KJWY-TV was a station in Jackson, Wyo. But now it serves Philadelphia, Pa.

Two small television stations in Wyoming and Nevada with audiences in the thousands have packed up and are moving to bigger cities after exploiting a loophole in FCC rules.

KJWY, Channel 2 in Jackson, Wyo. used to relay television programs from a Casper station for the benefit of the 9,500 people living in the Teton County community. The station operated with just 178 watts — the lowest powered digital VHF station in the country. KVNV, Channel 3 in Ely, Nev., originally relayed Las Vegas’ NBC affiliate for the benefit of 4,200 locals. Both stations were purchased at a very low-cost by a mysterious partnership of buyers back east.

Today, KJWY has a new call sign – KJWP. It’s still on Channel 2, but the station is now licensed to operate from Wilmington, Del, with its transmitter located just across the border in Philadelphia. It’s one of the rare few television stations in the eastern half of the country that have “K” call letters usually assigned to stations west of the Mississippi River. KVNV is expected to follow to its new home in Middletown Township, Monmouth County, N.J., later this year. Its transmitter will have nothing but open water between northern New Jersey and nearby New York City — its intended target.

The two stations’ original combined audiences likely never exceeded 10,000, because both stations had very limited range for their transmitters which served two very small communities. But in the big cities of New York and Philadelphia, the stations can now reach a potential audience north of ten million and collect advertising revenue the stations in Wyoming and Nevada could only dream about.

PMCM, LLC., obviously had this in mind when it acquired the two stations in 2009. The principals behind PMCM already own six Jersey Shore radio stations in Monmouth and Ocean County under the name Press Communications, LLC.

How Congress and the FCC Opened the Door

PMCM discovered a little-known law that was originally introduced to help spur the launch of VHF television stations serving small Mid-Atlantic states shadowed by nearby large cities. In 1982, New Jersey Sen. Bill Bradley attached an amendment to an unrelated tax bill that required the FCC to automatically renew the license of any commercial VHF station that agrees to move to a state without one. The new law superseded nearly all the FCC’s other licensing regulations. At the time the law was passed, the only two states that were without any commercial VHF stations were Delaware and New Jersey.

That summer, RKO General, embroiled in a major scandal over illegal billing irregularities and deceiving regulators, thought it could save its New York station – WOR-TV – from threatened license revocation by agreeing to move from New York City to Secaucus, N.J. In agreeing to move the station, WOR would also expand much-needed coverage of New Jersey news and current affairs. But viewers barely noticed and by 1987 RKO General’s bad behavior got them booted out of the broadcasting business altogether after what FCC administrative law judge Edward Kuhlmann called a pattern of the worst case of dishonesty in FCC history. WOR’s new owners changed the call sign to WWOR-TV and the station’s home remains in Secaucus.

Two things happened after the mess with WOR. Bradley’s law remained on the books and America’s adoption of digital over the air television for full power stations meant channel number changes for many stations by the time the transition was complete in 2009. WWOR-TV relocated to UHF channel 38 (while still promoting itself as Channel 9) and Delaware’s only remaining VHF station is non-commercial WHYY Channel 12, a PBS station better known as hailing from Philadelphia. Once again, New Jersey and Delaware were without commercial VHF stations, a fact that did not escape the notice of PMCM.

Me-TV Launches in Philadelphia and New York

After a lengthy court battle with the FCC, PMCM successfully moved and relaunched KJWP, Channel 2, on March 1 as Philadelphia’s Me-TV affiliate. Although the transmitter power was raised, the station’s digital VHF signal still doesn’t reach very far, so its owners invoked “must-carry” with area cable systems, which means cable systems must carry the channel so long as the station does not ask for any payment.

The station’s reach is defined by the FCC far beyond its actual broadcast signal. Officially, the station can demand cable carriage as far south as Dover, Del., as far west as Lancaster, Pa., almost all of southern New Jersey and into northern New Jersey. Today, Comcast and other cable systems carry KJWP across Philadelphia and the Delaware Valley. Verizon FiOS is adding the station by this weekend and it is also available via satellite TV local station packages. Unlike larger stations fighting to be paid by cable systems, KJWP is happy to be carried by all without charge because it can sell advertising to a much larger potential audience. It plans to produce local programming, including news, which opens up even more advertising opportunities.

