Beltway battle coming to a head at FCC
The Beltway battle over proposed changes to the retransmission consent law is coming to a head at the FCC.
The key constituencies in the fight — broadcasters on one side, and cable, satellite and telco TV operators on the other — have staked out familiar positions in making their cases for preserving or overhauling the nearly 20-year-old retrans rule.
But the question of regulating how TV station owners and subscription TV providers negotiate carriage agreements has drawn the attention of a range of outside orgs, who cast it as a consumer protection issue and an impediment to the spread of broadband availability in rural areas.
Last Friday marked the deadline for filing com-ments with the Federal Communications Commission on the notice it issued in March of a proposed rulemaking on retrans. That move came after months of heavy lobbying by subscription TV providers and after a series of high-profile retrans showdowns, some leading to station blackouts in major markets.
Also last week, biz research firm SNL Kagan issued revised projections charting the growth in retrans revenue for TV stations, mostly Big Four affiliate stations. SNL Kagan estimates stations reaped $1.14 billion in 2010, amd that will climb to $3.61 billion by 2017, with big spikes coming in the next few years as station owners reap the rewards of higher fees secured in recent deals with providers.
The FCC has set June 27 as the deadline for replies to the comments filed during the past two months. Those have ranged from lengthy position statements and dueling studies from major players like DirecTV, AT&T, CBS Corp. and the National Assn. of Broadcasters to laments from individuals, such as Thomas Hertz of Swanton, Md.
Hertz weighed in on one aspect of the retrans overhaul under review: the question of whether the FCC should eliminate the program exclusivity provision that prevents subscription TV providers from carrying out-of-market broadcast stations. Providers want that flexibility to give them another option if they can’t make a deal with a local Big Four affiliate station.
For viewers like Hertz, the issue is pressing because his home is considered part of the Pittsburgh market, which means he gets very little Maryland news from the Pittsburgh stations carried by his cable provider. In a letter addressed to FCC chairman Julius Genachowski, Hertz wrote: “I’m sure that if you were to move here from Washington you would be equally annoyed.”
Among the key players, the positions haven’t changed much since the retrans lobbying push began early last year.
The cable/satellite/telco alliance is looking for the FCC to limit broadcasters’ ability to pull their signals when negotiations falter by mandating that disputes go to arbitration or mediation. In addition to dropping the exclusivity provision, the providers want the FCC to toughen the requirements that the sides engage in “good-faith negotiations.” They also want to prohibit station owners from handing retrans negotiation rights to an outside entity, such as a network or another station owner or group, to enhance their leverage.
“Removing the temptation to threaten withholding of such particularly attractive programming should reduce the level of contentiousness in retransmission consent negotiations and foster a less confrontational and counterproductive atmosphere for reaching agreement,” DirecTV wrote in its filing.
The nation’s second largest subscription TV provider (behind Comcast) argued that the retrans law as it stands favors broadcasters thanks to ”decades-old government policies encouraging broadcast territorial exclusivity, and the business arrangements that have ossified around these policies, (which) have created a ‘non-market’ that encourages brinksmanship and disruption.”
Broadcasters counter that the existing system mandating private retrans negotiations is working well. The NAB and others assert that the flare-ups that have led to blackouts are high-profile exceptions rather than the rule for both sides. Moreover, broadcasters maintain that retrans revenue is increasingly important to the health of local stations and the national broadcast nets at a time of dramatic change for the TV biz.
The WGA West weighed in with a filing supporting the position of broadcasters, which remain the source of the TV scribe tribe’s biggest paychecks.
“The proposed action would hurt the ability of broadcast stations to seek appropriate compensation for network programming,” the WGA West wrote. “This would in turn reduce the revenue available for investment in new original programming nationally and locally, harming both content creators and consumers.”
In the midst of the biggest retrans showdowns to date, including last fall’s 15-day blackout of Fox’s New York stations for Cablevision’s 3 million subscribers, Genachowski has indicated that he is reluctant to move the FCC into a position of mandating arbitration or interim carriage agreements.
Some observers predict that any changes that come from the retrans review will be marginal, such as strengthening good faith requirements and the on-air notification to viewers that a retrans squabble is looming.
Others predict the FCC will push for more aggressive regulation in smaller markets. Small- and medium-sized cable providers have long complained that they have little leverage to push back on retrans fee demands by Big Four affils that they must carry to remain competitive with national satellite and telco competitors. Cablers and other advocacy orgs have linked retrans reform to another key priority for Genachowski’s FCC: the availability of broadband service, which cablers argue is more attractive to consumers when bundled with subscription TV service.