NAB Tells FCC Retrans Regime Is Working

ACA says broadcasters are leveraging their muscle at the expense of smaller cable operators

By John Eggerton -- Broadcasting & Cable, 2/12/2008 6:17:00 PM

The National Association of Broadcasters (NAB) told the FCC Wednesday that it should not expand its inquiry into progam tying and bundling into a "wide ranging attack on the retransmission consent process," and that broadcaster negotiations for carriage of channels rather than cash is the free market at work.

That advice came in comments filed in the FCC's inquiry into the impact of program bundling/tying on cable prices and choice.

NAB said that broadcasters do not engage in "take it or leave it" bargaining tactics in retransmission consent negotiations--as the Amreican Cable Association alleges--and that broadcasters do not have unfair leverage, calling it "counterfactual" to suggest that the marketplace has tilted in favor of broadcasters.

NAB also dismissed complaints that broadcasters were responsible for straining the capacity of cable systems or boosting cable rates.

"Congress clearly established retransmission consent to create a marketplace in which broadcasters could negotiate for various forms of compensation for MVPDs’ use of valuable broadcast signals," said NAB, "including the carriage of additional programming services. It is particularly ironic that some MVPDs now complain so vociferously about this particular form of compensation, as broadcasters began negotiating for carriage of additional program services because cable operators steadfastly refused to pay cash for their retransmission and resale of local broadcast signals."

NAB also said that after thousands of retransmission negotiations since the practice began in 1993, on a dozen complaints had been filed for failure to negotiate in good faith, and no braodcaster has ever been cited by the FCC for having failed to do so.

NAB said that broadcasters don't have the market power to engage in anticompetive tying, and that the issue really comes down to the money. NAB cites Hearst-Agyle comments arguing that while some TV stations are 20 times more popular than some cable channels, they ask only "a fraction" of what operators "willingly pay" for "far less popular cable programming."

"There is simply no credibility to the complaints of [the American Cable Association (ACA)] and others about market-based prices when all they really want is for the Commission to favor certain competitors, rather than the principles of competition," NAB said.

In its filing, ACA told the FCC that, at least in negotiations with smaller operators, the marketplace is "rife" with "take it or leave it" negotiations and price discrimination. "Small and medium-sized cable companies are facing persubscriber fees many times higher than what larger MVPDs pay for the exact same broadcast stations," says ACA.

ACA wants the FCC to require programmers to offer individual channels for sale to operators, which would essentially be a wholesale version of the consumer a la carte model FCC Chairman Kevin Martin favors. ACA also wants the FCC to require continued carriage of channels during the program access complaint process.