KVNV remains on the air in Ely for now as a My Family TV affiliate, showing a mix of family friendly and religious programs. But its days as a Nevada broadcast station are numbered. KVNV will officially sign-off in Ely for good in a few months and relaunch operations across the New York City market as New York’s official Me-TV affiliate. Like with KJWP, KVNV will keep its original call letters and invoke must-carry, which means the station is likely to appear on northern New Jersey Comcast systems, Time Warner Cable in Manhattan and other boroughs, as well as Cablevision on Long Island and across parts of Brooklyn.

Charles Dolan, Cablevision CEO

Cablevision Systems Corp.’s board of directors have been sued by an investor for wrongfully approving “grossly excessive” compensation for Chairman Charles Dolan and members of his family who serve as executives at the fifth-largest U.S. cable company.

The board of Bethpage, N.Y.-based Cablevision, which includes Dolan’s three daughters, approved more than $80 million in pay and benefits for the firm’s founder and his son over the last three years while the company piled up financial losses, according to the plaintiff’s suit.

Charles Dolan founded the cable company in 1973. Although others at the company have taken a larger role managing its day-to-day operations, Charles still won approval of $41 million in compensation for himself over a three-year period beginning in 2010. His son James was awarded $40 million, despite the fact he seems to be losing interest in Cablevision, preferring to devote more time to his rock band – JD & The Straight Shot – where he serves as lead singer, according to the lawsuit.

The plaintiff alleges the compensation packages were excessive and a waste of corporate assets at a time when Wall Street analysts criticized the cable company for underperforming financially.

“The Dolans treat Cablevision as a family coffer, routinely entering transactions with the company that have improperly favored the Dolan family’s interests over the interests of the company and its public stockholders,” said shareholder Gary Livingston, who filed the suit.

What the Dolan family wants, they usually get. The family collectively hold shares that control about 73 percent of the company’s voting rights.

It isn’t the first time the Dolan family — now billionaires — have found themselves in court over compensation issues. In 2008, the company’s top executives agreed to pay more than $24 million to settle shareholder lawsuits accusing them of benefiting from stock option grants that were backdated.

Livingston’s case is an example of “baseless shareholder lawsuits designed simply to enrich the plaintiff and his lawyers,” Charles Schueler, a Cablevision spokesman, told Bloomberg News today in an e-mailed statement.

Beck

Glenn Beck and his independent network TheBlaze are not happy about Time Warner Cable and Comcast merging operations and think it will concentrate too much power in the hands of a single entity that already ignores independent voices seeking a spot on the cable dial.

Beck left Fox News Channel to help start a new network — TheBlaze — that began as GBTV, an online streaming video operation. In the fall of 2012, the network, which airs more than 40 hours a week of new programming, secured exclusive carriage on Dish, the satellite television provider. Now that the exclusivity agreement has expired, TheBlaze management and viewers have launched a very vocal campaign to get the channel on cable systems across the country. The venture has been modestly successful with smaller cable operators like Buckeye Cablevision in Ohio and ETC Communications in Michigan. Beck’s network can also be seen on Cablevision’s lineup in the suburbs of New York City. But for most of the country, the only way to watch is to stream it online for $9.95 a month/$99.95 a year. Large cable systems have so far shown little interest in picking up the network.

“Comcast is one of the bigger pains in the neck for TheBlaze,” Beck told his radio listeners.

“Since launching the GetTheBlaze campaign, 50 small, midsized and major cable systems have begun carrying our network,” said TheBlaze CEO Chris Balfe. “These are the cable systems that must be responsive to their customers to survive. Monopoly type [multichannel video programming distributors] like Comcast and Time Warner Cable do not have a good history of listening to customers or supporting independent programmers whose content is in demand like TheBlaze. While we are skeptical that giving Comcast even more market power will benefit consumers, promote competition or lead to more diversity of voices, we will continue our successful campaign because eventually, even giants have to listen to what their customers want.”

“Look, the amount of decision makers, which is so surprisingly small in the industry in general, is potentially getting smaller,” Steve Krakauer, TheBlaze’s vice president of digital content told POLITICO. “Keeping up the fight is so important.”

