Carriage conflicts spur review of rule

The FCC will undertake a review of the retransmission consent rule amid the growing contentiousness between broadcasters and cable operators on carriage agreements, FCC boss Julius Genachowski said Wednesday.

The Federal Communications Commission chairman said in an interview with CNBC’s David Faber that the commission will tackle the retrans issue in much the same way it developed the ambitious National Broadband Plan it unveiled earlier this week.

“We’re going to look at (retrans) the same way we looked at broadband: Open participatory proceedings focusing on facts and data, and just thinking in an open way with an open mind about what would work best for the country and for all the players involved,” Genachowski said.

A group of cable, satellite and telco operators filed a petition with the FCC last week urging the commission to mandate that retrans disputes be subject to arbitration and that stations cannot pull their signals while negotiations are ongoing — a key leverage point for station owners (Daily Variety, March 10).

The FCC is expected to post a formal notice seeking comments from the public on the petition some time this week. But Genachowski’s comments on CNBC’s “Squawk on the Street” made it clear that he feels compelled to probe the retrans issue as a consumer protection issue, though he also emphasized that the process is rooted in market-based negotiations between private companies.

“There are strains in that system,” Genachowski said. “A lot of issues have been raised with us, and we’re committed to looking at how can we improve it. … The companies involved need to be able to negotiate fair agreements among themselves. What I’m focused on is what’s the effect on consumers who don’t have a seat at the negotiating table but are affected when deals can’t be struck.”

Retrans has been the law of the land since 1992, but it has only recently erupted into standoffs between major media players as station owners push harder for significant cash compensation for carriage rights. Fox and Time Warner Cable had a high-profile scuffle that threatened to yank Fox O&Os in nine markets on New Year’s Day. Disney and Cablevision earlier this month went to a Defcon 4 blackout of WABC-TV New York for 20 hours, right up through the first 13 minutes of the March 7 live Oscarcast (Daily Variety, March 8).

Cable and satellite operators maintain that the retrans law is outmoded because it was enacted in an era when cable operators had no competition in the subscription TV marketplace. But now, broadcasters have the sway to demand big bucks for carriage or they can handicap a provider by taking away a must-have local channel. Broadcasters counter that they deserve compensation commensurate with top basic cable channels because their local network affiliate stations tend to be among the most-watched channels on a cable/satellite provider’s lineup.

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