FCC Retrans Changes Seen as Unlikely Soon Unless More Disputes Arise
The FCC seems unlikely to soon change retransmission consent rules as it considers a request for rulemaking by many multichannel video programming distributors, unless a contractual dispute between a TV station and an MVPD leads to an outage for subscribers, an analyst and an FCC aide suggested Wednesday. No executives at a USTelecom event on retransmission predicted quick commission action on the petition by 14 cable, satellite, telco-TV and nonprofit entities. That could change if there’s another instance in which MVPD customers can’t watch broadcasts because of a contractual dispute, as with the removal for less than a day of Disney’s WABC-TV New York from Cablevision’s lineup this year (CD March 9 p2), some said.
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"There’s not a lot of appetite at the FCC to intervene in some sort of massive way,” or “critical mass” for legislation on Capitol Hill, said analyst David Kaut of Stifel Nicolaus. There’s “a rough balance in the policy arena,” in which no parties -- broadcasters that don’t want retransmission changes, or MVPDs and others that do -- are prevailing, he said. The FCC seems to think that “the raised eyebrow, the scrutiny” that the agency provides is enough, Kaut said. Pulling a signal is “kind of like nuclear weapons,” he said. “You have to be careful how you use it. There can be repercussions” for broadcasters.” Kaut added, “The more disruptions there are, the more scrutiny there’s going to be,” but the commission seems reluctant to intervene.
"The raised eyebrow is the current procedure,” said Brad Gillen, an aide to Commissioner Meredith Baker who noted he’s not privy to how Chairman Julius Genachowski’s office or Media Bureau Chief Bill Lake wants to proceed. Among those seeking rule changes, “there isn’t a lot of agreement right now on actually what you want us to do,” though the issue “has by far been the most popular” in the media area in his year on the eighth floor, Gillen said. A question is whether “the chairman’s clear interest in this and Bill Lake’s clear interest in this” is enough to get the sides to act in good faith, and if they don’t whether the agency will seek further comment.
"It’s in no one’s interest for consumers to be caught in the middle” when impasses occur, said Senior Vice President Erin Dozier of the NAB. “What usually happens is, folks get down to the wire and they extend” contracts if they don’t have an agreement, she said of pay-TV companies and broadcasters. “There are strong incentives on both sides to stay at the table and get the deals done.”
Time Warner Cable, the lead FCC petitioner, has “no issue with paying cash to broadcasters now,” said Vice President Rachel Welch. “They have high-value programming. They should be compensated.” Yet broadcasters also put their shows online without charge, devaluing them, she said. Seeking new retransmission rules isn’t akin to the net neutrality controversy, in which ISPs including MVPDs don’t want the FCC to regulate the Internet, executives said. Because the government already regulates retransmission, there isn’t “so much a market failure” as a “regulatory failure,” Welch said. “This isn’t a true market,” unlike in broadband, in which “Congress and the FCC have basically stayed out of the way because they want it to be a true market,” she added.
AT&T doesn’t “see a market failure in net neutrality, but we see one looming” on retransmission, said Vice President Hank Hultquist. The telco doesn’t see increases in what broadcasters seek to be paid for carriage “stopping,” he said. “We see a trend where it will continue to increase. It’s not just the retransmission consent rules, but how they work with other things,” like network nonduplication and syndicated exclusivity that lead to higher costs, Hultquist said. Retransmission is “fair, works and benefits consumers as it is currently constructed,” NAB’s Dozier said.
All MVPDs, not just cable operators, should have to tell subscribers of channel lineup changes in advance, Dozier said. Broadcast lawyer John Hane of Pillsbury Winthrop believes that “subscribers deserve notice,” he said. “If they get notice they have the opportunity to switch” providers, he said. “Let the consumers make their calls.” Cable operators already must give 30 days heads’ up, Welch noted. “Adding to that, I think it’s worth exploring, and I think it would be great if the FCC teed it up in a notice of proposed rulemaking,” she said. With consumers buying broadband, phone and video service in bundled packages, changing providers because of a retransmission dispute “may alter your choice for broadband” or phone provider, too, she said. The FCC hasn’t “gotten into the weeds into what a notice would look like,” Gillen said. “I don’t think there isn’t common ground out there potentially.”