TV stations may be lost to Hawaiian Telcom’s customers

Roughly 34,000 Hawaiian Telcom TV subscribers on Oahu could see black on the KGMB and KHNL stations come Friday.

Hawaiian Telcom and Raycom Media, owner of Hawaii News Now channels KGMB (CBS) and KHNL (NBC), failed to reach a new agreement to continue the partnership at the start of the new year.

If a new agreement or extension to continue negotiations is not reached by midnight Thursday, Hawaiian Telcom notified its subscribers, it will be forced to pull KGMB and KHNL off the air. This would be the first blackout for the local pay-TV provider.

“The bottom line is we’re willing to pay our fair share to carry Hawaii News Now, but the 300 percent fee increase Raycom asked for in its original proposal is just unfair, unjustifiable and unsustainable,” said Hawaiian Telcom spokeswoman Su Shin. “What they’re asking for is two to three times more than what we were already paying them. What’s essentially happening in the industry is that broadcast companies are in effect using retransmission fees to make up for their revenue losses in other areas.”

TV providers pay retransmission consent fees to broadcasters to carry their signals.

Rick Blangiardi, Hawaii News Now general manager, said a number of marquee events could be affected if an agreement isn’t reached by the midnight deadline.

“All of our local news, prime-time shows, sporting events, all playoff games in January,” he said. “Certainly we have a considerable amount of NFL playoff games. I certainly hope that we can come to a favorable agreement.”

Besides NCAA basketball tournaments, NFL games and the National Hockey League Winter Classic this weekend, viewers could miss the Rose Parade, also known as the Tournament of Roses, the annual parade held in Pasadena, Calif., on New Year’s Day.

Paul McTear, president and chief executive officer at Raycom, based in Montgomery, Ala., didn’t return calls for comment.

“We hope that we are able to reach a fair agreement with Hawaiian Telcom that will keep KGMB and KHNL on their system on Oahu and we promise to do all that we can to make that happen,” a message on the Hawaii News Now website said Monday. “Please remember you always have choices. We are free over the air and available through other providers in our community.”

Ted Hearn, vice president of communications for the American Cable Association, which represents nearly 750 small and midsize cable operators nationwide, said that retransmission fees have soared to $6.3 billion in 2015 from $28 million in 2005. Industry analysts project U.S. TV station retransmission fees will reach between $10 billion and $12 billion by 2021.

Ultimately, the costs will be passed onto consumers, Hearn said.

“Raycom and other broadcasters are using their monopoly power to engage in price gouging to harm paid TV providers like Hawaiian Telcom and their subscribers,” he said. “They have this habit of timing these blackouts to occur before marquee entertainment and sporting events.”

Rules governing retransmission consent fees, part of the 1992 Cable Act designed to ensure the availability of local news and information, were enacted when major networks dominated TV. At the time, most consumers had only one choice for pay-TV service. Today, consumers have numerous alternatives for TV programming, including the Internet and other pay-TV providers.