
When Sinclair Broadcast Group and Mediacom Communications Corp. weren't able to reach an agreement for pricing concerning a new agreement, Sinclair pulled 22 of their stations from Mediacom after the contract expired. The result was that 700,000 cable subscribers were left without cable access to network-affiliated stations.
Not willing to make a deal, Mediacom resorted to trying to get the government involved. Sinclair rightly stated that it is a matter that is between two private
companies that the government has no business interfering with.
Listening to the Mediacom Chairman and CEO Rocco B. Commisso, reveals that he evidently doesn't like operating in a free-market system. Here's the rhetoric he used when trying to influence opinion over the matter:
Sinclair "is intent on using its raw market power and leverage to discriminate against Mediacom and other smaller cable companies serving small communities across America."
"Without price discrimination it should lead to a similar result."
"But because of Sinclair's discriminatory practices..."
"outraged over Sinclair's total disregard for the inconveniences brought on Mediacom's customers..."
"cannot begin to comprehend why the FCC, while acknowledging that the public interest would be best served by the parties resolving their dispute through arbitration, has not acted yet to order such a resolution."
This is nothing more than a socialist argument that has been buried since the fall of the Soviet Union. Anyone in charge of a company in America needs to have a little understanding of free market economics to be in that position.
In a free market economny, there's no such thing as "price discrimination." The term itself has no meaning.
When he mentions "raw market power," he's right. That's what a market it. There is nothing new about companies that are larger being able to secure better deals and rates in any industry through buying more products or services. It's that simple.
His rant that Sinclair is disregarding Mediacom's customers only reinforces Commisso's incompetence. He's responsible for making the deal that ensures uninterrupted coverage. If he and Mediacom can't afford to be in the business, maybe they need to be sold to someone that can.
By his own words, he can't comprehend why the FCC doesn't act to order that they come to a resolution. What kind of nonsense is that? That's the same as ordering a married couple to get along better together and not divorce.
Using the inflammatory words he used in this deal, shows that his customers are pressuring him to make a deal, and he's the one that's not performing his duty to get it done. He's the one that's failed miserably in all aspects of this scenario.
Mediacom needs someone that is able to understand business, economics and is able to negotiate without the type of ranting that evidently is part of the problem in the first place.








There's a deeper issue here. When the cable industry began to develop it's own programming (ala the Discovery Channel), the FCC required that it be sold to cable's competitors at a "non-discriminatory" rate. Shouldn't television station owners be held to the same standard?
The retransmission consent law was intended to encourage tv stations and cable companies to craft win-win arrangements that ultimately benefited viewers. Examples include putting stations local news on the VOD system, carrying second channels like NBC Weather Plus and building fiber cables from the stations to the cable system so that even if the transmitter fails, viewers can see the content. These type of deals benefit the station, the cable company and the viewer.
Sinclair seems to only want cash with no incremental value-add for the customer.
If a viewer doesn't like the price a cable company offers for the product, she can go to the dish folks. By the same token, if a cable company doesn't like the price the TV station offers for their network product, shouldn't they be able to buy it from someone else?
It seems to me that Mr. Commisso is only trying to minimize the costs that he must pass along to customers. And in an environment where the content is only available from one provider, a provider who is granted use of the public airwaves with a requirement to serve the public interest, arbitration makes sense.
Mediacom doesn't need a new CEO, the FCC needs a new chairman.
Posted by: Anonymous | January 22, 2007 11:27 AM | Permalink to Comment