Local Choice Is ‘Future,’ Rockefeller Promises, Expecting Thune to Lead Charge

"A total practicality,” Rockefeller, who first circulated the broadcast a la carte proposal with ranking member John Thune, R-S.D., told us at the Capitol Wednesday of the decision to remove Local Choice. “If there’s anything that’s certain in life, it’s that Local Choice is going to be the future.” He has never talked to “anyone except a broadcaster” who had a problem with it, he said, pointing to a short work period this month with two weeks left.

"But we have to pass STELA, reauthorize that,” Rockefeller said. “If we include [Local Choice], it would greatly complicate that process. … It’s not something we could pass anyway this year. We could not do it. It’s an exercise in both confidence about the future and practicality about the present.” Local Choice “probably would prevent us from getting it reauthorized, and I don’t want to be that person,” Rockefeller said.

Thune had expressed confidence in Local Choice, speaking to reporters at the Capitol midday Tuesday, but Commerce confirmed it would drop Local Choice from its Satellite Television Access and Viewer Rights Act draft within hours. Rockefeller and Thune circulated a Local Choice outline last month and unveiled legislative language in the reauthorization draft Friday (CD Sept 8 p1). “Because it is a big and bold idea, Local Choice deserves more discussion and a full consideration by policymakers, and the Committee may not have time to include it as part of STAVRA,” said a Commerce spokesperson Tuesday. “Rockefeller and Thune are focused on passing STAVRA next week, and continuing to work with their colleagues on Local Choice.” The STAVRA markup is expected Sept. 17.

Thune must carry the Local Choice torch next year, said Rockefeller, who’s retiring after this term. “Yeah, I think he’s intrigued by it,” Rockefeller said, saying they both strongly back Local Choice and Thune’s enthusiasm. “He and I have the same kinds of instincts.” He pointed to the states they come from.

Rockefeller must have whipped his members and determined he lacked support, said a pay-TV industry lobbyist. The timing, considered a broadcast industry lobbyist, involved Commerce staffers reserving judgment when Local Choice was in outline phase, awaiting legislative text and then truly objecting after they saw the language. But the removal of Local Choice from STAVRA should not reflect on Commerce members’ fundamental dislike for the proposal -- it was more about process and the time required, said the pay-TV industry lobbyist.

Thune to Lead Charge?

Thune was the lawmaker driving Local Choice, said industry lobbyists. They expect it to remain a top item next year, especially if Thune becomes Commerce chairman if Republicans win Senate control in November. In July, pay-TV industry lobbyists assumed STELA reauthorization was the one big shot at getting Congress to overhaul video laws until the next reauthorization in five years, but Local Choice changed the conversation, said the pay-TV industry lobbyist. If Thune chairs Commerce next year, expect Local Choice “to resurface as part of a communications legislative effort in 2015,” Guggenheim Partners analyst Paul Gallant emailed investors. “Passing communications legislation is always an uphill battle, but given the House’s interest in updating the Telecom Act -- along with Senator Thune’s support -- we think 2015-16 could become a realistic window for targeted communications legislation to move through Congress.” The pay-TV lobbyist called Thune and his staff “true believers” in Local Choice.

"It’s flat-out going to happen,” Rockefeller said of Local Choice’s long-term prospects. “You cannot say to the American people, who are getting 300 channels and 500 channels, of which they watch eight but have to pay for all, that what our bill does, which is decide what you want to watch, you let us know that, and you let companies know that, and that’s what you pay for, nothing more,” that the bill won’t become law, he said.

NAB thanked Commerce “for recognizing the unintended negative consequences this measure would have had on localism, broadcasters and our millions of viewers,” said CEO Gordon Smith in a statement. TVFreedom, a broadcaster coalition including NAB, also celebrated Local Choice’s removal. It’s “encouraged” if not necessarily satisfied with STAVRA, a spokesman said, but “will continue to fight to preserve the lifeline basic service tier provision in any legislation that moves forward this year.” Wells Fargo analyst Marci Ryvicker emailed investors that this change was not surprising and predicted “an overall positive to some minor overhang in the broadcast stocks.”

But pay-TV industry stakeholders hope to advance Local Choice. “Local Choice is a powerful, bipartisan idea rooted in free-market principles that would create a level playing field and discipline the market in ways that benefit the public,” said American Cable Association President Matt Polka in a statement. “This is a concept whose time will come.”

The American Television Alliance (ATVA), a coalition including ACA, DirecTV, Dish Network, Public Knowledge, Time Warner Cable, Verizon and USTelecom, has aggressively advertised in favor of Local Choice in recent weeks, but the broadcast lobbyist warned ATVA’s role could diminish next year in a possible Thune push. Comcast is attempting to buy Time Warner Cable and AT&T is trying to buy DirecTV -- two members that fund ATVA -- and the new owners may not be as keen to promote Local Choice, the broadcast lobbyist said. “As much as the broadcasters would love for us to go away,” ATVA is “as strong as ever” and has a “broad and diverse membership base that includes companies from multiple platforms and consumer groups to independent programmers,” ATVA’s spokesman told us in response. The pay-TV lobbyist thought it was premature to assess ATVA’s role next year but pointed out that the alliance includes many committed members.

"The technical and substantive issues were real but not insurmountable,” Public Knowledge Senior Staff Attorney John Bergmayer told us of Local Choice. “Proponents of Local Choice have to socialize the idea more, but I think the support it already has is impressive. That said, they made the call that it’s not worth holding up STELA while that happens. It’s good that it was included in the first draft of the bill. … The debate on this idea is just beginning."

Broadcasters’ STAVRA Lobbying

Broadcasters will continue lobbying against other STAVRA provisions. It still contains language that would limit joint retrans agreements, which some broadcast lobbyists have always told us was the real concern -- they never thought Local Choice would get off the ground. NAB is “seriously concerned with a number of provisions” in STAVRA and wants to “ensure our viewers’ continued access to lifeline local television,” Smith said. TiVo has also outlined concerns with the set-top box integration ban language of STAVRA.

STAVRA will face a hold on the Senate floor if broadcasters’ top-level concerns remain on the draft, said the broadcast lobbyist. Top concerns include STAVRA’s language on broadcaster sharing agreements, the basic tier and the provision directing the FCC to consider a possible prohibition on online blocking, the lobbyist said. A lesser broadcaster concern is the language modifying designated market areas, the lobbyist added. The pay-TV industry lobbyist suspects STAVRA will advance as is, now that Local Choice is gone, pointing to what he judged the provisions’ fairness and likely bipartisan committee backing.

Rockefeller believes STAVRA can clear Senate Commerce and advance as-is without Local Choice attached, he told us. “Yeah, I know [broadcasters are unhappy], but the unhappier K Street is, the happier I am,” he said. “It is inevitable, and I think they know it, which makes them very unhappy.”