ATVA, NAB Duel Over Totality of Circumstances Proposals

NAB came out swinging against retransmission consent negotiation proposals suggested by multichannel video programming distributors. It labeled them "a cynical ploy ... to use government to lower their cost of doing business," in a filing Thursday in FCC docket 15-216. ATVA said broadcaster arguments the FCC can't or shouldn't pursue such retrans negotiation rule changes as restricting online blocking or blackouts prior to marquee events don't hold water. "The public ... bears the brunt of broadcaster misbehavior," it said.

Thursday was the deadline for reply comments to the NPRM on possible changes to the "totality of circumstances" test for good-faith retrans consent negotiations. The FCC is seeking feedback on 15 separate negotiation practices and whether they should figure into the good-faith test (see 1509020061). Some MVPDs also suggested other acts to add to the list as evidence of bad-faith negotiating, such as prospective programming bundling (see 1512020029).

Pay-TV proposals "run the gamut from problematic to absurd," and some -- such as prohibiting third-party involvement in retrans negotiations -- would do nothing to reduce impasses, NAB said. It also said proposed more-stringent penalties that would apply only to broadcasters for violating the good-faith standard would violate the Communications Act. And restrictions on network or programming bundling as a condition for retrans consent would mean the FCC is getting into programming pricing decisions, which the agency long has eschewed, NAB said.

The marquee events proposal is both impractical and unfair because MVPDs would get to carry events like the Academy Awards or Super Bowl "even though they have failed to reach an agreement with broadcasters as to the fair value of the signals containing that highly desired programming," NAB said. It also said no MVPD disputed the argument that copyright law prevents the FCC from any rule "that would effectively force a broadcaster to publicly perform or distribute content online that would violate the copyright owner's exclusive rights."

MVPDs and allies have pointed to increasing blackouts and skyrocketing retrans fees as evidence of a broken market (see 1508240024). "If MVPDs really had leverage, prices wouldn't be going up 40 percent a year," ATVA said Thursday. Given the sizable percentage of pay-TV subscribers who experienced a blackout in 2015, it said, "No matter how one slices and dices the numbers, surely consumer disruption on this scale is too high."

While the number of retrans negotiation impasses has grown, NAB said, that's "dwarfed by the many thousands of agreements that are seamlessly completed." And MVPDs "ignore how little (if anything) they paid for their most popular content for many years; how ... broadcasters remain underpaid on a per viewer basis; and how, compared to their total revenue, pay TV operators' input costs would be the envy of most other distribution businesses," it said.

Few MVPDs ever have filed good-faith complaints against broadcasters because the problems usually come up at the end of an existing retrans agreement, and by the time the FCC can review the facts in a totality of circumstances complaint, "the damage has already occurred," ATVA said. It said the FCC needs to provide better guidance on the totality of circumstances test by expanding the list of behaviors that presumptively violate good faith.