FCC Pressure Seen Having Little Impact On TWC Pricing of SportsNet LA
FCC Chairman Tom Wheeler pushing for a resolution in Time Warner Cable’s carriage price dispute likely won’t go very far in putting pressure on TWC and DirecTV and other pay-TV providers to have a successful binding arbitration, some observers said in interviews Wednesday. Wheeler said the FCC will monitor the dispute on pricing for carriage of SportsNet LA, and intervene as appropriate (CD July 30 p7). While the commission does not have jurisdiction over programming, the publicly stated concerns of the FCC and lawmakers put more eyes on the situation, said professionals in the sports media and media economics fields. Some observers said pressure to end the dispute would most likely come from each company’s interest in pending transactions before the FCC.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Having political pressure is helpful, but “you need two willing parties to engage,” said Chris Bevilacqua, a sports media consultant at Bevilacqua Helfant Ventures. “But it doesn’t appear that DirecTV is interested in engaging in binding arbitration,” he said. “It’s typically not a bad thing to have outside pressure, but these things always come down to private negotiation and the parties have to ultimately agree.” Time Warner Cable offered to enter into such arbitration.
The most the FCC can do is what it’s doing, said Andrew Zimbalist, economics professor at Smith College in Massachusetts. The FCC can ask for information and investigations, and “probably amp it up a little bit from where they are right now,” he said. Wheeler’s inquiry helps to highlight the issue for the public and Congress, he said. It’s a constructive step toward pushing a resolution, but it’s not a definitive step, he said. At the moment, the FCC is trying to move this along to arbitration, he added: “Maybe using the bully pulpit will facilitate that.” DirecTV and Time Warner Cable had no comment for this story.
Although the FCC lacks jurisdiction in the area of programming, Time Warner Cable could be under pressure to quickly reach an agreement because of its pending purchase by Comcast, said Zimbalist. The commission doesn’t have the power to tell companies what to do, “but it will weigh in on all public policies that can affect Time Warner Cable and Comcast,” he said, referring to the $66 billion deal. “Time Warner wants to be cooperative and collaborative if it can be."
The FCC will stay involved to make sure no unfair or deceptive business practices are uncovered or tried, said Mary Kelly, a media economics assistant professor at Villanova University. It’s these types of disputes “that may highlight concerns with the pending mergers of Comcast/TWC and AT&T/DirecTV, and the move to greater consolidation in the industry,” she emailed. Comcast/Time Warner Cable is the biggest leverage for the FCC, said Daniel Lazaroff, director of the Loyola Sports Law Institute at Loyola Marymount University in California. “The failure to resolve this could have some impact on its decision” on that transaction, he said. The companies don’t want the government involved and will likely settle the matter quickly, he said: “If DirecTV doesn’t like the idea of binding arbitration, it gives them an incentive to try to come up with a number and set of conditions” that both parties can live with.
Regardless of the authority the FCC has, it has the ability to put pressure on companies to get something done, said Lee Berke, president of LHB Sports, Entertainment and Media. “Everybody wants to be involved in saving baseball on television.” When these battles take place, Congress, FCC and other regulators tend to get involved at some point and “put pressure on everybody to get a deal done,” he said.
The FCC involvement could alarm sports channel owners, said Guggenheim Partners analyst Paul Gallant. At a minimum, FCC involvement could invite other cable or satellite operators to file complaints over similar demands by sports channels, “which could potentially limit those channels’ pricing power,” he said in a research note. The FCC has never acted on prior calls to require a sports tier, but with pay-TV prices a perennial issue, Wheeler’s actions “bear close watching for owners of sports channels,” he said.
American Cable Association put its support behind Wheeler’s role Wednesday in a news release (http://bit.ly/1xzoeiF). At Tvfreedom.org -- at odds with ACA, Time Warner Cable and other pay-TV companies on retransmission consent -- a spokesman said the FCC has no authority to step in on the Los Angeles programming matter. But it still has reasons to address it, from a consumer’s perspective, he said. The companies working out a deal through arbitration or some other means is probably in their best interest, he said. “If they're not able to fix the situation, and it sets a pattern going forward, then it’s something that regulators will be paying attention to more closely.”