Wide Array of Pay-TV Companies to Seek Carriage Impasse Changes

A wide array of subscription-video companies will seek changes in how the FCC handles disputes that the providers have with broadcasters, industry executives said. Cable operators, DBS providers and at least one major telco will file a petition for rulemaking this week asking for binding arbitration in carriage disputes, they said. Cablevision subscribers lost Disney’s WABC-TV New York for 20 hours Sunday before service was restored. Broadcast and cable executives expect additional disputes, though most deals are successfully negotiated (CD March 9 p2).

Time Warner Cable is leading the charge to ask the FCC to change the handling of carriage disputes, industry officials said. It held down-to-the-wire talks New Year’s Eve with News Corp.’s Fox network, and media reports said its carriage deal with ABC ends this summer. A Time Warner Cable spokeswoman said that company and others also will ask the commission to impose a standstill period during impasses, so pay-TV subscribers continue to receive the stations. The petition may be filed with the FCC this week, industry officials said, saying it could be submitted Tuesday after our deadline. Retransmission consent rules “are outdated and being exploited by broadcasters to harm consumers,” the Time Warner Cable spokeswoman said. It’s “in the interest of both parties to reach a successful” deal, an NAB spokesman said.

DirecTV, Dish Network, Mediacom, Public Knowledge and Verizon expect to sign the petition, representatives said. The New America Foundation also is expected to sign on, industry officials said. A representative didn’t reply to a message seeking comment. The American Cable Association, another signer, “intends to address also the rampant price discrimination faced by smaller cable operators and their customers and the need for regulations to fix this problem as well,” President Matt Polka said. “Once the FCC puts this petition out for public comment, ACA will add this issue to the list of problems with the current retransmission consent rules, particularly for smaller operators, and strongly advocate for the problems to be solved."

Industry officials said Comcast seems unlikely to get involved in the issue because of its deal to buy NBC Universal. (See separate report in this issue.) It seems unlikely the NCTA won’t back the petition, industry officials said. “As a company that will be in both the cable and broadcasting businesses, looking at the issue from both sides, we hope we can play a constructive role in working toward a resolution of these issues,” a Comcast spokeswoman said. “Everyone knows that retransmission consent needs to work better, and most importantly, consumers shouldn’t be held hostage in these disputes.” The NCTA supports “reform of the retransmission consent process and will participate in any proceeding that explores ways to fix it,” a spokesman said.

Supporters of rule changes also have been seeking legislative remedies, executives said. A letter Tuesday to the House and Senate Commerce Committees said the signers have 65 million video customers total. “The video marketplace is dramatically different today” than in 1992, when Congress gave TV stations the right to demand cash for carriage, they wrote. “These changes in the market are allowing broadcasters to wield the very government protections meant to preserve access to the public in order to threaten to deny -- or actually deny -- their signals to consumers as a tactic to increase their profits.” Bright House Networks, Charter, Insight and Suddenlink were among the signers. Representatives of the companies declined to comment or didn’t reply to messages. The Organization for the Promotion and Advancement of Small Telecommunications Companies also signed the letter to lawmakers. OPASTCO signed the petition, a spokeswoman said. Cablevision, another supporter, wants the FCC to “protect consumers’ interests and reform a system that is clearly broken,” a spokesman said, citing the WABC signal cutoff.

Notwithstanding “a few high-profile negotiations, an impasse is exceedingly rare,” the NAB spokesman said. “As was the case with Time Warner [Cable] and Cablevision, consumers have a choice. If their cable operator refuses to reach an agreement with their local broadcast station, the cable customer can switch to a competing service provider” or use an antenna, he said.

"The petition is really the starting point for what we hope becomes a broad industry discussion” on retransmission consent, said Vice President Thomas Larsen of Mediacom, another signer. “If we can’t get it fixed within the FCC’s authority, we think we need legislation” to update existing laws, he said. “We just need the FCC within its existing authority to take into account the changes in the marketplace or legislative changes to do it.” The commission should “address skyrocketing consumer costs by establishing a new framework for resolving retransmission consent disputes and ensuring that consumers are not caught in the middle,” Time Warner Cable’s spokeswoman said. “The recurring threats of blackouts, high-stakes public ’showdown’ negotiations and recent economic analyses have all confirmed what programming distributors have known for years: The retransmission consent regime is broken.”