Gutsy Sinclair is right to ask cable firms to buy content

January 14, 2007|By Jay Hancock | Jay Hancock,Sun Columnist

Every media company desperately wants to reverse the slide in income from music, video, news and other traditional content. Sinclair Broadcast Group is doing something about it.

Last week the Hunt Valley television station owner stared down a cable company called Mediacom Communications and yanked Sinclair major-network stations from almost two dozen Mediacom systems in the heart of the football playoffs and just ahead of American Idol's season launch.

Pay up, went the Sinclair message, or thousands of cable customers in Des Moines, Iowa; Pensacola, Fla.,; Lexington, Ky.; and other places won't watch Simon Cowell insult amateur singers for a "long time."

Hooray!

Sinclair is challenging the madness that says the only way to do business in the media these days is give away content and pray that somebody advertises on it to generate revenue. This has prompted predictably hilarious sanctimony in the Mediacom burgs.

The Iowa Cable and Telecommunications Association has asked the Legislature to hold hearings on Sinclair's desire to be paid for its product, reports the Des Moines Register.

Sinclair "is not looking out for the people's interest," a TV consumer says in the Pensacola News Journal.

"I've been watching Lost, Desperate Housewives and Ugly Betty every week," a viewer tells the News-Gazette of Champaign, Ill., where Sinclair has an ABC affiliate. "It's not right for cable customers to become victims of a corporate war."

People sure love Sinclair stations' programming. But, in an extension of the Napster mindset that has ravaged the music business, they see programming as an entitlement and seem to forget that programs need revenue to exist.

Cable systems have traditionally gotten broadcast-station signals free. Sinclair and other broadcasters had plenty of over-the-air viewers, plus ample income from advertisers and networks. They were happy enough with the extra viewers brought by cable hookups.

But advertising, audience and revenue are no longer sure things for any media concern, including this newspaper and its parent, Tribune Co., which owns a couple of dozen TV stations.

As business slips away to the Internet, many media corporations have decided that the way to compete is to throw everything onto the planetary network and cross their fingers.

Not Sinclair. It joins The New York Times and a few other gutsy companies in demanding payment for electronic content that once was gratis. The Times now charges a subscription fee for columnists and other premium Web content. (The Wall Street Journal has charged for most of its Web product since 1996.)

Cable companies accuse Sinclair of discriminating against them by demanding a "retransmission" fee, but Sinclair was really discriminating by not asking for payment.

It and other broadcasters have collected retransmission fees from satellite TV companies for years.

Cable pays big dollars for garbage like Spike TV and Fox Reality; it can darn well pay for the network fare and newscasts of local TV stations.

Unlike Sony Music and EMI, which can do little about the free, online "retransmission" of their music except sue, Sinclair can seek recompense for the secondary use of its content by withholding it. Can you blame it?

To try to cope, Mediacom gave away thousands of rabbit-ear antennas so customers could catch Sinclair's over-the-air signal, causing a traffic jam at Mediacom offices near downtown Des Moines, the Associated Press reported.

For its part, Sinclair offered incentives of $100 or $150 for people to ditch Mediacom and sign up with DirecTV, a satellite-television company that pays Sinclair for retransmission.

700,000 affected

In all, about 700,000 Mediacom customers were being deprived of cable transmission of 22 Sinclair stations carrying material from Fox, ABC and other networks.

It's a beautiful fight, and this could be just the beginning.

Sinclair has already persuaded a few cable companies to pay retransmission fees estimated to total $25 million for 2006. A deadline to reach a retransmission deal with Time Warner Cable was due to expire Friday, and Sinclair is in the early stages of trying to get fees from Comcast, which carries the signal of Sinclair's Fox 45 Baltimore station to much of the region.

In contrast with the Mediacom situation, Sinclair might choose to play a gentler form of poker with the huge and powerful Comcast and Time Warner.

Then again, it might not. Sinclair is the unpredictable, nasty uncle of the media family, often flouting public opinion and even the interests of its shareholders.

Questionable past

It has a history of questionable transactions with insiders. It spooked advertisers in 2004 by planning to air a smear job on Democratic presidential candidate John Kerry shortly before the election. (It later backed down.)

It fired Washington bureau chief Jon Leiberman after he was quoted in The Sun criticizing the Kerry program, and then sued the poor guy to boot. It beat the drums for the Iraq war, dispatching Leiberman and commentator Mark Hyman to Baghdad in 2004 to cover "positive" news that conventional media were supposedly ignoring.

But whatever you think about Sinclair's politics, it is doing shareholders a favor in the retransmission fight.

And maybe, by showing that content costing millions needn't be cast fruitlessly into the ether, it is doing the media industry a favor, too.

jay.hancock@baltsun.com

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