Cable Industry in Full-Court Press on Retrans Rules

The cable industry increasingly is pushing for a new regulatory look at retransmission consent rules. Cablevision said the FCC should launch a rulemaking on ways to address such issues as broadcasters forcing affiliated networks into particular tiers and requiring networks to reach a certain percentage of customers. The American Cable Association told the FCC the agency should seek comment on whether certain negotiating tactics it accused broadcasters of employing ultimately harm the public interest. The FCC should "re-examine its existing presumptions that certain types of conduct are consistent with competitive marketplace conditions [and] seek comment on whether these presumptions ... are contributing to current market dysfunctions and thus should be modified or eliminated," ACA said in a filing posted Friday in docket 10-71.

The cable complaints are "a well-coordinated effort timed conveniently to the FCC's 'totality of circumstances' retrans review," an NAB spokesman emailed us Monday. "There is a deliberate pay TV strategy to submit as much retrans disinformation into the FCC record in hopes the Commission will tip the scales in favor of pay TV over local broadcasters."

The FCC has the power to break up cable TV programming bundles, and now is the time to do so, Cablevision said in a filing posted Monday in docket 10-71. The 23-year-old retransmission structure dates from a time when Congress worried about cable operators holding the trump card over distribution and local broadcast stations, Cablevision said. Now, aside from over-the-air transmissions, broadcasters can self-distribute, as with CBS All Access; distribute through aggregators like Hulu or streaming services like Sling TV; and use various Internet video services like YouTube alongside their cable, DBS and telecom options, Cablevision said. "The tools that Congress gave broadcasters to enhance their leverage in carriage negotiations with distributors is disserving consumers, resulting in higher fees to operators, driving more broadcast-affiliated cable programming into distributors’ video packages, and requiring consumers to pay more for content that they do not want or forego [sic] content they do want."

The proposed NPRM would seek input on ways to address such issues as broadcasters forcing affiliated networks into particular tiers and requiring that networks reach a certain percentage of customers -- which has the effect of pushing cable operators to eliminate their standalone low-cost broadcast basic tier, Cablevision said. If the FCC won't ban tying additional channels to channels in high demand, Cablevision said, it should at least prohibit tier-placing requirements and market penetration minimums, Cablevision said. The agency also should look into a ban on tying practices and decide that good-faith standards require basic-tier customers not be counted when assessing whether market penetration minimums have been met, the cable company said. While broadcasters have argued that the 1992 Cable Act indicates Congress felt bundling was acceptable, "nothing in the statute limits [FCC] authority to prohibit bundling practices when they harm consumers," Cablevision said.

The ACA also expounded on its good faith/bad faith standards arguments in its filing, saying a variety of negotiation actions should be automatic good faith standard violations, including blackouts around marquee events, online blackouts of broadband subscribers, and setting prices or conditions in current retransmission consent negotiations for broadcast stations that broadcasters may later buy or launch in the future. Pointing to growing retrans consent fees and what it called "unrelenting onerous demands by broadcast stations," ACA said the FCC needs to look at reforming the array of retrans consent rules.

Pay TV's "plan is simple: Get tons of publicity about possible retrans disruptions; force disruptions to occur; and then attack broadcasters for being the culprit," said NAB's spokesman. "It's all part of a plan to shift attention away from abysmal pay-TV business practices, outrageous monthly set-top box and DVR fees, and astronomical early termination fees that punish consumers who want to switch providers."