NAB’s Smith to Attack Pay-TV STELA Proposals

Any proposal that “would mandate standstills or importation of distant signals in the event of retransmission consent impasses are just naked attempts to distort market-based retransmission consent negotiations in favor of cable and satellite,” Smith plans to say. A former Republican senator from Oregon, Smith calls the current retransmission consent regime “fair,” citing broadcaster value. He also insists that broadcast stations must remain on cable operators’ basic tier. Broadcasters also have “concerns” with restructuring designated market areas, he will add. Smith intends to lament the FCC’s Monday vote on joint sales agreements as provoking “serious concerns” from broadcasters and say the agency has hurt localism. “I am so disheartened that the FCC failed to acknowledge the enormous benefits to viewers and local communities that can result from these agreements,” he will say.

"Inviting the FCC to order interim carriage of a broadcast station during a dispute would assure disputes would never be resolved,” Smith plans to testify. “Such a change would undercut the only leverage a broadcast station has to secure an agreement. Moreover, allowing pay-TV companies to import an out of market broadcast signal during a dispute -- with news, weather and advertising irrelevant to those viewers -- would undermine the localism Congress specifically sought to promote. It also provides a back door for MVPDs [multichannel video programming distributors] to avoid negotiating a fair rate for broadcast programming in the marketplace.”

NCTA CEO Michael Powell, however, tells lawmakers in his prepared testimony that these add-ons are wise and necessary. “We support codifying the FCC’s effort to prohibit broadcasters that are not commonly owned from engaging in joint negotiations with cable operators and other MVPDs for the price, terms and conditions of their retransmission consent,” Powell says. He slams the “unfair” and “duplicative” requirement that cable operators carry broadcast stations on the basic tier. STELA should include a requirement that parties negotiate retrans in good faith as well as repeal of the set-top box integration ban rule, he will say. Powell sees the Monday FCC vote on joint sales agreements as justified and Congress should “complement and extend FCC efforts,” he will say.

STELA reauthorization is an “opportunity to step back and examine broader issues,” DirecTV Executive Vice President Mike Palkovic plans to testify, a view at odds with broadcasters who insist reauthorization should be narrow. Broadcasters have argued that broader video marketplace revamp issues should be addressed as part of a Communications Act overhaul. The battle between broadcasters and the pay-TV industry has intensified in recent months, with aggressive campaigns from front groups TVFreedom and the American Television Alliance, respectively. DirecTV, echoing Dish’s testimony before the Senate Judiciary Committee last week (CD March 27 p3), wants STELA to tackle retrans blackouts.

"The most basic form of blackout relief would be to require broadcasters not to black out their signals,” Palkovic plans to testify. “Under such a ’standstill’ provision, signals would remain up while the parties negotiate, with the ultimate agreement applying retroactively so that no party benefits from delay. If parties are unable to reach agreement after some amount of time, they could submit their best-and-final offers to baseball-style arbitration.” In baseball arbitrations a player and a club submit their salary figures to an arbitrator who selects one figure or the other, not a figure in between.

Free Press backs using STELA reauthorization to address the retrans good faith negotiating provision, Policy Director Matt Wood plans to testify. In his prepared testimony he urges Congress to allow the FCC to continue its retrans consent and media ownership rule changes. He praises several pieces of legislation -- the Video CHOICE (Video Consumers Have Options in Choosing Entertainment) Act in the House and in the Senate, the Television Consumer Freedom Act as well as the video bill of Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., known as the Consumer Choice in Online Video Act. Lobbyists have widely anticipated Rockefeller’s online video distributor legislation will take center stage at his STELA hearing. Wood says Congress likely should not have to address “joint negotiating tactics” as long as the FCC steps up. But “Congress must address the real culprit for rising retransmission fees and myriad other failures in the video marketplace: the traditional cable business model, which too often centers around how to divide the spoils from captive customers rather than how to improve consumers’ choices and lower their prices in the first place,” Wood says.

NCTA and TiVo’s fight over the set-top box integration ban will also continue in the Senate after months in the House. Powell will ask the Senate Communications Subcommittee that STELA include repeal of the set-top box integration ban rule. On the integration ban, Powell backs the language present in the House STELA draft, pulled from a bill introduced by House Communications Subcommittee Vice Chairman Bob Latta, R-Ohio, last fall. But lawmakers must “resist including any provisions in the STELA reauthorization bill that would undermine video device competition,” TiVo CEO Tom Rogers plans to testify, lambasting the Latta language and citing opposition to the House STELA draft for this reason. Rogers’s written testimony revolves entirely around this provision, which is “extraneous” to STELA’s purpose and undermines “consumer choice and competition,” he says. “Congress needs to solve for the policy objective rather than undermining the existing policy in the name of lifting an industry burden that applies equally to retail devices and from which TiVo also wants to move on to a successor standard.”

Also set to testify Tuesday is FCC Media Bureau Chief Bill Lake. The hearing will take place at 2:30 p.m. in 253 Russell. The committee Republicans’ memo for the hearing mentioned both the House STELA draft awaiting action by the full House Commerce Committee as well as Monday’s FCC vote on joint sales agreements as items worth watching. STELA will expire by the end of the year unless Congress reauthorizes it, and both the Commerce and Judiciary committees in both chambers have jurisdiction.