Senate Communications Subcommittee Chairman John
Kerry (D-Mass.) has proposed his new "consumer protection" bill in a
discussion draft of retransmission consent reform legislation sent to FCC
Chairman Julius Genachowski Tuesday.
The legislation would include imposing fines for
bad-faith bargaining, standstill agreements and the FCC as mediator, but not
A committee source on background said the senator
is "exploring the possibility" of holding a hearing on the bill the
week of Nov. 17, just after Congress returns for its lame duck session.
Calling it a "broken system," Kerry said
the legislation would try to fix the two-party system, in this case negotiating
parties, for the sake of a third party: consumers.
As he telegraphed in a statement following Fox and
Cablevision's failure to come to terms Oct. 15,
the bill would keep signals on the air while the FCC evaluates both parties and
recommends, or doesn't recommend, binding arbitration, during which carriage
would also continue.
He says that at the "end of the day,"
the broadcaster would retain the right to pull the signal when there is a
"good faith" impasse, but the end of the day would come after the FCC
stepped in to mediate to the degree above.
He outlined four scenarios in which he saw that
process coming into play:
"Scenario 1 - The FCC finds that the
broadcaster is negotiating in good faith and making an offer consistent with
market conditions but the distributor is not. In this case, the distributor
shall agree to the broadcaster's last best offer or terminate carriage and the
FCC may fine the distributor for negotiating in bad faith. In lieu of
termination of the signal, the broadcaster can withdraw the last best offer and
ask the Commission to require binding arbitration.
"Scenario 2 - The FCC finds that the
broadcaster is not negotiating in good faith or making an offer consistent with
market conditions and the distributor is negotiating in good faith and making
an offer consistent with market conditions, then the FCC can require binding
arbitration. The penalty for the broadcaster is forced participation in
"Scenario 3 (This will be the most
likely scenario in most cases). The FCC finds that both parties have
negotiated in good faith but reached a true impasse based on an honest
disagreement on the value of the signal. In this case, the FCC may
request them to submit to binding arbitration. If one party or the other refuses
to engage in binding arbitration, then the FCC will provide both parties with a
model notice by which to inform consumers of the potential loss of service as
well as the difference in offers on the table so that consumers can judge for
themselves who was making the fairest offer. This adds a more consumer
friendly and transparent way to end transmission of services if necessary and
creates an attractive option for arbitration for both parties.
"Scenario 4 - The FCC finds that
neither party is negotiating in good faith, then it can require binding
arbitration and fine both parties."
The FCC is already empowered to take action if either party is not
negotiating in good faith.