The market outcome for the license fee under...

The market outcome for the license fee under the retransmission consent paradigm may not be socially efficient, the Phoenix Center said in a white paper. The paper, released Thursday, said broadcast regulation “creates a type of positive information externality,” and private transactions don’t typically account for externalities, Phoenix said in a news release (http://bit.ly/JMx7nv). That means “the market price for the retransmission fee is theoretically ’too high,’ both relative to the socially-optimal price and the market price of an otherwise-equivalent cable network,” it said. This “spread” is a consequence of a disharmony “between the historical and continuing policy of the broadcast social contract and the ‘market’ approach embodied in the retransmission consent regime.” For there to be a true market solution to retrans consent, “Congress must eliminate, or meaningfully reduce the scope of, the social contract, including the various protectionist and support mechanisms given to the broadcast industry,” the paper said (http://bit.ly/190kpKN). Revising rules for network non-duplication and syndicated programming exclusivity would allow customers of multichannel video programming distributors access to highly desired network and sports programming, it said. However, given the retransmission of distant signals is also governed by contracts between networks and affiliates, “it is unclear how much help repeal of the exclusivity rules will actually provide.” Congress could amend the retransmission consent provisions of the Communications Act to allow the FCC to authorize interim carriage of a station by an MVPD pending the conclusion of a new agreement, it said. “This solution would continue to satisfy Congress’ substantial interest in having local commercial broadcast stations appear in MVPD channel packages."