More Hill Interest in Retrans Shown in Spate of Letter Writing to FCC

The letters to FCC Chairman Julius Genachowski came since late November, when the first batch of several high-profile disputes, one of which led to a brief signal cutoff between cable operators and broadcasters, began to get public notice. Since New Year’s Eve, there have been down-to-the-wire contract talks between Time Warner Cable and News Corp.’s Fox, Mediacom and Sinclair, Cablevision and Disney’s ABC -- subject of a brief cutoff during the Oscars award ceremony aired on that network -- and now Time Warner Cable and Disney. The latter two companies late Thursday said they struck a new deal. Their contract expired Wednesday night but carriage of ABC and Disney cable channels like ESPN had continued on Time Warner Cable as talks continued the next day.

The letters to Genachowski show a greater focus on retransmission on Capitol Hill in recent times, some broadcast and cable executives said. They disagreed on the reason for it. Some broadcast executives said the increased interest came as a result of cable operators’ efforts to attract more attention to the topic by filing a petition at the FCC, lobbying Congress and forming the American TV Alliance to get public and media attention. Cable executives contend the renewed focus is a result of TV stations seeking more cash compensation from subscription-video providers and from threatening to withhold carriage if those terms aren’t met. Actual signal cutoffs have been few, and FCC staffers monitored the negotiations between Time Warner Cable and Disney less actively than in the recent past on the premise a deal would likely be reached (CD Aug 30 p1).

"We have seen a significant increase in interest on the Hill, particularly in the last 18 months, and it continues to build,” said a spokesman for the TV alliance. “Dozens of members from both sides of the aisle have written letters to the FCC. They are clearly seeing that consumers are being impacted by broadcasters’ threats and actions and something must be done to protect TV viewers.” The NCTA declined to comment.

NAB believes “pay TV providers have no incentive to negotiate fairly if they think the FCC is going to insert itself into these disputes,” a spokesman for the broadcaster group said. “The evidence is overwhelmingly clear that the current retransmission consent law provides every incentive for each of the negotiating parties to reach an agreement.” Neither Congress nor the commission usually “get involved in commercial contract negotiations,” noted Northwest Broadcasting CEO Brian Brady, head of the Fox affiliates group and an NAB board member.

One of the 31 letters we reviewed asked the FCC to not change retransmission rules such as by imposing continued carriage of broadcast stations when they and pay-TV companies can’t reach a new deal as a complaint is pending. “I am very concerned by the potential harm that the so-called ’standstill provision’ coupled with the imposition of government arbitration is likely to cause,” Rep. Phil Gingrey, R-Ga., wrote Genachowski May 27. “Retransmission consent is an example of a negotiation in which both sides would be harmed if an agreement were not struck.” In a letter to colleagues, House Commerce Committee members Gene Green, D-Texas, and Marsha Blackburn, R-Tenn., said current rules work. Since that letter wasn’t sent to the FCC, it wasn’t counted in our total. Letters were obtained as a result of a Freedom of Information Act request we filed with the commission and from broadcast, cable and commission officials.

More typical of the letters were those that asked Genachowski to begin a rulemaking on retransmission rules and said small operators were being overcharged by broadcasters or asked the FCC to resolve impasses between Cablevision and ABC, that network and Time Warner Cable and broadcaster Sinclair and Mediacom, a cable operator with systems in the Midwest. Most letter writers represented states or districts where there was a signal cutoff or one was narrowly averted, said broadcast and cable executives who reviewed the letters at our request. Almost 67,000 households in Minnesota would have been affected by a Mediacom-Sinclair dispute, wrote Sen. Al Franken, a Democrat from that state. The concerns of small cable operators in Ohio should be taken into account by the FCC, Sen. Sherrod Brown, a Democrat from there, wrote Genachowski.

