A carriage dispute is a disagreement over the right to "carry", that is, retransmit, a broadcaster's signal. Carriage disputes first occurred between broadcasters and cable companies and now include direct broadcast satellite and other multichannel video programming distributors.
These disputes often involve financial compensation – what the distributor pays the television station or network for the right to carry the signal – as well as what channels the distributor is permitted or required to retransmit and how the distributor offers those channels to its subscribers. While most carriage disputes are resolved without controversy or notice, others have involved programming blackouts, both threatened and real, as well as strident public relations campaigns. Carriage disputes have occurred both in the United States and internationally. Cord-cutting has lessened the impact as more people move from traditional distributors to streaming media services.
History The history of carriage disputes can be seen as having two distinct circumstances: the first involving over-the-air broadcasters, whose signals can be received with an antenna; the second involving broadcasters transmitting via cable, satellite or other means—but not over the air. In the United States, the first led to a quagmire of legal disputes involving the Federal Communications Commission and the courts, shifting regulations, and questions over copyright law – all revolving around the basic question of whether a carrier has an inherent right to retransmit an over-the-air signal. Broadcasters accused carriers of being "leeches", making money off of programming content that they contributed nothing to produce. Carriers countered that their role was largely passive, because they were merely redistributing freely available signals more widely. By contrast, carriage disputes involving broadcasters who do not use the public airwaves, while representing many high-profile encounters, have raised fewer legal and policy questions, playing out largely at the negotiation table and in the court of public opinion.
The legal precedent for carriage disputes dates back to 1934 legislation, which required a broadcaster to get permission before using programming from another broadcaster. The law was later applied to cable companies, as well. In the 1950s, cable companies operating in the western United States began retransmitting broadcast signals for the benefit of customers situated too far from the station's transmitter to receive programs with an antenna. Stations objected that they were not being compensated for this retransmission or that they were having to compete with more distant stations that duplicated their content. From February 15, 1966, to December 18, 1968, the United States Federal Communications Commission barred cable companies from importing non-local broadcast signals into the top 100 television markets – while allowing cable companies to petition for exceptions. After an interim period, the FCC partially lifted these restrictions in 1972, eliminating them entirely by the end of the decade.
The issue was finally resolved with the 1992 Cable Television Consumer Protection and Competition Act. Among its provisions, the act mandated that distributors must carry local stations who make their signal available for free, but must also get retransmission consent before a signal can be retransmitted. Mandatory retransmission consent gave broadcasters the ability to seek compensation from distributors and established the basis for carriage disputes going forward. At first, the larger broadcasters negotiated not for higher fees, but for inclusion of their newer, lesser known, non-terrestrial channels. Fox, for example, obtained distribution for FX (now owned by the Walt Disney Company); NBC for CNBC. The practice complicated carriage disputes by making bundled tiers not just a marketing choice, but a contractual obligation.
Between 2013 and 2020, the largest cable networks lost about $179.5 million in revenues from carriage disputes "that resulted in blackouts that were eventually resolved", according to the analysis firm S&P Global Intelligence in a 2021 report. Paramount Global topped the list, losing $40 million over the period, while Comcast, Fox Corporation, and the National Football League each lost more than $30 million. The most costly carriage disputes pitted cable networks primarily against Dish Network, as well as Suddenlink Communications (now rebranded "Optimum") and Verizon Communications. (Comcast, which is both an internet service provider and a broadcasting and cable company, was at different times on both sides of the negotiating table.)
S&P Global said the blackouts came from cable networks seeking better deals "with traditional multichannel operators, which still serve more than half of the video subscription market in the U.S. and still supply billions of dollars in revenues for the cable network industry." Even with steady subscriber losses, the traditional cable industry remained a profitable business.
+Blackouts per year20108201142201290201311920149420151232016104201721320181402019276 (as of Oct.) 202033620211052022 303 (est.)
Examples United States
The 2009 dispute between Time Warner Cable and Fox is an example of a carriage dispute involving an over-the-air broadcaster. The dispute pitted the second largest United States cable system against one of the four major U.S. television networks, whose broadcasts included the popular prime time series American Idol and National Football League games. Fox's then-parent company, News Corporation reportedly sought a monthly fee of $1 per subscriber; Time Warner offered 20 to 25 cents. Both companies mounted aggressive public relations campaigns, including dedicated websites and advertising. Fox suggested that viewers look into alternatives to Time Warner, including satellite and Verizon's Fios service. Time Warner Cable countered that it was trying to rein in expenses that would ultimately be paid by subscribers. The companies ultimately settled close to the deadline, and, as is typical with carriage disputes, did not disclose the terms. The deal encouraged other over-the-air broadcasters to seek higher retransmission payments, thereby putting upward pressure on cable and satellite bills.
