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Cable operators file petition with FCC

DirecTV, Dish, Verizon urge changes to local station rule

Just as broadcasters are starting to command real money from retransmission consent deals, the cable side is pressing hard in Washington to overhaul the rules governing retrans negotiations.

A group of major cable operators, sat-TV providers DirecTV and Dish Network and telco Verizon filed a petition Tuesday with the Federal Communications Commission urging a review and changes to the law mandating that subscription TV providers negotiate deals with local broadcast stations for the right to carry stations on their channel lineups.

The petition proposes that retrans disputes be subject to some form of arbitration and that broadcasters be prevented from yanking their signals from the provider as a leverage point in negotiations. It also proposes that the station owners be prevented from tying retrans deals to carriage agreements for other non-broadcast channels owned by the same company.

The filing comes in the wake of the showdown last week between Disney and Cablevision over the retrans deal for WABC-TV New York. The dispute led to Disney yanking the stations from Cablevision for about 20 hours starting at 12:01 a.m. Sunday and extending right up through the first 13 minutes of ABC’s live Oscarcast. Fox and Time Warner Cable began this year in a retrans brawl that threatened to yank Fox O&Os from Time Warner systems in nine major markets.

An FCC spokeswoman declined comment on the petition late Tuesday.

Broadcasters are sure to fight hard against the push for a retrans revamp. Local stations are increasingly counting on rising fees from subscription TV services to help offset a declines in local advertising revenue. The Disney and Fox retrans wrangles ended with the cable operators agreeing to go from paying nothing for retrans rights for the stations to monthly fees of about 40¢ to 80¢ per subscriber — which is coin on a par with the fees commanded by top cablers such as USA or TNT.

“The unintended consequences of pay TV providers attacking the free-market-based retransmission consent model could be the demise of local programming,” said Dennis Wharton, exec veep of National Assn. of Broadcasters. “To see billion-dollar pay TV companies asking for government intervention to protect their exorbitant profits is just plain wrong.”

In the filing, the petitioners argue that the retrans law enacted in 1992 is outmoded in the existing subscription TV landscape. Back in 1992, cable had a firm monopoly on the subscription TV biz, but now that there is competition from sat-TV and telcos Verizon and AT&T, broadcasters have more leverage in threatening to yank their signal and send angry consumers to cable competitors. But the inclusion of DirecTV, Dish and Verizon in the FCC filing underscores that all subscription TV players are concerned about what the filing dubbed “pervasive brinkmanship” in retrans negotiations by TV station owners.

Sen. John Kerry (D-Mass.) was among the first to call for the FCC to take action on retrans and mandate that stations could not pull their signals while talks were ongoing. Broadcasters have questioned whether the FCC has the authority to make such a move. Much of the 42-page petition filed Tuesday is devoted to making the case that the commission does have “the authority and the obligation to adopt a framework that addresses mounting consumer harms caused by excessive retransmission consent fees and pervasive brinkmanship.”

The group of cable operators filing the petition does not include Comcast Corp., which is in the middle of trying to secure regulatory approval of its takeover of NBC Universal. Comcast is likely wary of pushing for anything in D.C. beyond its own merger issues. It also is about to inherit a group of NBC O&Os up for retrans deals in a few years. But the nation’s largest cable operator did offer tepid support for taking a hard look at the retrans rule.

‘”Everyone knows that retransmission consent needs to work better, and most importantly, consumers shouldn’t be held hostage in these disputes,” Comcast said in a statement Tuesday. “As we’ve said many times, as a company that will be in both the cable and broadcasting businesses, looking at the issue from both sides, we hope we can play a constructive role in working toward a resolution of these issues.”

Most of the companies behind the FCC petition — which include Time Warner Cable, Cablevision, Charter Communications, Mediacom and the American Cable Assn. — also sent a letter to key members of the House and Senate sounding the alarm that the “retransmission consent regime is broken” and citing the WABC shutoff as hard evidence.

“It is time to consider how to restore balance to the unique retransmission consent process and take steps to protect consumers against either seeing access to broadcast signals priced out of their reach or having that access denied to them,” read the letter.

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