Good-Faith Rule Change Proposals Range Beyond List of Practices Under FCC Scrutiny

Labeling prospective programming bundling as a bad-faith negotiation tactic and eliminating the list of presumptively good-faith tactics altogether, were among suggestions multichannel video programming distributors and MVPD allies had for the FCC on reforming retransmission consent negotiation rules. Some went beyond the list of practices the agency said it's considering as potential violations of good-faith negotiating. Meanwhile, broadcasters and their allies again said the retrans market doesn't require fixing.

NCTA opposed online blocking. Since broadcasters' online content is usually on-demand access to back content, live over-the-air programming "is not a substitute," NCTA said. It made similar comments against online blocking -- though aimed at edge providers -- last year during the FCC net neutrality proceedings. Filings were posted Tuesday and Wednesday in docket 15-216 (see 1512010052 for a report on Tuesday's and earlier comments). Tuesday was the deadline for comments on an NPRM on possible changes to its "totality of circumstances" test in retrans good-faith negotiations, with replies due Dec. 31.

The 15 negotiating practices in the NPRM don't automatically mean all or any will be considered bad-faith negotiating practices, said Gary Lutzker at BakerHostetler, who represents cable clients on retrans issues, in an interview. He pointed to a Media Bureau rejection last month of broadcaster complaints against DirecTV, including the complaint that the direct broadcast satellite company wasn't sharing documentation or evidence for why it had rejected their negotiating offer (see 1511060060). Similarly, items beyond the 15 raised by filers could get consideration if the FCC sees a market weakness that needs to be addressed, he said.

Fans of changes to the totality test had a litany of actions they want to see considered bad faith, with many of their proposals echoing the FCC. ITTA said failure to make an initial contract proposal at least 90 days before the existing contract's expiration should be bad faith, and said if the FCC doesn't stop program bundling, then tier placement and penetration requirements should be defined as per se bad faith behavior. Time Warner Cable said a variety of practices ought to be labeled per se violations, including prohibiting importation of an out-of-market signal during a blackout and forced bundling.

The American Cable Association pushed for such inclusions to the bad-faith list as bundling of prospective programming, and third-party interference in retransmission consent agreements for historically carried out-of-market stations. Cablevision singled out "must buy" provisions that require cable customers buy the broadcast basic package, including retrans-consent stations, before they get access to other programming. Mediacom said insisting that an agreement expire on a different date than the end of the three-year retrans consent cycle should be a presumptive violation of good faith. In its filing, it also sought rules limiting broadcasters’ communications with an MVPD’s customers and restricting blackouts to only when negotiations have reached a final impasse and only after a cooling-off period and mediation. TheBlaze TV, while not taking a stand on any proposed remedies, nonetheless urged the FCC "to carefully examine" such practices as forced bundling, online blocking and charging for subscribers that do not receive service.

New America's Open Technology Institute and Public Knowledge together said the FCC should eliminate its list of presumptively good-faith tactics and expand its list of per se bad-faith ones, and rely on a case-by-case analysis when dealing with disputes not involving those per se violations. "The blanket presumption in favor of bundling, for example, opens the door for large programmers to drive up fees and consumer cable bills by insisting on carriage of numerous channels alongside their most desirable products," they said. They said the public interest obligations of broadcasters should become part of the good conduct standard and the FCC should require mandatory final-offer arbitration when negotiations are at loggerheads. They said the FCC should look into interim carriage as a means of preventing blackouts.

The FCC is overstepping its bounds with the proceeding, some broadcasters said. "Congress could have, and would have, directed the Commission to take other action beyond a 'review' [of the totality of circumstances test] had that been the statutory goal," CBS said, saying the very existence of the NPRM "satisfied its congressional mandate to 'commence a rulemaking to review' its totality of the circumstances test." The very act of looking at specific practices undermines the essence of the totality of circumstances test, with the FCC "abandoning its flexibility to consider the negotiation as a whole in favor of predetermining evidence without considering an action within the context of the entire negotiation," Nexstar said.

Broadcasters also criticized specific proposals in the FCC list, such as the requirement broadcasters publicly post their rates or a prohibition on charging different rates to different MVPDs, with Meredith saying those "are directly aimed at a specific outcome: reducing the fees MVPDs pay to broadcasters," saying that amounts to rate regulation, which the FCC lacks the authority to do. Required bundling of programming "facilitates the development of new and diverse content and services," Univision said, and any rules that dictate terms of tier placement would do away with "the sort of 'give and take' that has yielded significant mutual benefits for Univision and its distribution partners and their viewers and subscribers."

If the FCC makes any change to good-faith rules, it should be a prohibition on surface bargaining -- an example being insistence on the right to distribute a station's signal online even when the MVPD knows the broadcaster's programming agreements don't allow for that, Gray Television said. The FCC "should decline ... to engage in regulatory arbitrage to benefit MVPDs and refuse to inject itself into the setting of terms and conditions of retransmission consent agreements" given there have been half a dozen good-faith complaints in the 15 years since those rules were implemented, Hearst Television said.