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Cable, Satellite Ops Seek Congressional Review of Retrans

Top multichannel providers say there is current imbalance in favor of broadcasters 3/10/2010 10:44:03 AM Eastern

Looks like cable is opening a two-front war on the retrans
system as currently constituted.

According to a copy of a letter being sent to the House and
Senate Commerce Committees from Time Warner, Cablevision, Dish, DirecTV,
Cablevision, the American Cable Association and others, cable and satellite
operators want the committees to take a new look at the Cable Act and
retransmission consent in light of what they say is the current imbalance in
favor of broadcasters and a "broken system" in need of repair.

Citing the retrans fights between Cablevision and ABC and
the loss of WABC programming "temporarily" to 3 million consumers
(something on the order of 18.5 hours), they said that the balance of power
that existed in 1992 has shifted and it is consumers who are caught in the
crosshairs. 

The companies, which are mostly the same ones signing onto a
petition asking the FCC to "fix" retrans as well, say that there is a
difference between asking the government to step into negotiations for cable
channels and TV stations.  That
difference, they say, is "the unique government benefits and privileges
conferred on broadcasters that preclude the normal give and take of private
contractual negotiations."

They say those include guaranteed basic tier carriage, exclusivity
and blackout rules as well as must-carry.

Although, stations that elect must-carry are not negotiating
retrans. The operators suggest must-carry protection could be a government incubator
for future negotiators. "Broadcasters alone have been the beneficiaries of
mandatory carriage rights - must carry - that have allowed them over decades to
grow their audiences through the free use of facilities built by video
providers while at the same time having been granted the freedom to dictate the
terms on which they will allow the retransmission of the same programming that
is available over the air and increasingly over the Internet for free,"
said the companies.

Also signing on to the letter were Charter, Insight,
Mediacom, Suddenlink, Bright House, and OPASTCO, the small telco lobby.

The letter is reprinted in full below:

 

Dear Chairmen and Ranking Members:

The undersigned serve, or represent companies that serve, over 65 million
video consumers. We write to you today to bring to your attention to, and to
seek your assistance in addressing, the harm that is being caused to those
consumers as a result of increasingly contentious negotiations over the terms
that broadcasters are demanding from multichannel video programming
distributors for retransmission consent. The most recent retransmission consent
dispute, between ABC and Cablevision, resulted in over three million consumers
losing access temporarily to ABC programming. That dispute is just the latest
example of how the retransmission consent regime is broken and in need of
repair, and comes immediately in the wake of similar highly publicized disputes
that occurred at the turn of the year. During the impasse between ABC and
Cablevision, over 70 state legislators and a number of Members of Congress
raised concerns about the impact retransmission consent-related service
disruptions and threats of such disruptions are having on consumers.

Congress gave broadcasters retransmission consent rights in 1992 as part of
a regulatory scheme that was intended to ensure the broadest availability of
broadcast programming to the public. The video marketplace is dramatically
different today on the distribution side with MVPDs competing with one another
in nearly every community nationwide. These changes in the market are allowing
broadcasters to wield the very government protections meant to preserve access
to the public in order to threaten to deny - or actually deny - their signals
to consumers as a tactic to increase their profits.

Not surprisingly, the broadcasters would prefer that Congress and the
Federal Communications Commission stay on the sidelines and leave consumers
helpless in the face of such brinkmanship tactics. But that argument - and the
related argument that negotiations for the carriage of broadcast stations
should be treated no differently than negotiations for non-broadcast
programming services like the NFL Network or the Discovery Channel - ignores
the unique government benefits and privileges conferred on broadcasters that
preclude the normal give and take of private contractual negotiations.

As a result of these government benefits, broadcasters alone enjoy channel
location and tier placement guarantees that maximize their access to viewers,
and broadcasters alone are guaranteed undue leverage in carriage negotiations
by virtue of a detailed set of program exclusivity and blackout rules.
Additionally, broadcasters alone have been the beneficiaries of mandatory
carriage rights - must carry - that have allowed them over decades to grow
their

audiences through the free use of facilities built by video providers while
at the same time having been granted the freedom to dictate the terms on which
they will allow the retransmission of the same programming that is available
over the air and increasingly over the Internet for free.

Congress was aware of the fact that retransmission consent could, if
abused, lead to higher prices for consumers or service interruptions. But
Congress believed that these risks could and would be managed by the Federal
Communications Commission. Unfortunately, as recent events confirm, the balance
of power that existed in 1992 has shifted and it is consumers who are caught in
the crosshairs. It is time to consider how to restore balance to the unique
retransmission consent process and take steps to protect consumers against
either seeing access to broadcast signals priced out of their reach or having
that access denied to them.

We respectfully urge you and other Members of Congress to carefully examine
the circumstances that have resulted in the current imbalance in retransmission
consent negotiations. We stand ready to assist you in whatever way possible in
taking the necessary steps to ensure that, in the future, retransmission
consent benefits those Congress intended for it to serve: the American people.

Signatories to the letter pointed out that they represented
65 million viewers. They also included seven of the top 10 multichannel video
providers plus some 900 smaller cable providers represented by the ACA.

"The unintended consequences of pay TV providers
attacking the free-market-based retransmission consent model could be the
demise of local programming," said National Association of Broadcasters
spokesman Dennis Wharton. "Modest retransmission consent revenues help
local TV stations fund news operations, community service and life-saving
weather information that viewers across America rely on every day.
Vertically-integrated cable operators routinely compensate each other for their
own less-watched cable-owned networks while raking in profit increases five
times the amount of their programming costs. To see billion-dollar pay TV
companies asking for government intervention to protect their exorbitant
profits is just plain wrong."

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