Time Warner Cable: Retrans Never Has Been Free Market - Broadcasting & Cable

Time Warner Cable: Retrans Never Has Been Free Market

TWC tells Senate Commerce it is time to let marketplace really decide
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Retransmission consent is one of several
special privileges given to broadcasters by the government, but it is also part
of a "thicket of outdated regulations," and a broken system that
needs fixing.

That
was the message from Time Warner Cable retrans negotiator Melinda Witmer
according to her written testimony for the Senate Commerce Committee's highly
anticipated July 24 hearing on the Cable Act at 20.

She
points out the law, enacted despite a presidential veto, was an effort to
promote competitive alternatives to cable, and was not meant to have a shelf
life beyond achieving that goal of competition eventually replacing regulation.
"This was made clear in the Act's Statement of Policy, where Congress
expressed its preference "to rely on the marketplace" rather than regulation
wherever feasible."

Cable
operators, who in 1992 could claim a 95% share of the MVPD business, are at
about 58% today, she said, and face even more competition from new platforms
such as online video.

She
also says that Congress' goal in the Act of encouraging cable to build out
service and bulk up programming has been fulfilled, with billions of dollars of
investment in new services like VOD and 3D and DVR as
well as high-speed Internet and phone service.

Given
those market realities, she says, it is time for some of the Act's provisions
to be overhauled, with retrans first on the list. "Contrary to broadcaster
assertions, retransmission consent is not now and has never been a free
market," she tells the committee.

TWC
is a member of the American Television Alliance, a group of cable operators,
satellite companies and others that petitioned the FCC a couple of years ago to
revamp its retrans rules, including by requiring outside arbitration and
preventing signal black-outs during retrans impasses. The FCC opened a
proceeding, sought comment, and made some recommendation, but has not acted on
the 2011 proposals. The FCC's chairman has said publicly the FCC's authority is
limited.

Witmer
lays some blame at the feet of the commission for underestimating its authority
to step in. "Unfortunately, the FCC has adopted a narrower interpretation
of its role in overseeing the retransmission consent process." she says,
"and the agency's inaction, combined with broadcasters' ability to play
competing MVPDs against each other, has been a key cause of the brinkmanship
tactics (or take-it-or leave it demands) that now characterize the
broadcasters' approach to retransmission consent negotiations," she says.

While
broadcaster witnesses for the hearing argue that it is MVPDs that hold up deals
ion part to make a public point about a broken system, Witmer says it is
broadcasters holding up deals because they know MVPDs don't have any recourse.

Armed
with a chart of the cable nets co-owned by broadcaster parent companies,
Wittmer illustrates her point: "MVPDs today do not have the choice of
'paying a little less' for non-broadcast programming to cover their growing
retransmission consent expenses. The very broadcasters that are demanding increased
retransmission consent fees own the non-broadcast cable channels and are not
about to lower the amounts that they are paid for those."

While
TWC last week settled its retrans dispute with Hearst
,
Witmer evoked it in her testimony anyway. "Earlier this month, over two
million of our subscribers lost access to broadcast signals when we would not
cave in to Hearst Broadcasting's demands for huge fee increases," she said
"While our dispute with Hearst has been settled, the fact remains that our
customers are being asked to shoulder ever-increasing rates resulting from each
and every retransmission consent negotiation, even those that do not result in
a public dispute."

TWC
faces yet another potential dispute. The latest could involve a handful of
Meredith stations. On its website, one of those stations, KCTV Kansas City,
said that it could go dark on the Time Warner Cable system at midnight July 25.

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