Retrans Amendment Surfaces

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According to a source familiar with the crafting of a House Telecommunications bill rewrite being marked up in full committee next week, the following is an outline of a retransmission consent reform amendment being offered by Rep. Nathan Deal (R-Ga.) and Charles Bass (R.H.).

The amendment would put a shot clock on retrans deals, then send them to arbitration. It would also let cable operators team up for talks and required operators to supply the FCC with program pricing information.
Deal's office told B&C last month he was planning to introduce the language to the bill, though Committee Chairman Joe Barton (R-Tex.) has said firmly the amendment isn't going anywhere.
When asked three weeks ago whether there was a "germane-ness" problem with the amendment Deal was said to be working on, Barton said there was, instead, "a vote-getting problem. It won't pass." Though Barton also said he would encourage Deal not to introduce the amendment.

But if it were going somewhere, this is where it would go, according to the summary supplied B&C:

· Allows a cable operator or multichannel video programming distributor (MVPD), after 90 days of failed retransmission consent negotiation, to opt for baseball-style arbitration, as defined in the FCC’s News-Hughes arbitration conditions.

· Only those broadcast stations which are owned or controlled by a company which also owns and controls non-broadcast programming can be brought to arbitration.

· Under this agreement, both the cable operator or MVPD and the broadcaster submit their final offer for the primary broadcast signal, which they believe reflects the fair market value.

·  The arbitrator then chooses one of the two agreements which most closely approximates the fair market value of the programming carriage rights.

· The arbitrator is directed to consider the inflationary impact of any final offer on the price of a basic cable tier.


Section 2:  Transparency

·  Provides for every cable operator and MVPD [multichannel video providers] to provide to the FCC any change in rates, terms and conditions for the right to receive and retransmit video programming.

· Using this data the FCC is to annually publish statistical reports including: A price index of the range of rates charged to cable operators and MVPDs by programmers and broadcasters; Programming price averages; The percentage of programming increases;  Programming rates charged by region and company size.

· The FCC is directed to protect the data and only publish it in aggregated form so as not to violate any private contract.

Section 3:  Pool Bargaining

· Allows any cable operator or MVPD which meets the FCC’s definition of a small cable company to combine with any other small cable operator or MVPD to pool together to negotiate carriage with a programmer or broadcaster.

Section 4:  Definition of a Small Cable Company

· Requires the FCC to reexamine the definition of a small cable company.  The FCC last reexamined such definition in 1992.

· Provides for the FCC, in its reexamination, to consider whether any company effectively operates as a small cable company in a single DMA.

Deal spearheaded a letter to FCC Chairman Kevin Martin back in December suggesting that the commission should reconsider retrans as it works through the issue of family-friendly tiers and a la carte cable service.

FCC Chairman Kevin Martin has pushed both as a way to give consumers, particularly parents, more control over cable content as a response to activist group concerns about indecent programming.

The cable industry has countered by offering family friendly tiers voluntarily, but says unbundling its channels from service tiers will essentially unravel its business model and disadvantage smaller nets that depend on being bundled to gain carriage.

In a Dec. 12 letter, Deal, Ed Markey (D-Mass.) and six other House members wrote of their concerns that retrans deals--in which broadcasters negotiate compensation for carriage of their TV stations on cable--have helped drive the bundling of family-friendly and unfriendly channels. That's because many deals involve not cash but agreements to carry co-owned cable networks, FX for the Fox stations, for example, or MSNBC for NBC stations.

In an op ed submitted to B&C, Deal put an even finer point on it, opining that the tying of station carriage to cable channels has created a limited number of packages that can contain a"predetermined set of channels, ranging from family friendly cartoons to controversial gay and lesbian programs."

"By reforming the antiquated and anti-competitive retransmission consent rules," he wrote to B&C, "Congress can provide cable and satellite companies with the ability to offer innovative and new packaging options.  This will certainly be true with broadband video service providers.  Federal regulation must no longer prohibit the free market by enabling large network broadcasters to force limited choice on consumers."

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