The 2012 dispute between DirecTV and Viacom is an example of a dispute involving a non-terrestrial broadcaster. Viacom's cable/satellite channels, including Comedy Central, Nickelodeon and MTV, were blacked out for some 20 million DirecTV subscribers, who together represented about 20 percent of all U.S. households who subscribed to cable or satellite. DirecTV claimed Viacom was seeking a 30 percent fee hike, about $1 billion over five years. Viacom countered that while its channels represented 20 percent of total DirecTV viewing, the broadcaster received only 5 percent of the distributor's license fees. DirecTV argued that Viacom made too much of its content available for free on the Internet. Viacom responded that the practice was a marketing tool, although it pared that content back after the blackout. Also mentioned as a point of contention was Viacom's bundling of its co-owned channels – making them available to distributors only as a package rather than individually. In a sign of the increasing pressure on carriers to limit subscriber fees, DirecTV competitors did not mount advertising campaigns to attract disgruntled customers, and some competitors issued statements of support. Viacom and DirecTV resolved the dispute with a seven-year contract nine days later. Financial terms were not disclosed, though one analyst estimated Viacom would receive around $2.85 per subscriber, up from $2.25. In a first for Viacom, the company also agreed to give DirecTV customers access to live feeds on mobile devices.
Occasionally, a carriage dispute can last for months or even years. In September 2012, Time Warner Cable and the National Football League ended a nine-year dispute primarily over NFL Network, and later, NFL RedZone Channel. The deal followed an earlier settlement between the NFL and Cablevision, making Time Warner the last major holdout. Time Warner had offered to carry NFL Network on a narrower sports tier and argued that the relative scarcity of annual games–eight, expanded to 13–did not justify the cost. SNL Kagan estimated the average subscriber fee at 95 cents per month. Some prolonged disputes are influenced by outside people and organizations. In 2003, New York City Mayor Michael R. Bloomberg helped arrange a deal between Cablevision and YES Network, which had kept many New York Yankees baseball games from being seen by some 3 million local subscribers for the first year of YES Network's run. In 2006, EchoStar dropped the female-oriented channel Lifetime for a competing channel, Oxygen. While Lifetime is partially owned by Disney, which in turn owns ESPN and ABC, the deciding factor for contract renewal came less from the parent company's clout than from a letter writing campaign spurred by the National Organization for Women, the YWCA, and other groups.
Blackouts have occasionally extended to broadcasters' websites. In the summer of 2013, CBS blocked access to all Time Warner Cable subscribers, whether or not they lived in the disputed regions. In 2014, Viacom blocked streaming video access to Cable One customers. Broadcasters argued that the practice closes a loophole: if distributors are to feel pressure from their subscribers, those subscribers should not be able to view the content elsewhere. Federal Communications Commission Chairman Tom Wheeler said the practice of extending blackouts to the Internet is of broad concern.
A February 2015 carriage dispute between Fox Sports 1 and AT&T U-verse produced a rare example of a partial blackout. When the parties could not agree, the channel did not disappear entirely from the U-verse lineup. Instead, the blackout only extended to programming added since its launch, including NASCAR events, Major League Soccer matches, and USGA golf events. FS1 maintained it was only seeking to get paid for the added value provided. AT&T U-verse called the additional fees "unreasonable".
A subsequent carriage dispute between Fox Corporation and Dish Network (which led to its cable networks and broadcast stations being pulled from the provider) affected the programming of a third-party channel. The NFL's Thursday Night Football package was technically owned by NFL Network, but was sub-licensed to Fox Sports as producer of the telecasts, and Fox held rights to simulcast a selection of the package on broadcast television. After the simulcast was unaffected on the September 26, 2019, game, Fox reportedly requested that the simulcast of the October 3 game on NFL Network be blacked out on Dish and Sling TV in solidarity with the pulled channels. However, due to carriage contracts that forbade NFL Network from performing programming substitutions that only apply to specific providers, the NFL forwent the simulcast entirely and quietly made the game exclusive to Fox. Dish reached a new agreement on October 6, 2019.