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FCC votes to reexamine its rules on negotiations between broadcasters and cable operators

March 3, 2011 |  1:12 pm

In the wake of several high-profile disputes between broadcasters and cable providers over distribution deals, the Federal Communications Commission voted Thursday to launch an examination of its rules regarding so-called retransmission consent negotiations.

"Retransmission consent negotiations have become more contentious recently and consumers have gotten caught in the middle .... it's time to take a fresh look," said FCC Chairman Julius Genachowski.

For example, last fall, Fox yanked its signal from Cablevision Systems Corp., a large operator in New York and surrounding regions for over two weeks.

The move was cheered by the cable industry.

"By launching this proceeding, the FCC has recognized that it is time to change outdated government rules that favor broadcasters over consumers," Time Warner Cable said in a statement.

“Retransmission consent is a badly outdated system that inflicts serious economic harm on consumers," said Matt Polka, head of American Cable Association, a lobbying orgnanization whose members include independent cable operators. Polka calls the demands of TV stations "aggressive" and said it is time to give "careful consideration" to new policies.

Genachowski Broadcasters have countered that negotiations free of government interference are the best way to resolve these squabbles and that there have actually been only a handful of times when channels have gone off the air.

"In more than 99 out of 100 retransmission consent negotiations, agreements are concluded successfully and invisibly," said the National Assn. of Broadcasters, the industry's chief lobbying arm in Washington. "Broadcasters will continue working earnestly to ensure that consumers receive no TV service disruptions, mindful that even the threat of injecting government into a market-based process only incentivizes pay TV providers to game the process."

But even if the channels ultimately don't get pulled, consumers get caught in the middle of verbal wars between programmers and distributors. It does not help matters that often these deals seem to expire right when some big event is going on, as was the case last fall with Fox and Cablevision and baseball playoffs.

Currently, the FCC has a very limited role in negotiations between broadcasters and pay-TV distributors.Cable and satellite operators as well as some members of Congress have been putting heat on the FCC to find a way to have more say in these fights, which often leave consumers in the lurch.

At the meeting, the agency acknowledged that its power is limited here. It can't force a broadcaster to let a distributor carry its channel, and there is nothing in its proposed rule changes that would alter that.

"The clear message to cable and satellite providers is, don't expect the FCC to bail you out when your negotiating strategy isn't working," said John Hane, a communications lawyer with Pillsbury Winthrop Shaw Pittman who often works with broadcasters. "All five commissioners voted to take a look at the negotiating rules, but I didn't detect much genuine enthusiasm for more government intervention in private business negotiations."

The FCC said it would seek comment from consumer groups and the media industry about how it could strengthen its role in these negotiations. Among the changes the FCC is considering is eliminating its rules that prevent a cable operator from carrying a station from a neighboring town if a deal can't be struck with the local station.

For example, if a cable operator in Los Angeles is unable to reach a deal with a TV station here, it is prohibited from carrying a station from a nearby community such as Santa Barbara or San Diego. Broadcasters will probably fight any effort to change the commission's non-duplication rules as they would see it as taking away leverage to negotiate.

The FCC also said it wanted to strengthen its definition of good-faith negotiations as well as explore what role, if any, broadcast networks should have with regards to deals their affiliates sign with distributors. Some networks are seeking the power to approve their affiliates' retransmission consent deals. In the past, networks have negotiated on behalf of their affiliates.

The FCC's actions were too little too late for some media watchdogs.

“The FCC needs to do more to help consumers, instead of just helping the cable companies and broadcasters," said Joel Kelsey, political advisor to the advocacy group Free Press. "This market is broken, and so-called good-faith bargaining does little to prevent subscribers from losing access to channels they are paying for when a dispute arises.”

FCC Commissioner Michael J. Copps, who has been outspoken in his concerns about consumers getting harmed by all the battles between broadcasters and distributors, said the current system basically amounts to "big money against big money" with the consumer getting "pummeled."

-- Joe Flint

Photo: FCC Chairman Julius Genachowski. Credit: Gary Friendman / Los Angeles Times.

 

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