When Localism Bites Back

FCC rulemaking might impact protections, retrans

Broadcasters are concerned about a few paragraphs in the FCC's recent 98-page localism order that they say could gut local station protections of their network programming and syndicated shows, as well as weaken their retransmission consent negotiating position.

Tucked into the FCC's voluminous Jan. 24 order on broadcast localism were a handful of paragraphs followed by this sentence: “We will commence a rulemaking proceeding to address the need to ensure that all cable and satellite subscribers have access to television broadcast stations licensed to communities within the viewers' home state.”

The FCC says it is trying to fix the “infrequent but significant” problem that occurs when a TV station's market crosses state lines. In that case, FCC carriage rules may require carriage of an out-of-state station rather than one in a subscriber's own community.

“Such cases may weaken localism,” the FCC argued in the order, “since viewers are often more likely to receive information of local interest and relevance—particularly local weather and other emergency information, and local news and electoral and public affairs—from a station in the state in which they live.”

Last June, Rep. Michael Ross (D-Ark.) and Rep. Barbara Cubin (R-Wyo.) introduced legislation that would allow the change. Ross cited the plight of Arkansas cable TV viewers in the Memphis, Tenn., DMA who were deprived of University of Arkansas football broadcasts not carried by the Tennessee stations.

That bill stalled, but nervous broadcasters and their attorneys say that a similar move by the FCC might also wipe out their protection against duplication of a network signal or syndicated programming exclusivity. They worry it could also weaken broadcasters' hand in retransmission consent negotiations across the country since a cable operator would have the fallback of importing a station from an adjacent market. That the FCC said it would launch a rulemaking proceeding rather than an inquiry added teeth to the perceived threat.

Broadcasters have been increasingly asking for—and getting—cash for carriage from cable operators, helped by the rise in potential competitors for their product from telcos and Internet video delivery systems.

According to one communications attorney who has warned his clients of the proposal: “This is scary as hell.”

He says there is already an NAB effort underway to persuade FCC Chairman Kevin Martin not to institute the proceeding. NAB had not returned a call for comment at presstime, but there may be a split in the association on the issue. Some broadcasters might welcome the added carriage, but as a precedent, it could strengthen cable operators' hand when they negotiate new carriage contracts.

Old battle lines

“The cable guys have been pushing this for the past three years as a way to reduce broadcasters' leverage in retrans negotiations,” says the attorney, “and there are several bills that have been introduced in Congress that would do essentially the same thing.”

Cable's argument may be about retrans and the FCC may talk about news, but for Congress, it's been about sports, says another attorney.

The bill introduced by Ross and Cubin would allow cable operators to import TV signals from adjacent DMAs, particularly where they crossed state lines. The FCC would have to revise its network nonduplication, syndicated exclusivity, and sports blackout rules to accommodate the change, as it would if it adopts the proposal floated in the localism report.

Cable operators are prevented from importing so-called distant signals into markets where viewers get a signal from an affiliate of the same network, but Ross argued that “because so many of the DMA boundaries cross state lines, millions of subscribers are left watching the local channels of their neighboring state.”

When Ross introduced the bill, NAB was noncommittal, perhaps reflecting that split in member sentiment, but did say in a statement that it would have “serious concerns with any legislative attempt to disrupt the concept of localism.”

The American Cable Association has supported the move, arguing that expanding cable access to TV stations provides important in-state information about news, elections, government and weather.

That dog won't hunt, says the attorney, who points out that cable operators are free to carry a local station's newscast anytime they want by just picking up the phone and asking. Stations have copyright control over their newscasts and can, and do, make them available to cable operators in nearby markets looking to boost their news content, he says.

“They don't carry the duplicating network syndicated product,” he says, but they carry the local news. “It happens in a lot of markets. My guess is that someone on the Hill has been putting pressure on the chairman and that is why it has found its way into this order.”

Matt Polka, president of the ACA, concedes cable operators already pick up out-of-market newscasts, but he still maintains that “current network nonduplication rules and DMA boundaries prohibit greater competition for retransmission consent signals that would benefit consumers.”

Polka has certainly been urging the FCC to expand that access. While he concedes that cable operators do already pick up out-of-market newscasts in some instances, he still says there is a need to revise the signal-importation rules. Polka frames it as a pro-consumer policy that would allow them to see in-state broadcast signals “without interference by outdated network nonduplication rules, arbitrary DMA boundaries, and ironclad application of the anti-consumer retransmission consent rules.”