The deal reached between ABC and Continental Cablevision, under which the network agreed to provide its signal free to the cable service in exchange for Cablevision's promise to buy a spinoff of ABC's all-sports channel, is the first breakthrough in a months-long standoff over a new law that gives broadcasters the opportunity to charge cable TV operators for carrying their signal.
The law, passed by Congress last year, allows the networks to negotiate a fee with cable operators for the right to carry network programs. Presently, cable operators are allowed to retransmit free everything broadcast on network stations. Cable executives, however, have been adamant in refusing to pay broadcasters for their signals. The impasse has raised the possibility that some cable viewers might suddenly find broadcast channels being blacked out on their sets if their cable operators can't reach an agreement with the networks.
In a sense, the networks and the cable operators have been playing a high-stakes game of "chicken." The fact is the two need each other. In the Baltimore region, for example, about half the viewing public gets its signal via cable. None of the area's network affiliates can afford to risk losing that many viewers. By the same token, the loss of one or more networks' signals would represent a major blow to the operators of local cable companies and their ability to provide comprehensive service.
ABC's deal with Cablevision, the nation's third largest cable system, infuriated executives at the other networks, who had hoped to pressure the cable operators by maintaining a united front. By breaking ranks, ABC has put pressure on the other networks to reach similar accommodations with the cable companies -- or risk having ABC beat them senseless in the ratings battle. While it's technically possible for cable customers to switch their sets to broadcast mode whenever they want to watch a network program not carried by cable, in practice any network that relied on such a radical shift in viewing habits probably would put itself at an intolerable competitive disadvantage.
The networks are already hurting as a result of competition from cable. Some network executives no doubt saw the new law allowing them to charge cable operators as an opportunity to recoup some of the broadcast industry's losses. But cable has changed the economics of the industry partly because it has altered profoundly the habits of viewers. The networks will never again have the kind of monopoly they once enjoyed. From now on they'll have to learn to live with cable for the simple reason that they can't survive without it.