TBS sues to block cable rules

Turner Broadcasting System yesterday responded to Congress’ override of President Bush’s cable bill veto by filing suit to block implementation of the retransmission consent/must-carry provisions of the legislation.

The cable giant’s court challenge, filed in federal district court here, zeroes in on the most controversial aspect of the new law–a requirement that cable operators negotiate with broadcasters for local station carriage rights.

Cable currently receives broadcast stations free of charge; under the new law , broadcasters may negotiate payments for their signal through a process known as retransmission consent. Or, they can negotiate for preferential channel position under the must-carry requirement that cablers carry local stations.

It’s expected that network owned-and-operated stations and large web affiliates will command the most coin from cable operators, while small broadcasters and independents with less negotiating power will opt for must-carry.

Turner, in a bid to take the luster off broadcasters’ lobbying coup, yesterday urged the court to invalidate retransmission consent/must-carry provisions as unconstitional.

Bert Carp, Turner’s VP for government affairs, noted that courts have twice ruled must-carry is a violation of the free-speech rights of cable operators by giving broadcasters “unfair advantages over cable networks like CNN and TNT.”

Carp said that by adding retranmission consent to the mix, “The current approach tilts the playing field ever further against cable networks. It also hurts cable subscribers, who will have to pay for broadcast channels that their neighbors who do not take cable receive for free.”

Carp said Turner is “confident that the courts will make quick work of this ‘heads we win, tails you lose’ scheme.”

National Assn. of Broadcasters prez Eddie Fritts responded to the lawsuit by saying it “comes as no surprise. We … will do all we can to help ensure that Congress’ action is upheld.”

Carp’s claim that must-carry has been rejected twice as unconstitutional is correct. However, on both occasions the courts were deciding on the merits of a rule adopted by the Federal Communications Commission. Backers of must-carry believe the issue has a better chance of withstanding court scrutiny now that Congress has made it the law of the land.

It’s unclear whether any money will actually change hands via retransmission consent, since Congress did not place a price tag on the value of a station signal, and since cable honchos such as TeleCommunications Inc. topper John Malone could play hardball at the bargaining table.

Malone, who heads the largest cable multi-system operator in the country, has reportedly vowed that TCI will not pay anything to carry broadcast channels.

Even if retransmission consent results in millions of dollars in extra revenue for broadcasters, Hollywood studios will be fighting for a share of the pie, said Tim Boggs, a D.C. lobbyist for Time Warner. Programming contracts will be re-written to ensure that studios get a piece of the action, said Boggs.

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