Cable picked up those signals too. It’s important to understand that most communities around the country do not have access to duplicate NBC, CBS and ABC stations – but it has been an advantage the Frankfort community has enjoyed until this point.
Q: What is retransmission consent?
A: Between 1952 and 1991, FPB received permission to carry a station through the form of a letter requesting carriage of a local broadcaster. Since 1992, broadcast television stations (for example WKYT, WLEX, WTVQ, WLKY, WHAS) have been authorized by the U.S. Congress to grant or deny permission for a cable television system like FPB, to carry their signals. This right is renewable every three years. All Lexington and Louisville TV station agreements are up on December 31, 2014. FPB completed agreements for WAVE (NBC-Louisville) and WDKY (FOX-Lexington) over the summer and those deals are good through December 31, 2017.
The remaining broadcasters on FPB’s line up (WKYT, WLEX, WTVQ, WHAS, and WLKY) are denying us the right (have threatened to deny us the right) to retransmit their signal on our cable systems unless we pay exorbitant price increases, with zero to little room for negotiation.
Q: Why are you thinking about dropping Lexington and/or Louisville stations?
A: We are not dropping stations, they are dropping us. Local station owners are refusing to grant FPB permission to carry the station unless we pay increases in some cases as much as 200% more per customer. One broadcaster, in dollar terms, wants our customers to pay an additional $350,000 more per year. We feel that these increases are unreasonable and we refuse to pass on these higher costs to our customers without getting your feedback.
To be clear, we are committed to carrying at least one of each national broadcaster (ABC, CBS, NBC and FOX) while maintaining at least one broadcaster from each of the Lexington and Louisville markets.
Q: If you lose these networks, will I receive a credit?
A: FPB customers have received the 3 Lexington and Louisville ABC, CBS and NBC stations as part of their cable service for nearly 50 years. Until 2008, customers did not have to pay for these free, over-the-air-broadcast stations. Since 2009, FPB customers have paid out almost $3,000,000. This is why we are negotiating with the local broadcasters – we do not want to have to pass more than $7,000,000 in fees on to our customers and raise your cable rates over the next 3 years.
In 2012, we added a retrans fee line item to customers’ bills. This money goes directly to the broadcasters. Because of these astronomical increases that are being demanded by broadcasters and FPB’s desire to maintain at least one CBS, NBC, ABC, and FOX broadcaster, the retrans fee will need to increase from 2014 to 2015. Therefore there will be no possibility of a credit.
Q: The network just wants to be compensated for its programming – doesn’t it deserve to be paid for their valuable programming?
A: FPB already pays local broadcasters in the form of compensation for carriage of its 13 channels – in fact, our payments to broadcast stations already exceed $785,000 per year. Additionally, the stations also receive revenue every month from increased fees they are able to charge advertisers because of their carriage in the Frankfort market.
Q: What about the stations’ local programming?
A: FPB pays semi-annual copyright license fees to the owners of the programs on TV in the amount of approximately $90,000 per year. Each broadcast station receives these copyright payments for its local news and any local program it creates – and our company is proud to support the local community and make these payments. We don’t, however, like to take our customers’ money and send it to corporate headquarters in Alabama, Florida, Maryland and Pennsylvania. Over the last decade, most stations have also closed their Frankfort bureaus at the same time FPB Cable customers’ retrans fees have skyrocketed.
Q: Don’t you pay ESPN and other cable networks? Why should broadcast stations be any different?
A: We are willing to pay a reasonable amount for broadcast stations, but because of our lack of negotiating leverage, our customers are being extorted with costs that are disproportionately higher than cable customers in urban markets. This is not fair, and we are fighting this discrimination.
In addition, the increases being asked for by the Lexington and Louisville broadcasters are so outrageously high, it has come to the point where customers may not be willing to pay for duplicate NBC, ABC and CBS channels. That’s where FPB’s sample survey comes in – to understand what our customers want and what they’re willing to accept in the form of significantly higher fees from local broadcasters.
Q: Why shouldn’t I switch to satellite?
A: First, satellite is prohibited by federal law from carrying Louisville stations. Next, FPB is a local employer and we are committed to providing the community with local customer service. We offer quick service calls, a local downtown office where you can still speak to a real person, and 24-hour customer service support. Additionally, FPB-TV (cable channel 10) covers local sports, events, and government and is only available on FPB Cable.