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LIN, DISH Fight a Godsend for Retrans Reform Advocates?

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Retransmission reform advocates might be getting additional ammunition very soon. Four days before the Federal Communications Commission plans to take up a notice of proposed rule making on how it might change the rules governing retransmission negotiations, LIN Media warned that its stations could go dark on DISH Network by the end of the week, the very thing the FCC is working to avoid.

LIN is an owner and operator of TV stations, mostly in midsize markets, and has affiliates with all the major broadcast networks. If LIN and DISH fail to come to terms by midnight on March 4, DISH will be forced to pull LIN's 27 TV stations in 17 markets. A blackout would affect about 1.1 million households, about 8 percent of DISH's total subscribers.

Only a handful of retransmission negotiations end in a blackout, but those that do raise a ruckus in the press, anger viewers and draw the attention of congressional leaders. Last fall, when 4 million subscribers were left without some of the World Series games because negotiations broke down between News Corp. and Cablevision, Sen. John Kerry, D-Mass., held hearings, drafted legislation and put pressure on the FCC to act. Though it has limited authority to radically change the rules, the FCC put retransmission reform on its agenda for this Thursday.

One analyst thinks the timing was not an accident. "While this is just another retrans battle, the timing is interesting...We think DISH is holding out due to the FCC meeting," said Marci Ryvicker, a senior analyst with Wells Fargo Securities.

As with all retransmission negotiations between broadcasters and pay TV distributors, this one comes down to money.

In a statement, DISH said LIN was demanding "more than a 140 percent rate hike and other burdensome contract terms that ultimately will result in higher prices for consumers."

LIN's Vincent Sadusky, president and CEO, said his company is only looking for a fair deal. "Our highly rated television stations are important assets to our local communities, and it is unfortunate that DISH does not recognize their fair market value," he said.

DISH may be at disadvantage. The last thing the satellite TV company needs is another blackout. Its retransmission spat with News Corp., which led to a temporary loss of 19 regional sports networks and a handful of cable channels, contributed to a subscriber decline of 156,000 in the fourth quarter last year, the worst subscriber loss in the company's history.