Subscriber Notice Won’t Solve Retrans Woes, Pay-TV Providers Say
Broadcasters’ proposals that pay-TV providers give subscribers more notice of carriage disputes won’t fix the broken retransmission-consent system, cable and telco-TV providers told the FCC. Replies from them were posted Friday in docket 10-71 on a petition by 14 providers and public interest groups (CD May 20 p4). Mediacom, Suddenlink, Verizon and other multichannel video programming distributors (MVPDs) said such notification would have little effect. Disney and Time Warner Cable, the lead petitioner, debated whether economic analyses show that increases in what TV stations are paid for access to their programming and threatened disputes account for rising cable subscription fees.
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Verizon asked the FCC to “disregard claims that the consumer harms resulting from the current retransmission consent regime can be ameliorated simply by MVPDs’ giving consumers more advance notice of potential impasses and providing information” that they can switch providers or get the station over-the-air. “While differing on the merits of specific reform proposals, a wide range of commenters -- from providers, to public interest and consumer groups, to programmers -- agree that the current regime distorts negotiations for broadcast signal carriage,” the telco said. “The best way to address these concerns would be for policymakers to scrap the existing regime and allow the marketplace for broadcast programming to function like a normal market."
Subscribers aren’t hurt by lack of knowledge about what’s happening, several cable operators said. The companies already face notice obligations under the FCC rules requiring them to tell customers in advance of channel line-up changes, Insight Communications said. Mediacom and Suddenlink described broadcasters’ calls for further requirements as “mere window dressing” that “would actually exacerbate, rather than address, consumer confusion and frustration.” It would “formalize and legitimatize the fear mongering that broadcasters use as a negotiating tactic,” the two companies said.
Carriage fees are “modest,” said the NAB and the Big Four affiliate groups. They said data from an economist whose work was commissioned by the American Cable Association reach such a conclusion. The ACA’s economist calculated that the average fee to carry a Big Four station was 19 cents per subscriber a month, not much more than broadcast associations estimated, the filing said. And “arguments that aspects of the network-affiliate relationship are impacting retransmission consent negotiations and terms are simply inapposite,” it said.
No commenter offered the FCC a legal basis for approving the petition’s request for mandatory arbitration and a standstill period to avert carriage cutoffs, Fox said. “Nor has any commenter supplied any policy basis to justify the Commission abandoning its long-held belief that private business disputes are best resolved by the parties or, where appropriate, the courts.” Cable operators and especially Time Warner Cable “persistently sought to ascribe `blame’ for its own retail rate increases to programming costs, including retransmission consent fees,” Disney said. As economist Jeffrey Eisenach showed in a series of reports, “such fees could have played only a very small role in those retail rate increases,” the broadcaster added.
Opponents of new retransmission consent rules are mistaken in saying a revamp would disturb the free market, said Dish Network and DirecTV in a joint reply. The broadcast market is far from a free one, since it’s heavily regulated and the government imposes requirements, many favoring broadcasters, the companies said. Broadcasters get billions of dollars worth of spectrum free, force pay-TV operators to carry their programming and are allowed to withhold programming immediately before marquee events, the direct-broadcast satellite companies said. They said broadcasters’ claims that broadcast signals are available everywhere is also mistaken. NAB’s website shows that millions can’t receive off-air signals and when broadcasters withhold signals from other TV providers, many subscribers lose access to the programming.
Proposed “best offer” arbitration and “standstill” carriage would promote agreements and wouldn’t ensnarl the commission with disputes, contrary to what opponents say, the DBS companies said. In 5-1/2 years, the 35 TV stations run by News Corp. that were subject to similar arbitration requirements didn’t bring a single matter to the FCC for resolution, they said. Regional sports networks run by News Corp., Comcast and Tim Warner Cable that are subject to such conditions brought two arbitrations to the commission for review. “The availability of arbitration acts as something of a regulator on the conduct of the parties, giving both sides strong incentives to propose more reasonable terms for fear of losing the arbitration,” DirecTV and Dish said. They said they've found that preparing for arbitration encourages private dispute resolution.
An economic analysis commissioned by Time Warner Cable found 48 station blackouts and threatened ones 2000-2009. The supposition in a paper co-written by Eisenach that such cases don’t have much impact on the video programming market is wrong, said the cable operator’s study. “Brinkmanship tactics can have substantial market-wide effects on all” retransmission consent negotiations, whether or not a blackout occurs, it said. “This is because the anticipation of a blackout will lead some current subscribers to switch MVPDs and some potential new subscribers to choose a different MVPD.”