Retrans Rule Changes Unlikely to be Made Soon by Congress

That lack of general Hill attention on retransmission may soon change, when the distraction of the Nov. 2 elections ends and if Fox stations go dark on Dish Network, broadcast and cable officials said. Fox stations will go dark on Dish if the companies can’t agree to a new retrans pact when a deal expires at month’s end. The Senate Communications Subcommittee, which Kerry chairs, plans a hearing on the bill Nov. 17 at 2:30 p.m., a Senate committee aide said. Spokespeople for Cablevision, Dish and News Corp. had no comment on legislative strategy.

It will be tough to pass Kerry’s bill this year because time is short and politics are likely to be high in the lame duck, Senate and industry officials agreed. “Anything’s possible,” but “anything not thoroughly vetted by both sides has very little chance of squeaking through the lame duck,” a Senate staffer said. Lawmakers likely won’t stomach passing anything major other than a continuing resolution to keep the government running until Feb. 1, the staffer said.

Kerry’s true purpose may be to “keep the pressure on” and raise the profile of the issue of retrans, said an industry lobbyist. The forthcoming bill and next month’s hearing give advocates of reform a “perfect opportunity” to raise a ruckus on the Hill, said the lobbyist, who supports retrans rule changes. Lame-duck lobbying will likely be focused on Kerry’s subcommittee and the FCC, the person said. Kerry’s bill faces an uphill battle passing Congress this year, but it at least spells out to the commission what Kerry wants, said Stifel Nicolaus analyst David Kaut. It also sends a warning to industry that government is ready to step in to resolve the matter, he said.

A Dish-Fox dispute would bring more attention on the Hill to retrans, which could work in cable’s favor, said Vice President Thomas Larsen of Mediacom, among the operators seeking rule changes. “That Cablevision dispute combined with the fact that there is a potential Dish dispute on the heels of it is important to driving home the message that especially in New York, even switching providers may not protect you” since ex-Cablevision subscribers who signed up for Dish still wouldn’t be able to get Fox stations if they can’t agree to terms by the weekend, he said. “And that’s kind of the message we're trying to drive home on the Hill: Just because you switch providers doesn’t mean you're going to be protected."

"By blacking out 3 million viewers” during the National League Championship Series, “two Sundays of NFL games and a week plus of local news and weather, broadcasters are making a great case for reform on their own,” said a spokesman for the American Television Alliance, seeking changes in retrans rules. With Fox “threatening another blackout nightmare” in 25 more markets, it’s “difficult for anyone, including policymakers, to objectively look at what is happening and say that consumers are getting a fair shake,” he added. The group’s members include Cablevision, DirecTV, Dish Network, Time Warner Cable, USTelecom and Verizon.

Broadcasters are telling legislators and their aides that retrans continues to work and that the only two blackouts this year have involved Cablevision, said TV industry officials. Cablevision subscribers couldn’t view Disney’s WABC New York for about 20 hours earlier this year in the other retrans dispute. Broadcast lobbyists are telling congressional staffers that terrestrial carriage disputes haven’t involved pay-TV companies besides Cablevision, an industry official said.

The House members haven’t said whether they will introduce their own retransmission consent legislation. Democratic House Commerce Committee and Communications Subcommittee spokespeople didn’t respond to requests for comment. House Communications Subcommittee member G.K. Butterfield, D-N.C., opposed government intervention in Fox-Cablevision, in an Oct. 15 letter to FCC Chairman Julius Genachowski. “Government intervention in business-to-business negotiations of this nature could impact this and future retransmission consent negotiations,” Butterfield said. Current rules “have worked well for nearly two decades,” he added. Fox earlier this month asked some members of Congress to sign a similarly worded letter to Genachowski, industry lobbyists said.

Expected GOP gains in the election will make it even tougher to pass retrans legislation, analysts said. “The message of the upcoming midterm election is less federal intervention in the market,” Potomac Research analyst Paul Glenchur said. There would probably be “even more” of a “political outroar” on retrans now if members of Congress weren’t running for re-election, Larsen said. Dish remains “hopeful Fox’s blackout of 3 million Cablevision customers Oct. 15 will shed light on our own dispute with Fox” on regional sports networks that already aren’t being carried by the satellite company, a spokeswoman said.

"We don’t have a broken system here, we have a broken company here that seems to be involved in each of these disputes,” an NAB spokesman said of Cablevision. That company is “trying to use this sort of cynically as an opportunity for Congress to change the law or to get FCC intervention,” he added. An NCTA spokesman declined to comment.

Retrans is getting a lot of Hill attention, but it’s doubtful “there’s going to be a consensus to do anything in the lame-duck session,” said Glenchur. A Fox blackout on Dish “would broaden the geographic impact of the dispute” and “could help a legislative effort, but I don’t think it will be enough to produce something tangible,” he said. Fox is “hopeful that both sides can come to an agreement,” a spokesman said. Spokespeople for both companies said they're continuing to negotiate.