Broadcasters Respond En Masse to Retrans Petition
Cash and other compensation for carriage of TV stations in more deals between them and pay-TV providers doesn’t mean the FCC needs to change how it handles contractual disputes, many broadcasters said late Tuesday. It’s a sign that additional competition for multichannel video programming distributor (MVPD) customers with the addition of subscription-video providers means broadcasters can get fair value for their signals, they said. Cable operators are no longer the only ones consumers pay to view TV, giving broadcasters more leverage, some filings suggested.
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Lead petitioner Time Warner Cable seeks to end “the cycles of showdown negotiations,” which the American Cable Association said lead to higher prices for consumers. Cable, direct broadcast satellite, telco-TV and public interest groups want the FCC to impose a standstill period during carriage disputes, so MVPDs can continue to carry the broadcast programming at issue, and binding arbitration (CD March 10 p1). Cox Enterprises, owner of both cable systems and TV stations, supports examination of retransmission consent. The FCC should consider changing its rules so impasses have a “fair path to resolution,” Cox Enterprises said. It “should evaluate the impact on consumer welfare of the involvement of the major national television networks in retransmission consent negotiations between local broadcasters and MVPDs, and consider whether this network involvement is consistent with Congress’s principal goal in enacting retransmission consent."
The 14 petitioners claim to seek reform because the market for local TV service has changed since passage of the Cable Act in 1992, said NAB and the affiliate groups for the Big Four networks: “But the change they cite, the emergence of competition among MVPDs, does not provide a basis for the anti-competitive proposals Petitioners have advanced.” Lacking a way to negotiate “fair” compensation, stations would have “fewer financial resources to compete with MVPDs in the acquisition of high-quality programming,” the joint filing said.
The pay-TV petitioners “seek to avoid a very simple marketplace reality,” said CBS, Disney, Fox, NBC Universal and Univision, that “emerging competitive forces are now compelling them to pay fair market value for this programming, nearly 20 years after Congress expressly provided for such marketplace negotiations.” The petitioners want an “extrajudicial reformation” of the retransmission consent process, the filing said. “The Petition, however, provides neither a legal nor a policy basis for the Commission to cast aside rules that work as Congress intended."
Statutory licenses for pay-TV providers render stations unable to enforce their copyright or trademark rights, said owners of more than 100 stations. “Whether the mechanism is called ‘copyright’ or ‘retransmission consent,’ it is nothing more than two sides of the same coin by which content owners exercise lawful and necessary control over the distribution of their property -- video and audio programming -- by MVPDs,” said Allbritton Communications, Local TV, McGraw-Hill, Media General, Meredith Corp. and nine others. “Providing high quality programming, however, is expensive, and, like any commercial enterprise, broadcasters must be able to share in the value that they create in order to continue investing in the programming and news that Americans want."
Smaller cable operators are concerned about price discrimination against them and joint negotiations for carriage involving more than one Big Four affiliate in the same market, the American Cable Association said: “Retransmission consent increasingly means spiraling prices and bitter public showdowns with threatened or actual withdrawal of local network signals. Each outcome harms consumers.” Every negotiation for carriage now “carries a significant threat of disrupting service to consumers,” Time Warner Cable said. “Even where agreements are reached in spite of broadcasters’ brinksmanship tactics, the process exacts a significant toll on MVPDs and their subscribers. Consumers would be better served by new rules that end the cycles of showdown negotiations and recurring threats to cut off access to popular programming."
AT&T, which hadn’t signed the petition, sought a proceeding on retransmission consent.
The telco doesn’t “necessarily agree with all of the reforms proposed by petitioners” but “agrees that the conditions on which Congress and the Commission relied to justify adoption of those rules have markedly changed now that incumbent cable operators confront increasing competition for multichannel video services,” AT&T said. “Those payments threaten to drive up MVPDs rates to the detriment of consumers, many of whom may be forced to forego subscription to multichannel video services simply because they are priced out of the market.”