Exclusivity Rules to Be ‘Integral Part’ of Retrans Review, Wheeler Tells Lawmakers
FCC Chairman Tom Wheeler defended the idea of killing broadcast exclusivity rules in several letters to Republicans and Democrats on Capitol Hill. He conveyed no immediate intentions of doing so but outlined plans to address exclusivity rules as part of an agency proceeding on retransmission consent rules. He emphasized his objections to keeping the rules in August and circulated draft orders on the topic then (see 1508120051), an issue he never raised when addressing Hill leaders. NAB called Wheeler's responses a "dismissive rejection" and part of a "lone crusade against exclusivity."
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The FCC released Wheeler’s responses Tuesday. Senior lawmakers had urged the FCC earlier this year not to do away with the rules, citing concerns about their effect on industry stakeholders and broader copyright issues.
“An elimination of the exclusivity rules is unlikely to have an immediate effect on programmers, broadcasters, cable companies or consumers,” Wheeler told Sen. Chuck Schumer, D-N.Y., in a Nov. 10 letter. “This is because … current broadcast program contracts and network affiliation agreements normally contain their own exclusivity provisions prohibiting a program from being imported into a market if it is being shown on a local broadcast station. In these circumstances, retaining the exclusivity provisions may well be redundant and a federal intrusion, without cause, into the marketplace.”
The lawmakers weighing in on exclusivity rules were widely seen among industry lobbyists as especially influential. NAB had broadly circulated many of these lawmakers’ letters this fall. Schumer, perceived as often sympathetic to broadcasters, is the third-ranking Democrat in the Senate and widely expected to take over as Democratic leader following the retirement of current leader Harry Reid, D-Nev. Bipartisan leaders of both the Senate Commerce and Judiciary committees also urged Wheeler not to ax the rules, a joint letter that industry officials saw as originating from the office of Senate Judiciary Committee ranking member Patrick Leahy, D-Vt. (see 1509300056). Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, was the lead signature on the letter that resulted.
“Faith in the free market would suggest that government get out of the way, absent an indication of harm,” Wheeler said in the Nov. 10 response to Grassley, Leahy, Senate Commerce Committee Chairman John Thune, R-S.D., and Commerce Committee ranking member Bill Nelson, D-Fla. “Since the rules appear redundant to existing contractual provisions based on the record, their elimination would not be the trigger for such harm. However, the presence of the exclusivity rules prohibits the market from operating in a fair and efficient manner and aggravates the harm to consumers during retransmission consent disputes. Simply put, there is a possibility that the exclusivity rules protect broadcasters from the marketplace by substituting an anti-market government mandate and in the process contribute to high cable and DBS prices.”
Wheeler’s responses displayed similar language criticizing the exclusivity rules and outlining their broader role in the market. But he made no mention of any immediately forthcoming agency action that would actually kill the rules. Wheeler directly addressed the Satellite Television Extension and Localism Reauthorization Act, which Congress passed last year. That satellite TV reauthorization, now enacted into law, compelled the agency to open a proceeding on the totality of circumstances in retransmission consent negotiations.
“An integral part of any review of the retransmission consent regime is consideration of the Commission’s exclusivity rules,” Wheeler told Sen. Dianne Feinstein, D-Calif., ranking member of the Intelligence Committee, in another Nov. 10 letter. “Frequent press accounts have highlighted that the negotiations between broadcasters and cable operators over retransmission rights often result in program blackouts where cable consumers are denied the ability to see a particular channel until the dispute is resolved. The Commission’s exclusivity rules serve to exacerbate this problem for consumers by prohibiting the importation of distant signals, as well as strengthen the position of broadcasters in retransmission disputes, thereby constituting a distortion of free market processes.” Feinstein had written a standalone letter objecting to ending the rules.
Wheeler conveyed the same message to several members of the Congressional Black Caucus, who had written a letter led by Caucus Chairman G.K. Butterfield, D-N.C., in September protesting the possible end of the rules. “I appreciate your thoughtful input on this issue,” Wheeler said in that response. “I am sure it will continue to be discussed as we pursue Congress’s mandate on retransmission consent negotiations.”
“Chairman Wheeler’s dismissive rejection of the concerns raised by key congressional leaders over his proposal to eliminate broadcast exclusivity rules represents a shocking disregard for the institution that confirmed him," an NAB spokesman said Tuesday. "Exclusive programming rights allow TV stations to serve communities with quality news and entertainment, a point well understood by Chairmen Grassley and Thune, ranking members Leahy and Nelson, Senators Schumer and Feinstein, and six members of the Congressional Black Caucus. Unfortunately, their concerns have been ignored by an FCC Chairman who appears to be on a lone crusade against exclusivity."