The Frankfort Plant Board may consider increasing cable rates to offset rising costs of carrying network affiliates, the board’s chairwoman says.
FPB’s Board of Directors approved retransmission consent agreements for WDKY (Fox Lexington), WHAS (ABC Louisville) and WAVE (NBC Louisville) at Tuesday’s meeting. The plant board must renegotiate agreements every three years.
WDKY’s costs rose 4,500 percent compared to 2008’s agreement, WAVE’s 240 percent and WHAS’s 3 percent, FPB Cable Superintendent John Higginbotham said.
That’s in addition to agreements reached with WKYT (CBS Lexington) and WTVQ (ABC Lexington), whose costs rose 90 percent and 22 percent respectively.
Higginbotham said WLKY (CBS Louisville) will likely sign a 30-day extension and continue negotiations, and WDRB (Fox Louisville) won’t return to FPB’s lineup because the channel can’t offer Fox’s primetime lineup. WLEX (NBC Lexington) elected to be a must-carry and doesn’t renegotiate retransmission agreements, Higginbotham said.
Assistant General Manager Ron Thomas said Fox essentially threatened to pull its affiliation with WDRB if it signed an agreement with FPB.
“I mentioned to the board earlier we’re a captive audience,” Thomas said after the meeting.
“So the only one we have to deal with is Fox Lexington, and my suspicion is the corporate folks can get a bigger percentage of the cut out of Fox Lexington with one affiliate than having to deal with two because they don’t want us playing one off the other.”
Sheila Burton, the board’s chairwoman and the only board holdover from FPB’s last round of negotiations in 2008, said increasing cable rates “is something that has to be considered” with rising network costs.
In 2008, the plant board upped cable rates $1.30 per month after agreements reached $1.35 per customer monthly. Burton said she doesn’t remember seeing increases as steep as this year’s.
FPB could use $13,000 set aside for outside legal fees for these negotiations, which was untouched during the latest round of agreements, Burton said. Thomas said that will likely happen.
Thomas said he doesn’t know whether the plant board will increase cable rates, but the utility should develop a long-range plan to deal with increasing programming costs, possibly before renegotiating the next round of agreements in 2014.
“In any business model you can’t keep adding cost and adding cost and adding cost and still survive,” Thomas said, noting other programming agreements generally go up 5 to 6 percent each year Jan. 1.
“… Even if there is a rate increase, as far as when, the magnitude, over what period of time, that’s not even been discussed yet. What we want to do is sit down with the board and say, ‘OK, now that these retrans agreements are concluded, here’s where we are financially beforehand, here’s where we are afterwards, look at the additional programming costs that are going up Jan. 1 and look at what we want to do with the business model.’”
Burton agreed that FPB needs to develop a plan to manage rising cable costs.
“You have to be careful when you are delaying rate increases, and I think there are ways you can delay rate increases and it not bite you later,” Burton said.
“But I think we need to look at the whole picture. It’s hard to think that there won’t be some kind of increase in rates. I hope we can hold down how much of this has to be passed on to the customer through a rate increase.”