FCC Rules Won’tRemake Retrans

Draft proposal vote said to avoid major dispute shifts

Why This Matters

Retrans Q's in Search of A's

The National Association of Broadcasters sent a letter Feb. 3 to the FCC posing numerous questions it thinks need to be answered, including such hot-button issues as early termination fees and cable rates. Here is an abbreviated summary of the questions:

1. What is the impact of early termination fees and/or other MVPD [multichannel video programming distributor] policies on consumers’ option to terminate service so as to watch television over-the-air and/or change MVPD service providers in the event of a retransmission consent carriage dispute?

2. MVPDs seeking to change the retransmission consent regime have argued that changes are needed to protect consumers from rate increases. Are there other modifications to our rules that would help control consumer rates?

3. How does MVPD market share at the local, regional and/or national levels impact bargaining power in negotiations for retransmission consent?

4. How does vertical integration of the MVPD distribution platform and programming networks impact retransmission consent?

5. The network nonduplication and syndicated exclusivity rules do not establish exclusive rights; rather, they establish an enforcement mechanism for rights privately negotiated. How should this affect our analysis of proposals to modify these rules?

6. To ensure that broadcasters can comply with their statutory obligation to make a carriage election, should we require MVPDs to periodically file data on their ownership?

The FCC is aiming to vote on its much-anticipated rulemaking proposal on network neutrality at a March 3 open meeting. Expect broadcasters to dodge a couple of bullets.

It is believed that the FCC will provide more guidance on what constitutes good faith bargaining in divisive retransmission discussions, and perhaps identify specific practices that the commission would treat as violations of that congressional mandate. That expectation was signaled by FCC Media Bureau Chief Bill Lake in a speech to the Media Institute in December.

But according to multiple sources familiar with the item being circulated among the FCC commissioners, it will not create a mandatory arbitration regime, or require broadcasters to keep their signals on the air during disputes over retransmission fees.

The FCC’s notice for proposed rulemaking is in response to a request for reforms from a collection of cable operators, satellite companies and others, spearheaded by Time Warner Cable. They argue the system is weighted in broadcasters’ favor and that the result is consumer-unfriendly stalemates.

Broadcasters argue that there are relatively few stalemates, and that the system simply represents the marketplace working to compensate broadcasters more fairly for their high-value programming.

The cable operators and satellite companies have been looking for the FCC to step in to mandate arbitration and so-called standstill agreements to keep signals on. But FCC Chairman Julius Genachowski signaled to Congress that the FCC’s authority did not extend to such mandates—something cable operators have disputed. Genachowski’s concern is consumer welfare, rather than getting in the middle of negotiations.

There may be some chicken-and-egg play in that scenario, however, since Sen. John Kerry (D-Mass.), who was planning a bill to boost those powers, said he was holding off until the FCC’s announced plan to reform its rules.

Kerry’s office had not returned a call at press time seeking comment on whether the senator would restart his legislative push if the FCC does not address the standstill and arbitration issues.

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