Cable industry observers agree that life can be difficult for an unaffiliated independent cable network. Ovation found itself thrown off Time Warner Cable’s lineup for nearly a year because of a lack of original programming and miniscule ratings. But networks owned by studios like Universal or large broadcasting entities like Viacom stay, despite similar viewer response. Ovation had no leverage to compel continued carriage. Networks owned by larger companies often do, because they are packaged and sold to cable operators in a bundle. A cable company refusing to carry one low-rated cable network could be threatened with a much more expensive rate for the channels it does want or even face the loss of larger, must-have channels owned by the same company.

Polka

Beck isn’t alone being concerned.

The American Cable Association, a trade group that represents small and medium-sized cable operators, said it is carefully considering the potential impact of the merger on the cost of video programming sold to smaller operators.

“ACA has long acknowledged many problems in the pay-TV market, including the soaring cost of retransmission consent and sports networks and the record-setting number of broadcaster-imposed TV signal blackouts,” CEO Matthew Polka said in a statement. “ACA will be looking closely to see whether this transaction makes matters worse for small and medium-sized cable operators and their customers.”

Bright House Networks’ long standing relationship with Time Warner Cable — which negotiated programming deals on behalf of the smaller cable operator with operations in the south — may come to an end with an approval of a merger between Comcast and Time Warner. That could make Bright House a prime candidate for a takeover.

Charter Communications is likely to seek consolation prizes now that Comcast has outbid the smaller cable company for Time Warner Cable. Liberty Media’s John Malone and Charter’s CEO Tom Rutledge are meeting with advisers and board members to discuss where Charter will go next to grow its operations.

Malone and Rutledge believe the cable industry must consolidate to better position it against competition from online video, phone companies, and satellite television. Malone would like to see the United States served by just a few cable operators, and feels acquisitions are the best way to accomplish his vision.

Charter is almost certain to buy at least some of the three million Time Warner Cable customers Comcast intends to cast-off if it wins regulator approval of its buyout deal. But Team Charter has assembled enough financing to go much farther than that.

Among the most likely targets, according to CRT Capital Group and Raymond James Financial are family held Cox Communications, the third largest cable operator in the country with more than four million customers, Bright House Networks, the tenth largest operator with just over two million customers, and Suddenlink Communications and its 1.4 million subscribers.

Cox, like Cablevision, has been closely controlled by its founding family for years, so rumors of sales of one or both have never come to fruition. But with the merger announcement of Comcast and Time Warner Cable, Wall Street pressure to consolidate is growing by the day. There is talk that if Comcast succeeds in its buyout effort, even satellite providers like DirecTV and DISH are likely to seek a merger. Even Cablevision, which serves suburban New York City may finally feel enough pressure to sell.

A Cox spokesperson this week continued to insist the company is not for sale, but money often has a way of changing minds, if there is enough of it on the table.

Other small regional operators also likely to be approached about selling include: MidContinent, Mediacom, and Cable ONE.

The largest drops in Netflix streaming speeds are coming from ISPs that may be stalling necessary upgrades at the cost of their paying customers’ online experience.

Netflix performance for Verizon customers is deteriorating because Verizon may be delaying bandwidth upgrades until it receives compensation for handling the growing amount of traffic coming from the online video provider.

Verizon customers have increasingly complained about Netflix slowdowns during prime-time, especially in the northeast, and Netflix’s latest statistics confirm FiOS customers have seen average performance drop by as much as 14% in the last month alone.

Verizon told Stop the Cap! a few weeks ago the company was not interfering with Netflix traffic or degrading its performance, but there is growing evidence that may not be the whole story. The Wall Street Journal reports Netflix and at least one bandwidth provider suspect phone and cable companies are purposely stalling on upgrading connections to handle traffic growth from Netflix until they are compensated for carrying its video traffic.

The dispute involves the plumbing behind parts of the Internet that are invisible to consumers. As more people stream movies and television, that infrastructure is getting strained, intensifying the debate over who should pay for upgrades needed to satisfy America’s online-video habit.

Netflix wants broadband companies to hook up to its new video-distribution network without paying them fees for carrying its traffic. But the biggest U.S. providers—Verizon, Comcast, Time Warner Cable and AT&T Inc. —have resisted, insisting on compensation.

