Broadcasters, Opponents Find No Common Ground in Totality of Circumstances Review

The growth in blackouts -- close to 200 so far this year, vs. eight five years ago -- and the 22,400 percent increase in retrans fees since 2005 is proof the existing good faith rules are insufficient, ATVA said. "The broadcasters increasingly fail to live up to the public interest status they've claimed for themselves," Michael Nilsson of Harris Wiltshire, ATVA's outside counsel, told reporters Tuesday. ATVA pushed for two broad policy changes and seven specific rule changes. The policy changes would be that the FCC consider public interest in good-faith determinations instead of just looking at the conduct of both parties, and that it use labor law precedent to a greater extent. The seven acts it said should constitute per se violations of good faith or that presumptively violate the totality of circumstances test include: online blocking, forced bundling, blackouts around marquee events, ceding negotiation rights to a third party and prohibiting importation of a distant signal in case of a blackout. Those seven are widely seen by the pay-TV universe as "must have" changes to the good-faith regime (see 1509010029). The NPRM sought feedback on 15 practices (see 1509020061).

That NPRM "proposes a number of changes to ... favor pay TV operators while virtually ignoring [the] new video world order," NAB said, urging the FCC to maintain the rules status quo. The growth of retrans fees reflects "the retransmission consent market has finally begun to work" after years of cable operators "simply refus[ing] to pay any monetary compensation to broadcasters in return for reselling their signals to customers," it said. NAB also disagreed vehemently about the state of the video market. "Pay TV providers now have an unprecedented number of options for programming content beyond broadcast channels to offer their subscribers," it said, saying large multichannel video programming distributors "possess significant leverage over most broadcasters" in retrans talks. In a statement Tuesday, TV Freedom said it's "simply unthinkable that the FCC would now reward this brazen anti-consumer behavior by penalizing the pay TV cabal’s one source of real competition: local television stations."

If the proposals in the notice were adopted, NAB said, there's no proof it would mean fewer blackouts from failed negotiations. "Pay TV operators' goal in this proceeding is to increase their leverage in retransmission consent negotiations and pay broadcasters less, not to benefit consumers," it said. Instead, there might perversely be more impasses since broadcasters will have fewer options available during negotiations, NAB said.

Each time the FCC has looked at the good-faith test in the past, it "rightly concluded that the totality of the circumstances test is best left as a general, flexible standard" and doesn't need revision, especially since MVPD blackouts are rare, said News Press & Gazette Co., which owns TV stations in seven states.

Michael Calabrese, director of the Wireless Future Project at the New America Foundation, said it and Public Knowledge in a joint filing were going further than ATVA, urging the FCC to require interim carriage and final offer arbitration when necessary in case of an impasse. "There should never again be a broadcast channel blackout for consumers," he told reporters during an ATVA news conference.

Chairman Tom Wheeler has said he plans to bring up killing broadcast exclusivity rules as part of the FCC proceeding on retrans rules (see 1511240061). Elimination of the syndicated exclusivity and network nonduplication rules "at the margins is helpful" but wouldn't address the many retrans consent issues, Jeffrey Blum, Dish Network deputy general counsel, told reporters during the ATVA news conference.