Senate Proposal to End TV Blackouts Expected to Face Fierce Broadcaster Opposition

Its goal is to end broadcast TV blackouts. Rockefeller and Thune haven’t released any legislative text through official channels, but a senior committee aide confirmed to us their involvement and a two-page fact sheet details how it would work. “Local Choice would empower consumers by allowing them to choose the commercial broadcast content that they want to pay for as part of their pay-TV subscription, while ensuring that local broadcasters continue to receive full market value for their content,” the senior aide said. The two lawmakers want Local Choice “seriously considered” as part of STELA reauthorization, according to the aide, and both Rockefeller and Thune have said Commerce will take up STELA legislation in September. Top Commerce staff held separate Friday morning briefings for committee staff, NAB and multichannel video programming distributors, one industry official told us.

"Local broadcast TV stations retain the same absolute right to demand to be delivered to all pay-TV subscribers for free, or as they do now, they can seek compensation for retransmission of their programming by an MVPD [multichannel video programming distributor] ... to their subscribers,” a Local Choice fact sheet said. “A local broadcast TV station sets a price that an MVPD subscriber must pay to receive its channel from his or her MVPD. The broadcaster may change its price annually, and the price is the same for all MVPD subscribers in the local broadcaster’s market.”

Polka ‘Encouraged'

"Blackouts -- that’s the key,” American Cable Association President Matt Polka told us, saying those have long frustrated both ACA members and lawmakers. “I give [committee staff] high marks.” Retransmission consent “has become a nightmare for their customers and operators,” he said of ACA members. “They hate it.” Local Choice is “a real shot in the arm” inspiring members about what can happen in Washington, Polka said, saying he’s “encouraged” about the proposal’s prospects due to the power of Rockefeller and Thune. He expects major broadcaster pushback but wants Local Choice included in STELA.

Broadcasters are expected to significantly lobby against Local Choice, which would make it supremely difficult to include as part of STELA reauthorization, a different industry official told us. Expect better prospects if Republicans take control of the Senate after the November midterm elections, since Thune may well chair Commerce then, the official said. Guggenheim Partners analyst Paul Gallant predicted those better odds in a possible Republican Senate, too (CD Aug 12 p9). NAB said it opposes attaching Local Choice to STELA, and TVFreedom, a coalition of broadcast interests including NAB, attacked the proposal overall, accusing it of picking on broadcasters rather than focusing on pay-TV industry problems.

"I was somewhat astounded when I read NAB’s statement,” Polka remarked. “It’s a pretty crass position not to engage in the issue.” He slammed NAB for not addressing the proposal’s “legitimate” merits, simply suggesting Local Choice not be included on STELA, and Polka also criticized it for outsourcing the real attacks to the “NAB-funded front group” of TVFreedom. The broadcaster message, as Polka saw it, was, “Forget about the substance. Let’s just kill this thing.” Polka expects tremendous lobbying on NAB’s behalf against Local Choice. NAB declined comment on Polka’s remarks.

Some pay-TV industry stakeholders seem receptive. Dish lauded Rockefeller and Thune for trying to update the “decades-old retransmission consent regime in a manner that uses free-market concepts to put an end to harmful broadcast television blackouts,” it said in a statement Tuesday. The American Television Alliance (ATVA), which has ACA, Dish, DirecTV, Public Knowledge and USTelecom among its members, praised Local Choice. A DirecTV spokesman directed us to the ATVA praise when asked. NCTA declined comment.

Consider the “deafening silence” of NCTA, one broadcast industry official told us. The big cable companies are worried about getting dragged into a discussion of a la carte cable, the official said -- that’s where the real call for a la carte is, in those hundreds of channels many consumers don’t care about, not in the few broadcast channels. The official said the proposal is “tremendously complicated” and a paradigm shift that really should not be considered through STELA reauthorization, which Congress must do before the end of the year to avoid its expiration. The broadcast official also criticized Polka’s slamming of TVFreedom and pointed out that ATVA’s funding comes from top pay-TV companies. The official thinks it’s doubtful Local Choice will advance this year but believes it’s now very much in the conversation.

Others Reviewing, Unsure

"The basic idea makes sense, though there has to be a way to make sure that viewers actually can get savings -- in other words, if there are new charges direct from broadcasters on a bill, there needs to be a corresponding offset from the rest of the bill,” Public Knowledge Senior Staff Attorney John Bergmayer told us. “If we're going to have a public policy designed to control programming costs, viewers and not cable companies need to be the beneficiaries.”

Free Press is “reviewing this new bill,” Policy Director Matt Wood said. It has backed the Television Consumer Freedom Act in the Senate and the Video Choice Act in the House, Wood added: “We always will support measures that actually give video subscribers more information about what they're buying, and more power to choose the channels they want.”

Local Choice may simply be “August reverie,” said Center for Boundless Innovation in Technology Executive Director Fred Campbell in a blog post (http://bit.ly/1sOl6OL), expressing surprise at Thune’s purported involvement. He said Local Choice would apparently “do nothing” about the dispute between Time Warner Cable and DirecTV over the Los Angeles Dodgers games. “Would Senator Thune introduce a bill to end blackouts that leaves the biggest blackout of the year completely untouched?” Campbell said. “Unlikely. To the extent Senator Thune believes that mandating à la carte is the right solution for blackouts, he would presumably apply it to all video programming channels -- broadcast, cable, satellite, and online.” He compared the retrans overhaul advocates to advocates for strong net neutrality rules, partly amounting to his surprise at Thune’s involvement: “ATVA’s campaign to prohibit market negotiations between pay-TV operators and broadcasters represents a page right out of the net neutrality playbook,” Campbell remarked.

The proposal could raise awareness “on how broadcasters are different -- their signals are already available for free, so it makes no sense that viewers are forced to pay for them just to get basic cable channels that they can’t get with an antenna,” Bergmayer said. The proposal may have bearing on Aereo, which is in operational limbo since a Supreme Court decision ruled it was illegal, “if it is structured so that online providers and not just traditional MVPDs can participate,” he said. He suspects it’s too early to say on Local Choice’s prospects.

ACA members do have questions about “how do I do this technically” if Local Choice were to be implemented, Polka said, pointing to questions of how it would affect billing and other issues. But they see it as worthwhile, said Polka. Retrans now is “not what it was intended,” which is why the House and Senate have now addressed the rules in some form amid the STELA talks, Polka said. It’s “time to fix it,” he said. ACA members will ask senators to stay engaged, he said. (jhendel@warren-news.com)