LINKS: Programming Disputes. Viacom Networks Negotiations. The Facts about Viacom Grande Agreement Renewal:

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1 Programming Disputes Viacom Networks Negotiations After long and difficult negotiations we are pleased to inform you that we are finalizing an agreement for renewal of our contract with Viacom Networks, the parent company of MTV, Nickelodeon, Comedy Central, BET and several other cable channels. As we complete negotiations, Viacom networks will remain on your channel lineup. Thank you for your support and patience during these difficult negotiations. It is never our intent to make these negotiations a public conversation. Please know that, no matter what, we work hard to negotiate fair and reasonable pricing allowing Grande to bring you the best cable value. Grande knows that price is important to our customers and it s our goal to provide a great programming lineup at reasonable rates. Our rates are directly affected by what we pay for programming. We negotiate dozens of contracts every year. If we agreed to large rate increases on every channel we carry, that would mean substantially higher rates for our customers. Nevertheless, there is a growing trend toward ever higher demands by the programmers that is leading to higher cable rates for Grande and our competitors. Thank you for being our customer. We value your business and know that you have a choice. Thank you for choosing Grande. The Facts about Viacom Grande Agreement Renewal: Grande is finalizing an agreement for renewal of our contract with Viacom Networks and its family of cable channels: BET, Centric, Comedy Central, CMT, Country Music Pure Country, Logo, MTV, MTV Hits, MTV JAMS, MTV2, Nick Jr, Nick Too, Nick Toons, Teen Nick, Spike TV, Tr3s, TV Land, VH1, VH1 Classic, VH1 Soul, Palladia HD. After long and difficult negotiations we are finalizing an agreement for renewal of our contract with Viacom Networks, the parent company of MTV, Nickelodeon, Comedy Central, BET and several other cable channels. While we finalize the agreement, Viacom Networks will remain on your channel lineup. Thank you for your support and patience during these difficult negotiations. It is never our intent to make these negotiations a public conversation. Please know that, no matter what, we work hard to negotiate fair and reasonable pricing allowing Grande to bring you the best cable value. Grande knows that price is important to our customers and it s our goal to provide you a great programming lineup at a reasonable price. The price we charge our customers is directly affected by what we pay for programming. We negotiate dozens of contracts every year - if we agreed to large rate increases on every channel we carry, that would mean substantially higher rates for our customers. When the owners of TV stations and cable networks ask for more money, we negotiate with them in an effort to keep costs as low as possible. Thank you for being our customer. We value your business and know that you have a choice. Thank you for choosing Grande.

2 How do Programming & Retransmission Costs Work? The price that a consumer pays each month for a video service is driven largely by the costs that distributors like Grande must pay to the companies that create or package the programming the networks. That s right cable companies pays a fee for every household that receives that package, regardless of whether anyone in that household watches the network. Those content creators and TV networks set certain rules for how their shows and networks can be sold to end consumers, including which packages can contain their channels. In the past, the fees paid by companies like Grande to distribute cable networks (like ESPN, A&E, CNN, Fox Sports, etc.) were set in private business negotiations. Customers rarely knew those negotiations were taking place. However, fees have risen higher and higher recently forcing distributors like Grande to take a stand. At the same time, local broadcast stations have begun demanding significant fees to carry programming that they offer for free over-the-air and via the internet. We don t think it s fair to make cable customers pay for programming that others receive for free. In the past few years, many distributors have taken a stand against unreasonable fee increases by both cable networks and local broadcast TV stations. We are pushing back against TV networks that demand exorbitantly more money without delivering more value. Sometimes that result is a public dispute, with both sides using TV, , and other communications vehicles to tell their side of the story. And customers are caught in the middle. While Grande does not like public disputes, we are committed to delivering the best value for our Texas customers and doing all we can to minimize the excessive increases.

3 Retransmission is a National Issue. Retransmission disputes have become a national issue, not just isolated to any one cable company. Many distributors have had public disputes with network providers. Disputes leave consumers without their favorite programming or an increase in their bills. Cable companies have to either pass on huge increases to their customers or risk TV blackouts. Retransmission Consent. Retransmission consent refers to a provision of the 1992 United States Cable Television Protection and Competition Act that requires cable operators and other multichannel video programming distributors to obtain permission from broadcasters before carrying their programming. In exchange, a broadcaster may propose that the operator pay cash to carry the station or ask for any other form of consideration. The cable operator may refuse the broadcaster s proposal and not carry the programming This regulatory structure granted local broadcast stations, which already enjoy free use of the public airwaves, the unilateral right either to demand mandatory carriage on the cable system or to negotiate for carriage. If a station chooses the latter, video distributors are prohibited by law from carrying the station without the station s consent. Twenty years later, the competitive environment for video distributors has changed dramatically. Companies that own the local broadcast TV stations are increasingly imposing huge demands for cash that drive up a cable, satellite, or telephone company s costs of doing business, and this pricing affects you. What can you do? Broadcasters, politicians and other viewers need to hear your opinion. Most importantly, you can write to your congress person. Learn more about the History of Retransmission.

4 History of Retransmission 1948 Cable television first became available in the US in 1948, with subscription services to relay over-the-air commercial broadcasting television channels Cable Television extends the geographic reach of over-the-air television stations and provides for consistently good quality reception not available with a rooftop antenna or rabbit ears The FCC implements the Must Carry Rule. The Must-Carry rule mandates that cable companies carry the signals of all local broadcasters within a 60-mile area The FCC passes the Retransmission Act of 1992, gave stations a choice of requiring cable companies to carry them under the must-carry rules or negotiating with cable companies for compensation if they want to carry their broadcast signals Cable operators generally resisted broadcaster demands for cash compensation on the grounds that the programming was available off-air for free Broadcasters increase demands for cash compensation for programming carriage. Cable companies and other operators begin to agree to cash payments. Occasionally, broadcasters remove a channel from cable operators when fees are in dispute present Broadcasters ask for gigantic fee increases from distributors as much as 300%! Broadcasters and operators engage in several public disputes resulting in customer blackouts.