The bottleneck has made Netflix unwatchable for Jen Zellinger, an information-technology manager from Carney, Md., who signed up for the service last month. She couldn’t play an episode of “Breaking Bad” without it stopping, she said, even after her family upgraded their FiOS Internet service to a faster, more expensive package. “We tried a couple other shows, and it didn’t seem to make any difference,” she said. Mrs. Zellinger said she plans to drop her Netflix service soon if the picture doesn’t improve, though she will likely hold on to her upgraded FiOS subscription.

She and her husband thought about watching “House of Cards,” but she said they probably will skip it. “We’d be interested in getting to that if we could actually pull up the show,” she said.

Netflix relies on third-party traffic distributors to deliver much of its streamed programming to customers around the country. Cogent Communications Group is a Netflix favorite. Cogent maintains two-way connections with many Internet Service Providers. When incoming and outgoing traffic are generally balanced, providers don’t complain. But when Cogent started delivering far more traffic to Verizon customers than what it receives from them, Verizon sought compensation for the disparity.

“When one party’s getting all the benefit and the other’s carrying all the cost, issues will arise,” Craig Silliman, Verizon’s head of public policy and government affairs told the newspaper. The imbalance is primarily coming from the growth of online video, and as higher definition video grows more popular, traffic imbalances can grow dramatically worse.

A spat last summer between Cogent and some ISPs is nearly identical to the current slowdown. Ars Technica reported the traditional warning signs providers used to start upgrades are increasingly being ignored:

“Typically what happened is when the connections reached about 50 percent utilization, the two parties agreed to upgrade them and they would be upgraded in a timely manner,” Cogent CEO Dave Schaeffer told Ars. “Over the past year or so, as we have continued to pick up Netflix traffic, Verizon has continuously slowed down the rate of upgrading those connections, allowing the interconnections to become totally saturated and therefore degrading the quality of throughput.”

Schaeffer said this is true of all the big players to varying degrees, naming Comcast, Time Warner, CenturyLink, and AT&T. Out of those, he said that “AT&T is the best behaved of the bunch.”

Letting ports fill up can be a negotiating tactic. Verizon and Cogent each have to spend about $10,000 for equipment when a port is added, Schaeffer said—pocket change for companies of this size. But instead of the companies sharing equal costs, Verizon wants Cogent to pay because more traffic is flowing from Cogent to Verizon than vice versa.

Cablevision, which participates in Netflix’s Open Connect program, experiences no significant speed degradation during prime time. The same cannot be said of Time Warner Cable, which refuses to take part.

Netflix offered a solution to help Internet Service Providers manage its video traffic. Netflix’s Open Connect offers free peering at common Internet exchanges as well as free storage appliances that ISPs can connect directly to their network to distribute video to customers. Free is always good, and Netflix claims many ISPs around the world have already taken them up on the offer, slashing their transit costs along the way.

A few major North American ISPs have also agreed to take part in Open Connect, including Frontier Communications, Clearwire, Telus, Bell, Cablevision and Google Fiber. Open Connect participating ISPs also got an initial bonus for participating they could offer customers – exclusive access to SuperHD streaming.

But most Americans would not get super high-resolution streaming because the largest ISP’s refused to participate, seeking direct compensation from content providers to carry traffic across their digital pipes instead.

On Sep. 26, 2013 Netflix decided to offer SuperHD streaming to all customers, regardless of their ISP. As a result, one major ISP told the newspaper Netflix traffic from Cogent at least quadrupled. ISPs taking Netflix up on Open Connect saw almost no degradation from the increased traffic, but not so for Verizon, AT&T, Time Warner Cable, and Comcast customers.

Net Neutrality advocates fear the country’s largest phone and cable companies are making an end-run around the concept of an Open Internet. Providers can honestly guarantee not to interfere with certain web traffic, but also refuse to keep up with needed upgrades to accommodate it unless they receive payment. The slowdowns and unsatisfactory performance are the same in the end for those caught in the middle – paying customers.

“Customers are already paying for it,” said industry observer Benoît Felten. “You sell a service to the end-user which is you can access the Internet. You make a huge margin on that. Why should they get extra revenue for something that’s already being paid for?”

Some of the web’s biggest players including Microsoft, Google and Facebook may have already capitulated — agreeing to pay major providers for direct connections that guarantee a smoother browsing experience. Netflix has, thus far, held out against paying ISPs to properly manage the video content their subscribers want to watch but in some cases no longer can.