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NEWS ANALYSIS : TV Stations Across U.S. Wrestle With New Cable Rules : Television: Broadcasters must choose between two options for inclusion on cable. It could have a profound effect on viewing.

April 30, 1993|JOHN LIPPMAN and AMY HARMON | TIMES STAFF WRITERS

Broadcasters and cable television companies are about to engage in a high-stakes game of chicken that could cause some viewers to miss out on the World Series or "Roseanne."

That's the possible outcome of recent court decisions over cable TV legislation that would force local cable operators to set aside one-third of their channels for broadcast signals.

Broadcasters got a lift on Thursday when the U.S. Supreme Court rejected a bid from cable operators to block the rules. Chief Justice William H. Rehnquist, speaking for the court, said he is not persuaded that the cable industry has "a First Amendment right to be free of government regulation."

The new legislation, known in the industry as "must-carry" and "retransmission consent," was included in the 1992 Cable Act after heavy lobbying by CBS and other broadcasters, which face a June 17 deadline on deciding which option to pick.

Under "must-carry," a local TV station may demand that it be carried by a local cable operator, but would not be allowed to receive any payment. Such an option would give broadcasters the security of being carried on cable, but deny them any revenue.

The riskier option of "retransmission consent" would allow broadcasters to negotiate a payment or other form of compensation from cable operators. But if terms could not be agreed upon, the cable operator would have the right to drop the TV station from its system. Under that scenario, which is considered a long shot, some of the most popular shows could disappear from home television screens.

"I think the majority of broadcasters will go for retransmission consent," said Gary Chapman, president of LIN Television, a New York-based broadcaster that owns seven TV stations. "We are a valuable program source."

TV stations all across the country are now wrestling with the choice between must-carry or retransmission consent. The Federal Communications Commission has set an Oct. 6 date for implementation. Which option they choose could have profound effects on TV viewers.

The new legislation is the result of a fierce battle in Congress last year to re-regulate the cable TV industry after years of spiraling rates and complaints about poor service. The battle brought to the surface longtime animosity between broadcasters and cable operators.

Broadcasters have long complained that local cable TV operators pick up and retransmit their signals without payment. By contrast, cable operators must pay "carriage fees" to cable networks such as CNN and MTV--ranging anywhere from 25 cents to several dollars per month per subscriber--for the rights to carry that programming. Yet broadcasters claim that 70% of the viewing in a typical cable TV home is to local over-the-air stations.

"In cable homes the vast majority of viewing is to local broadcast stations," says Harry Pappas, president of Pappas Telecasting, owner of KMPH-TV in Fresno and KPTM-TV in Omaha, Neb.

Pappas says he will ask cable operators in those two cities to pay his company between 30 cents and 70 cents a month for each of their subscribers. There are about 250,000 cable subscribers in each city. Pappas said the additional fees he collects from the cable operators will be plowed back into local programming.

But most cable operators say broadcasters have not approached them to negotiate retransmission consent. The new rules have cable operators scrambling to figure out which channels they may be required to carry, and how to make room for them.

"I've got maps and charts spread out all over the conference room right now," said George Franciscovich, an attorney at Viacom. The San Francisco-based cable operator said it would have to drop cable channels on several of its systems if broadcasters opt for must-carry.

"If a glass is already full of water, you add more, some gets displaced. We're waiting for June 17 to see what the mail brings us," Franciscovich said.

Under the new guidelines, Garden Grove-based Paragon Cable will have to add three broadcast stations to its 45-channel offering. To make room, Paragon is considering combining the Comedy Central and VH1 channels, as well as eliminating portions of C-Span.

Times staff writer David Savage in Washington contributed to this report.

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