Broadcasters are fighting for their retrans lives, and they have billions of good reasons for doing so, given what they’ve been able to collect from cable operators for the retransmission of their signals.
Associations from all 50 states have signaled they will be marching on Washington, at least metaphorically, to register their strong opposition to the Local Choice plan. In one early battle skirmish, CBS Radio—at least the four CBS stations approached by Local Choice fan the American Television Alliance—refused an ad buy for a spot promoting the plan.
That plan would be to have broadcasters set the price for their channels and let cable and satellite subscribers decide whether or not they want to pay it. There would no longer be retrans negotiations with multichannel video programming distributors, and MVPDs could not mark up the price to its subs, but would not have to deliver TV station signals to the subs who did not agree to pay for them either.
Time is on broadcasters’ side. The proposal would still seem a long shot given that the idea is to add it to the Satellite Television Extension and Localism Act (STELA), which has to pass both Houses of Congress by the end of the year.
But a draft of the bill, now called STAVRA (the Satellite Television Access and Viewer Rights Act), circulated last week with Local Choice and other retrans “reform” elements that had broadcasters’ blood boiling.
One of those helping make broadcasters’ case against the proposal is Fred Campbell, former FCC Wireless Bureau chief and currently heading up the think tank, The Center for Boundless Innovation.
Campbell argues that some of the same folks pushing for Local Choice—proposed by Senators John Thune (R-S.D.) and Jay Rockefeller (D-W.Va.)—are also pushing just as hard against government regulation of free market Internet negotiations—such as paid peering Internet traffic exchange arrangements.
“Thune’s embrace of the intellectual basis for the ‘Local Choice proposal’—which inherently distrusts market negotiations between the operators of cable ‘pipes’ and content providers—represents a tipping point in the battle over net neutrality,” Campbell says. “If Thune doesn’t believe market negotiations are capable of producing fair outcomes for pay-TV customers with respect to television content, how does he plan to justify relying on the free market to produce fair outcomes for Internet content?”
But Thune doesn’t believe the current negotiations between broadcasters and cable operators are the result of a free market, according to AshLee Strong, Thune’s communications director.
“The current negotiations between cable operators and broadcasters are far from a free market,” Strong told B&C. “Among other anti-free market components, the current law requires consumers to purchase, as part of government-mandated basic cable packages, all the broadcast channels that are already available for free over the public airwaves. The ‘Local Choice’ proposal would create more of a free market that enables consumers to choose what they buy and empowers broadcasters to set their own price for their valuable local content.”
Strong suggested tying the retrans market and network neutrality issues is off base. “Sen. Thune has repeatedly and clearly been on the record against so-called net neutrality regulations, and any notion otherwise is ill-informed.”
To Dodge a Blow
Broadcasters, led by coalition group TV Freedom, continue to argue the Local Choice plan would be a devastating blow to broadcasting and a targeted à la carte regime that excludes all those cable channels viewers may not want to pay for. American Television Alliance members are pushing just as hard for the plan.
“This proposal would impose à la carte requirements on local TV stations—and only local TV stations,” Rob Kenny of TV Freedom blogged last week. “What the pay-TV lobby is attempting to do is decrease the number of subscribers who watch local broadcast TV on their systems, take away advertising revenue and hope that many local TV stations price their channel too high so that more and more subscribers choose not to pay for their channels. This is bad economics and it hurts consumers and small TV stations in the end.”
The Senate Commerce Committee is planning to take up the Local Choice plan as part of its version of STELA later this month.
It will be a year this month since the FCC proposed getting rid of the UHF discount. But it did more than propose. The item specifies that until the commission votes the final order, it will treat any new station sale as though the discount were already gone.
The reply comment deadline on the rulemaking proposal was back in January, but the FCC has yet to vote on an order. Among those comments were that the FCC should start discounting VHF stations since they had essentially traded places with UHF in terms of value—UHFs are the stronger signals in digital, as VHFs had been in analog. If the FCC decided to do that, some of the station sales that would be disallowed under this interim period might be allowable.
So, while the FCC is applying a new ownership restriction that isn’t even on the books yet, it continues to enforce a rule Republican and Democratic chairmen have tried to get rid of for years, an irony not lost on one veteran broadcast attorney.
“The FCC said that applications filed after the date of the adoption of the NPRM that rely on the UHF discount to comply with the ownership rule will not be approved,” he said. “Contrast that with the radio- TV cross-ownership rule, which the FCC has twice proposed to repeal and received no significant comments opposing repeal. That rule continues to be applied and even requests for waivers pending the outcome of the ownership proceeding are not granted.”
A spokesman for FCC chairman Tom Wheeler had no comment on the status of a final vote, but did point out that the NPRM preceded Wheeler’s arrival at the commission by a month and a half, adding that the Media Bureau “has continued to review the record.”