When NAB President Gordon Smith was a Republican senator from Oregon, he and colleagues were contacted by constituents whenever there was a problem in TV service, he said. “The truth is that retrans is working exactly the way that Congress designed it to work,” as are negotiations for new contracts, he said. “It’s just when there’s a high-profile one that breaks down and there is a cutoff in service that it then gets the attention” of consumers and members of Congress, he added. “Mess with the TV set of their constituent, and your switchboard will light up all day. And that’s what creates the pressure point politically. But then you say `okay, what cure are you proposing?’ and is the cure better than the disease, if it’s a disease at all?'"

"Lack of oversight over the retransmission consent system has allowed an increasing number of these disputes to occur,” such as the impasse between Cablevision and Disney earlier this year that affected New Yorkers, House Commerce Committee member Eliot Engel, a Democrat from there, wrote Genachowski in March. Genachowski responded to other letter writers that the commission had sought comment on the petition for rulemaking to change retransmission rules and that some have questioned whether current rules were outdated. “I continue to be concerned about retransmission consent negotiations that interrupt or threaten to interrupt broadcast television service to consumers who subscribe to a multichannel video programming distributor,” he wrote. A Media Bureau spokeswoman declined to comment for this story.

Current legislation gives the FCC “very limited authority” to intervene on the issue, Commissioner Robert McDowell said. “So if indeed many members of Congress are concerned about this area, they should pass legislation to give us more authority and give us a directive, a very clear directive, to act, in which case I will very faithfully attempt to carry out the mandate,” he added. “The statute says what the statute says, and if Congress doesn’t like the marketplace as it exists now, Congress has the ability to change that through legislation."

House Commerce Committee member Ed Markey and Senate Commerce member John Kerry, both Democrats from Massachusetts, didn’t represent potentially affected constituents but wrote to the FCC anyway. Regardless of sender, the wording of many letters was the same as or similar to that in other missives on retransmission sent by colleagues. That indicates the letters were sent at the behest of cable operators in their districts, broadcast executives said. “Yeah, we're being zealous advocates, but its because of what we're experiencing across the table from the broadcasters” in retrans negotiations, said President Matt Polka of the American Cable Association, among the petitioners. “We certainly have been very committed to the cause” of changing retransmission rules.

"The level of understanding and education about retransmission consent is higher than it has been and that will increase as more congressmen understand the issue when there are more disputes in their districts,” Polka said. “These things happen all over the place. And they are starting to happen in many smaller communities that don’t make The New York Times or The Wall Street Journal” which give national attention to the issue, he added. Polka expects more members to write the commission, to broadcasters’ dismay, he said: “The fact that there are 50 members now drives them crazy that there are that many members actually taking a stand on this” and “certainly their interest is most heightened there, when you actually have a dispute."

Hill interest on retransmission is “bigger than it has been in the past because the MSOs [multiple system operators] have made it a bigger issue,” said CEO Vincent Sadusky of Lin, with TV stations in 12 states. Among legislators, “the ones who had a vested interest in the issue, we've spoken with,” he said.

Retransmission disputes in bigger markets draw more media and hence legislative attention than those in smaller cities, said President Robert Gessner of Massillon Cable, with more than 30,000 video subscribers in Ohio and part of the retrans alliance. “In terms of the Time Warner/Disney matter, for good or ill, those larger entities just attract or command more public attention,” he said of Time Warner Cable. “That makes them seem more important to legislators and regulators, but the issues are the same in all markets. The impact on the viewers, cable systems and TV stations are the same. Of course, there is also the huge difference of the leverage a large MSO like Time Warner can exert."

Legislators in North and South Dakota, where Midcontinent Communications has most of its approximately 250,000 cable subscribers, are far more interested in broadband deployment, capacity and speeds than video issues in general or retransmission specifically, said Vice President Tom Simmons. “This particular issue has not risen to the front burner category for our congressional delegates and that’s really because we have not had the monumental battles as part of our retransmission negotiations,” he said: In the company’s history, “we have been able to reach retransmission [deals] with broadcasters with the exception of one in North Dakota.”