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CBS-Time Warner Cable Blackout Spurs D.C. Action on Retrans

Legislative efforts to overhaul FCC rule and prevent carriage disruptions are gaining steam

The month-long blackout of CBS O&Os from Time Warner Cable systems in key major markets has igniting a feverish round of lobbying in Washington, pitting cable and satellite operators who want to see Congress step in against broadcasters who see little need to change the current rules regarding retransmission consent.

The prospect of “retrans reform,” or any legislative move to curb future service disruption, gained some credence when Rep. Greg Walden (R-Oregon), chairman of the House communications and technology subcommittee, expressed a willingness to “get all the issues on the table” as lawmakers look to extend a law that gives satellite companies a license to provide local channels. The question is whether Congress will merely extend the law, the Satellite Television Extension and Localism Act, which expires next year, or add provisions dealing with retransmission consent negotiations.

At a hearing on Wednesday, Walden (pictured) didn’t go into specifics, but he said that he expects to circulate a discussion draft on the issues early next year. ”

“In the on-demand world of the Internet and mobility the statutes that govern the video marketplace are blissfully ignorant of the changes that have taken place around them,” Walden said.

Rep. Anna Eshoo (D-Calif.), the ranking member of the subcommittee, earlier this week introduced a draft bill, the Video CHOICE Act, with an eye toward blocking channel blackouts during negotiation disputes. “Since 2005 there have been 70 — that’s seven zero — disputes, involving 392 stations, for a total of 3,853 days of retransmission blackouts,” Eshoo said at Wednesday’s hearing. “Now, if someone out there wants to start defending this, I think it would be really interesting because I just don’t think it’s that defensible.”

Her legislation would give the FCC authority to grant interim carriage of a broadcast station during an impasse in negotiations. But it also attempts to address a number of other issues as consumers complain of rising cable bills. It would ensure that customers can buy cable TV service without subscribing to the broadcast stations seeking the retrans fees, and prevent media congloms from making the availability of their broadcast stations contingent on a cable or satellite operator also carrying their other cable entities.

Eshoo’s bill also calls for the FCC to study the rising programming costs of regional and national sports networks, and instructs the agency to determine whether stations were negotiating in “good faith” if, during a retransmission impasse, they blocked their online content from consumers. CBS blocked TW Cable customers in the affected markets — including New York and L.A. — from accessing CBS programming online via TW Cable-provided broadband. That move raised the ire of telecom policy watchdog orgs and open Internet advocates.

“I hope this doesn’t become the new normal in retransmission disputes,” said Rep. Mike Doyle (D-Pa.).

The FCC, perpetually under scrutiny for “picking sides” between industry players, has been reluctant to step in, even if commissioners have expressed concern and dangled the prospect that more should be done in the future. So in the aftermath of the CBS-Time Warner Cable showdown, the cable and satellite business has been not only pushing for reform in Congress, but the idea that change is inevitable.

On Thursday, the American Television Alliance, an organization of cable and satellite operators as well as public interest groups, held a press conference call with reps from public interest orgs including Public Knowledge and the National Consumers League, as well as the New America Foundation and Citizens Against Government Waste. Their message: There is real movement among lawmakers to do something about the current system of retransmission negotiations, in place since the passage of the Cable Act in 1992.

But broadcasters are vowing to wage their own campaign, arguing that not only is there nothing wrong with the current system, but that their programming is always available for free, via an antenna. In a conference call, Dennis Wharton, spokesman for the National Assn. of Broadcasters, said that the problem was three “bad actor” companies, Time Warner Cable, Dish Network and DirecTV. He says that their aim is to “whip up hysteria and keep this top on the minds of policymakers,” something that has an impact on retrans negotiations. “If there was simply a message from Congress and the FCC that ‘We are staying out of this,’ you wouldn’t see any more impasses,” he said.

In a gridlocked Congress, the odds are against action, perhaps even more so when an issue pits one industry against another. Yet with rising cable rates, increased costs for sports rights and more demands on broadcasters to find new revenue streams, it’s also pretty likely that in the not too distant future, there will be another dispute that will reignite all the ire and acrimony.

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