NAB Skewers Cable, Satellite TV Providers Over Subscriber Exit Fees
By Ted Hearn, Editor of Policyband
Washington, D.C., Feb. 6, 2024 – The National Association of Broadcasters sees a link between exit fees required of pay-TV customers and carriage disputes that pit TV stations against cable and satellite TV operators.
NAB, in comments filed yesterday with the Federal Communications Commission, asserted that cable and satellite TV providers rely on the fees to benefit from losing TV stations as a result of failed contract or retransmission consent negotiations.
The lobbying organization for radio and TV stations – in a complex narrative that omitted any reference to massive pay-TV subscriber declines – pointed to early termination fees (ETFs) as intentionally expensive to prevent cable and satellite TV subscribers from finding a new provider to view dropped TV stations.
“Consumers may decide they have had enough of disrupted access to their favorite programming, outages of their entire [cable or satellite] service, rising costs of service and/or other issues. But those that wish to terminate [cable or satellite TV] service often find themselves ‘locked in’ by the prospect of paying hundreds of dollars in ETFs,” NAB said.
NAB claimed that cable and satellite TV providers are not reluctant to engage in carriage disputes with TV stations because the downside risks for them are small.
“During retransmission consent impasses, broadcast stations also face immediate financial repercussions from reductions in ratings and ad revenues while their signals are not carried and the lack of retransmission consent compensation from [cable and satellite TV providers].” NAB said. “Yet pay TV providers involved in disputes are in the short-term largely insulated from any economic harm and, instead, may reap benefits."
NAB’s comments came as the FCC considers banning cable and satellite TV providers from imposing ETFs on video subscribers. Customers pay these fees for breaking service contracts early.
The FCC also wants to stop these same pay-TV providers from denying refunds to non-contract customers who drop service with days or weeks left in the monthly billing cycle.
FCC Chair Jessica Rosenworcel calls ETFs and billing cycle fees (BCFs) “junk fees.”
NAB said that although it was not taking a position on whether the FCC has legal authority to ban the fees or in fact should do so, it filed comments to note how “pay TV providers have waged war on the system of retransmission consent since its inception.”
NAB’s filing did not mention a major industry trend – cable and satellite TV providers suffering the loss of millions of subscribers to cord cutting. Nor did it explain how reliance on cable and satellite TV exit fees served as a deterrent.
Charter Communications lost 257,000 cable TV customers in the fourth quarter of 2023, partially attributing the decline to customer defections related to the company’s carriage dispute with Disney last August and early September just prior to the start of the NFL season.
Comcast has lost 879,000 cable subscribers over the past two quarters, according to the company and Leichtman Research Group. As result, Comcast is no longer the largest cable TV company by subscriber count in the U.S.
But NAB insisted that cable and satellite TV operators view ETFs and BCFs as economically and politically useful.
“NAB observes that ETFs and other MVPD practices harm consumers, insulate MVPDs from the consequences of their actions, and help fuel the ability of MVPDs to manufacture ‘evidence’ of a supposedly broken system through retransmission consent disputes,” NAB said.