Rockefeller Seeks Sweeping Changes for TV Market

"If you fail to fix this situation, we will fix it for you,” Rockefeller told executives from broadcasting and cable companies who testified at the hearing. “But when we do, we will seek to do more than referee your corporate money disputes,” he said. “We need new catalysts for quality news and entertainment programming. … We need slimmed down channel packages that better respect what we really want to watch. And we need to find ways to provide greater value for television viewers at a lower cost."

Kerry said that “our predilection is not to get involved” or “somehow manage the marketplace in ways that our inappropriate.” But “consumers keep getting crunched,” and “that’s when we come to the table. Without a better, more transparent process, more fights will happen, raising prices for consumers and crowding out independent programming, he said. Kerry isn’t committed “to any one alternative,” but to “protecting consumers and finding the best way to do that.” He believes the FCC can and should use its existing authority to address the problem. Kerry reminded witnesses later that broadcasters’ access to Americans is a “government-granted privilege."

Ensign agreed it’s time to revise retrans rules, but said he has concerns about putting the commission in the middle of carriage negotiations, as proposed by the Kerry bill. Ensign supports moving to a more “free-market” approach that puts consumers in control, he said. Rather than create additional regulation, Congress should “unpack some of the regulations we already have,” said outgoing Sen. George LeMieux, R-Fla. New rules could cause unintended new problems, he said. Retrans doesn’t seem as “devastating” a problem as other national issues Congress is dealing with, he said.

Kerry asked if shedding light on retrans negotiations would “not create a greater fairness in the bargain process?” Sen. Mark Pryor, D-Ark., said the “total lack of transparency” bothers him. He asked if there was “any good public policy reason” for the lack of sunshine. Cablevision Chief Operating Officer Tom Rutledge agreed transparency would help, but also wants the FCC to address problems like program tying. News Corp. President Chase Carey complained that broadcasters are losing “hundreds of millions of dollars,” as well as popular sports programming, to cable. Cable companies have much greater power than they used to, replied Kerry, “but that doesn’t necessarily license a discriminatory relationship or a completely unbalanced relationship” in which consumers don’t know what’s going on.

In their recent dispute, News Corp. gave Cablevision an excessive “take it or leave it” price, said Rutledge. Why some discussions go sour is “a question of degree -- how exploitative the request is,” he said. With competition from telcos and satellite providers, Cablevision is fighting for customers and “price matters,” he said. Carey said News Corp.’s price was a “small fraction” of what other, worse-rated cable networks are getting.

FCC Chairman Julius Genachowski deferred to Congress on the retrans issue, in an Oct. 29 letter to Kerry. Genachowski said the agency had limited tools on retrans (CD Nov 2 p1). Under the Kerry draft bill, TV signal transmission would continue unabated while the commission evaluated a dispute. It would give the FCC power to require arbitration and issue fines to companies in retransmission consent disputes.

Passing legislation on such a controversial subject won’t be easy, especially next year in a split Congress, MF Global analyst Paul Gallant wrote investors. Congress will also have to contend with broadcasters, an influential industry that opposes retrans legislation, he said. However, he added it’s “possible that additional blackouts would increase pressure on congressional opponents to support legislation in the name of consumer protection."

Kerry told us after the hearing he doesn’t know yet if he will introduce a retrans bill in the lame-duck session.