Cable TV's Tough Offer

THE notion of not paying for something that is widely available free is an appealing one.

In negotiating retransmission rights with the major networks and local TV stations, many of the nation's largest cable operators are using a variant of that notion. They refuse to pay cash royalties to distribute programs once free to them and still free to anyone with a pair of "rabbit ears." Instead, they are negotiating agreements with networks and local stations to give them a cable channel, access to time slots on existing channels, or something else in lieu of cash.

If this approach were but one compensation option presented to local stations and networks, the cable companies might be on firmer ground. But 14 of the nation's 20 largest cable firms, accounting for 58 percent of cable subscribers, are holding the line on refusing to pay cash royalties.

Cable operators and stations face an Oct. 6 deadline for concluding negotiations, required under the Cable Television Act Congress passed last year. If no agreement is reached the station is dropped from the service.

Can people pick up local stations for free? Certainly. But these folks are not rebroadcasting them for a profit.

The cable industry says that if it pays royalties, the cost passed along to customers could be an additional $1 billion, and many subscribers already are grumbling about rates. Yet cable can't afford to lose network programming. One survey of cable subscribers found that nearly two-thirds would drop cable if network programming were unavailable.

Is the cable operators' approach then a win-win situation? Not if the local station or affiliate hasn't the programming to support a cable channel or if the revenue from the time slot it's allocated is minuscule. In any case, this should be decided case by case, not by industry fiat.

Continental Cablevision is said to be preparing to link its network to Internet next year. This would give its cable customers direct access to a worldwide computer network. As new ventures spread, and the revenue they promise increases, new regulation issues are likely to arise. Pushing on retransmission rights may not be the best use of the cable industry's political capital.