5 Global News on Retransmission Congress returns to retransmission consent law 9/17/13, Politico Retransmission fee race poses questions for TV viewer 8/2/2013, USA Today Click the links above to read the full article.

6 FAQs - Page 1 Viacom Networks said Grande is dropping/dropped their channels on March 31, 2014 or I saw/read/heard that Grande is dropping/ dropped Viacom Networks on March 31, Grande is not dropping/has not dropped Viacom Networks. We are finalizing our contract with Viacom Networks. During this time the Viacom networks will remain on your channel line up. What is happening with Viacom Networks? After long and difficult negotiations we are finalizing an agreement for renewal of our contract with Viacom Networks, the parent company of MTV, Nickelodeon, Comedy Central, BET and several other cable channels. While we finalize the agreement, the Viacom networks will remain on your channel line up. Thank you for your support and patience during these difficult negotiations. It is never our intent to make these negotiations a public conversation. Please know, that no matter what, we work hard to negotiate fair and reasonable pricing allowing Grande to bring you the best cable value. Will My rates go up? Grande makes every effort to minimize costs and provide our customers with the best TV programming at a reasonable price. We knows that price is important to our customers and it s our goal to provide you a great programming lineup at a reasonable price. The price we charge our customers is directly affected by what we pay for programming. We negotiate dozens of contracts every year. When the owners of TV stations and cable networks ask for more money, we negotiate with them in an effort to keep costs as low as possible. Please note that If you are on promotional 3 year price assurance package, your rates will be adjusted on the anniversary of your price assurance package. Is there a possibility that a final agreement will not be reached? It is Grande s and Viacom Networks intention to finalize our agreement. We are working hard and are confident we will be successful as we have reached many agreements with all cable networks over the years. Did Grande end up paying 2X more for these networks? We are unable to discuss specific deal terms. But no, we reached an agreement that is significantly better than the one proposed by Viacom. I still see Viacom messages, but you indicate a deal is reached. Which is accurate? It sometimes take up to five days to stop media advertising. We assure you that an agreement is bineg finalized. Is this happening anywhere else? Grande is not alone. Programmers are demanding of Grande and over 750 other cable operators across the country steep rate increases. Programmers have forced blackouts upon other video providers in the past. In fact, DirecTV dropped Viacom for 9 days in July 2012 from their channel lineup as a result of a dispute over programming fees. Events like these have also happened to other providers such as Time Warner, Direct TV, DISH, Suddenlink, Cablevision, Comcast and others. There is a growing trend toward ever higher demands by the programmers that is leading to higher cable rates for Grande and our competitors. Why did Viacom say Grande was dropping their networks from Grande s lineup? This is an unfortunate tactic that network owners use to gain leverage in their negotiations. It s an attempt to pressure Grande into accepting the outrageous increases. What s more, before and after they remove channels, they may ask you to call and/or your TV service provider in an attempt to put pressure on the provider to cave in to the network owners excessive fee increases.

7 FAQs - Page 2 You say you are fighting to keep our bill low, but yet you raise prices every year. At Grande, we are committed to providing our customers with quality TV programming at a reasonable price and we make every effort to minimize costs. As you have seen from recent negotiations, we are doing all we can to ensure you don t suffer unfair price increases as a result of unreasonable rate increase demands from channel programmers. In the past three years, local broadcast stations and cable networks in our markets have increased their rates by nearly 30%. In 2014 local TV stations and cable networks will again increase their rates. We absorb a lot of the cost increases for your cable channels. We DON T pass them all on to you. Grande must adjust pricing somewhat so that we can continue to deliver the quality cable programming our customers have come to expect. What is retransmission consent and what is a renewal? These terms describe essentially the same thing. A renewal is the process that happens when the owner of a cable network or group of cable networks negotiates a new contract with a TV service provider like Grande. Retransmission consent is the legal term for the process that happens when the owner of an over-the-air broadcasting TV station or group of TV stations negotiates a contract with a TV service provider for carriage.

8 Taking Action What can I do? Network owners, politicians and other viewers need to hear your opinion. You can write to your Congress person.

9 Why Disputes Happen Here is what you should know when a cable network or station owner threatens to take away your favorite channels. Cable Network & Station Fees Grande pays programmers (cable network or station owners) a fee per channel, per month, per customer. When contracts come to an end, we negotiate new agreements, and most of the time, you never hear about them. But sometimes, a programmer will demand a significant increase in its monthly fees then put pressure on us by saying we are dropping them. Not so. In those cases, we believe it s our responsibility to take a stand and help protect you from excessive increases. Temporary Loss of a TV Channel or Cable Network. Grande does not take TV channels away from customers during contract disputes. Only the network owner can do that. In negotiations with TV providers, network owners will sometimes deny you access to their programming and then blame your TV provider. That tactic is an attempt to frustrate you, and then have you complain to your TV provider. But the real motive behind it is to help the network owner extract huge fee increases. When programming disputes occur, network owners sometimes spend millions of dollars on newspaper ads, TV and radio commercials that tell you what you could lose if your provider were to disconnect you from certain networks. But at Grande, we are glad to keep networks on under our current contract, while we negotiate, until a new contract is in place. The decision about whether or not to allow networks to stay on during negotiations is entirely in the hands of the network owners.

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