Report: Regulation Could Boost CBS Profit by $1B per Year

Report: Regulation Could Boost CBS Profit by $1B per Year

A new report out of Pivotal Research Group investment analysts indicates that broadcasting giant CBS could be set to make $1 billion per year in retransmission fees, aided by a pro-broadcaster Federal Communications Commission (FCC) and a highly regulated TV marketplace regime that critics charge is minimally reflective of free market principles.

According to analyst Brian Weisner, the FCC could act to bolster broadcasters out of concern about local TV stations going the way of local newspapers, which have lost out in an increasingly diversified media marketplace in which less demand exists for their product.

This is despite the fact that, according to Weisner, “[the world] has clearly moved on to the point where distributors are no longer monopolists in their offering of video services,” yet rules on the books that date to 1992 continue to treat cable and satellite firms like “de facto monopolies.”

Critics have long charged that retaining the existing TV marketplace regime, including the retransmission consent rules, artificially props up broadcasters against alleged but non-existent monopolies.

According to proponents of legislation introduced by Sen. Jim DeMint (R-S.C.) and Rep. Steve Scalise (R-La.), that regime helps broadcasters reap profits that might be unavailable in a free market, the basis for which is hefty retransmission fees whose cost is ultimately borne by cable and satellite customers.

Michael Heimowitz, a spokesperson for the American TV Alliance which supports reform of the current regime, was quoted by Multichannel News as saying “this report supports what we’ve been saying all along. The broadcaster business model is propped up by government regulations completely biased in their favor. They have all the advantages, especially in retrans. It’s not a free market, and that’s not good for the viewing public.”

Broadcasters contend that they provide an invaluable public service in the form of local news and public policy-oriented programming, and that maintenance of the existing regime is in the public interest.

However, given Pivotal Research Group’s analysis, maintenance of the regime also appears to be in the direct financial interest of CBS itself.