Senate scrutinizes retrans scuffles

But lawmakers at odds on how to overhaul broadcast, cable regs

With high-profile disputes between broadcasters and cable and satellite providers ending in channel blackouts, Senate lawmakers on Tuesday signaled a willingness to modify, overhaul or even do away with retransmission consent rules.

At a hearing marking the 20th anniversary of the Cable Act, which put in place provisions that allow broadcasters to charge cable operators for carrying their signals, Senate Commerce Committee chairman Jay Rockefeller (D-W.Va.) said that “when consumers lose channels in these corporate disputes, they should get a refund.” But he pointed to a larger problem.

While competition has increased in the two decades since the legislation passed, one aim of the 1992 legislation, he noted that cable bills continue to go up faster than the rate of inflation. Consumers are also forced to buy larger packages of channels even if they will never watch many of them.

“This says to me that the market isn’t working,” Rockefeller said. “Real competition should be bringing the rates down.”

Sen. Jim DeMint (R-S.C.), the ranking member of the Commerce Committee, is co-sponsor of a bill that takes a much more radical approach: the repeal of a whole host of laws regulating the industry, including retrans consent guidelines, the compulsory copyright license, must-carry rules and media ownership rules.

Broadcasters warned that changes could lead to unintended consequences. For example, abandoning the retrans rules and compulsory licensing would make rights negotiations more complicated, as cable operators would have to negotiate with many more players for the rights to carry programming.

“When you increase by 10 times the number of rights holders that have to come to an agreement, you are likely to increase by tenfold the number of disruptions that are likely to occur,” said Gordon Smith, president of the National Assn. of Broadcasters. He said that broadcast TV accounts for 35% of all viewership, but stations receive only 6.7% of carriage fees. He warned of the impact on local programming, as stations would have to cut back without the revenue stream.

More modest proposals — like mandated arbitration during retrans disputes, or prohibitions on pulling of signals as disagreements are resolved — have been met with resistance from broadcasters as shifting the balance of power to cable providers.

Martin Franks, exec VP of planning, policy and government affairs for CBS Corp., told the committee that “retransmission consent is neither broken nor an antique in need of refurbishment.”

Yet cable operators argued that the current system gives stations an unfair advantage, with the higher retrans fees passed on to consumers, said Melinda Witmer, Time Warner Cable exec VP and chief video and content officer.

Broadcasters “cannot claim that without special treatment they will no longer be able to provide consumers with local news and information, and at the same time, reduce their spending on localism and deny cable and other pay TV customers access to their signals during disputes,” she said.

Despite the hearing’s focus on problems, it’s highly unlikely that lawmakers will take any action in an election year. Sen. John Kerry (D-Mass.), a member of the Commerce Committee, said, “There’s a real divide here, and it is going to be interesting how we manage it.”