Sources: Sen. Commerce Floats Retrans Remake

'Local Choice' pitch would be to let subs decide whether they want to pay station prices, get stations
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Under a proposal reportedly being floated to broadcast and cable execs at a meeting requested by the Senate Commerce Committee Friday, cable subs would be the ones deciding whether they wanted to pay the per-sub fee charged by TV stations, and subs choose which TV stations they wanted to have in their cable package.

The goal is to end blackouts and the pitched battle between MVPDs and broadcasters over retrans, and is being discussed in relation to reauthorizing of the Satellite Television Extension and Localism Act, which the committee is preparing to take up in earnest next month.

The proposal, which was being billed as "Local Choice," would essentially end retrans negotiations between cable/satellite and broadcasters for local station carriage, with cable operators essentially acting as collecting agents for the TV station payments made by subs to broadcasters.

It would also mean there was no more requirement that all retrans stations be delivered by cable operators to all subs. Stations could still ask for must-carry status, however. But if they wanted payments, the market and viewer demand would determine who got the signals.

According to one description of the proposal, broadcasters would set a per-sub price, cable and satellite operators could not mark up that price, and subs could decide for themselves which stations they wanted, if any.

MVPDs would not be allowed to require a sub to purchase any nonbroadcast programming along with their stations choices under the Local Choice proposal.

A broadcast source familiar with the proposal added: "Does anyone see the disconnect between people being offered a la carte for broadcast, but not for the hundreds of cable channels that people are forced to watch and that make up the vast majority of their cable bills.”

Not surprisingly, broadcasters, who want no retrans revamp, were not happy, while cable and satellite operators represented by the American Television Alliance, who have been pushing for getting rid of the must-buy requirement, were hailing it as a win for consumers.

"While NAB appreciates Chairman Rockefeller and Ranking Member Thune's careful consideration of video programming laws, this proposal represents a significant rewrite of the Communications Act," said NAB EVP of communications Dennis Wharton. "Given the shortness of time between now and the end of the Congressional session, we question whether there is sufficient time for key committees in Congress to give this proposal the thorough review that is warranted. NAB has always supported a clean reauthorization of STELA and we do not believe this bill is an appropriate vehicle for reviewing the retransmission consent process."

“We applaud Chairman Rockefeller and ranking Member Thune for their efforts to fix the broken and outdated retransmission consent regime," said the American Television Alliance. "Based on initial reports, their innovative concept of local choice is a solid bipartisan compromise and a real win for consumers. It would provide consumers with great choice and transparency and would end retrans blackouts once and for all. We look forward to learning more details and working with them to protect consumers from blackouts and skyrocketing retransmission consent fees.”

Here is how the plan was briefed in one document:

“LOCAL CHOICE is an evolution of the existing retransmission consent regime to a simpler approach designed to put more power in the hands of the viewer. LOCAL CHOICE empowers consumers by allowing them to choose the commercial broadcast content that they want to pay for as part of their pay-TV subscription, while ensuring that local broadcasters continue to receive full value for their content. It is transparent, easy to understand, and respects consumer choice. LOCAL CHOICE gets rid of blackouts, makes sure that broadcasters are fairly paid, and puts viewers in control by giving them meaningful choice over their programming options and offering more opportunity to control the cost of their pay-TV subscriptions.

The Basics

 “LOCAL CHOICE pays broadcasters. Local broadcast stations will retain advertising revenues and be fully compensated for their programming at a market-based rate – preserving the dual revenue stream that broadcasters believe is vital to the health of their business.

 "LOCAL CHOICE empowers broadcasters. Local TV stations still have two choices to reach pay-TV subscribers. First, local broadcasters can demand under existing law to be delivered to pay-TV subscribers for free. Or, under LOCAL CHOICE, they are automatically offered to all pay-TV subscribers, who can opt to subscribe to the local commercial broadcast station for the fee set by that station. In addition, free over-the-air signals will still be available.

 “LOCAL CHOICE is simple. Local TV stations set their own price and sell directly to consumers, who make the choice whether or not to pay for that channel as part of their pay-TV package. Complicated and contentious retransmission consent disputes will become a thing of the past – no more blackouts of local broadcast programming.

 “LOCAL CHOICE promotes localism. Local broadcasters will be directly rewarded by pay-TV subscribers for offering relevant and compelling local content, and no longer face the threat of negotiations with large MVPDs that may depress their real market value.

 “LOCAL CHOICE preserves the consumer viewing experience. Local TV stations retain their channel position, so that consumers know where a station is located on the channel lineup. Consumers will continue to get their full broadcast lineup unless they affirmatively decide not to buy a station. Consumers will not face blackouts or the resulting loss of local news, weather, and sports programming.

 “LOCAL CHOICE has absolutely no effect on public television stations, other noncommercial educational stations, and any station electing must carry status, such as religious broadcasters.

 "LOCAL CHOICE is a win for consumers. Consumers choose whether to pay for their local TV stations (no more hidden retransmission consent costs on their monthly pay-TV bill) or view them through the free 'always on' over-the-air broadcast signals.

How LOCAL CHOICE Works

 “LOCAL CHOICE does not change the essential features of the retransmission consent system. Local broadcast TV stations retain the same absolute right to demand to be delivered to all pay-TV subscribers for free, or as they do now, they can seek compensation for retransmission of their programming by an MVPD ('multichannel video programming distributor,' aka pay-TV system) to their subscribers.

 “A local broadcast TV station sets a price that an MVPD subscriber must pay to receive its channel from his or her MVPD. The broadcaster may change its price annually, and the price is the same for all MVPD subscribers in the local broadcaster’s market.

 “All MVPDs in the local broadcaster’s market are required to make the broadcast signal available to their subscribers at the broadcaster-set price. MVPDs cannot mark up the price and must remit the fees they collect to the local TV station.

 “An MVPD subscriber may decide which, if any, LOCAL CHOICE broadcast channels they wish to pay for and receive.

 “In order to protect local TV channel availability, MVPDs will not be able to require subscribers to purchase non-broadcast programming in order to receive local broadcast channels through LOCAL CHOICE. Local stations also will appear on the same channel they do today so that the consumer viewing experience is retained. In addition, free over-the-air signals will still be available.

 “The cable basic tier and satellite 'carry one, carry all' requirements remain otherwise unaffected, so local must-carry channels, such as religious stations; PBS stations; and PEG ('public, educational, and government access') programming will continue to be carried like they are today.

 “To make the transition seamless for current MVPD subscribers, an MVPD cannot remove a local broadcast channel from its line-up unless and until the viewer actively chooses not to buy that channel.

“LOCAL CHOICE ends some of the most troubling aspects of the present retransmission consent system for consumers. Importantly, (1) it ends blackouts associated with contentious retransmission consent negotiations; (2) it requires every local broadcast TV station to be made available to MVPD subscribers; (3) it guarantees viewers have transparency on retransmission prices; and (4) it gives viewers more control over their MVPD subscription.

“At the same time, it preserves fair compensation for broadcasters – in fact, it allows them to freely, fairly, and transparently value their programming. It also incentivizes broadcasters to deliver locally-oriented content and programming that their local consumers want to watch (and purchase). The competition between local stations also could spur new innovation in broadcasting and reinvigorate key national broadcasting values like localism and serving the public interest.”

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