House Communications Members Take Aim at Content Blackouts at Start of Video Market Review

House Communications Subcommittee members in both parties used a Wednesday hearing to hammer the current retransmission consent negotiations process, particularly the blackouts when those talks break down, but all sides made clear a legislative solution is likely to take longer than the current Congress to pass. There was strong GOP opposition, meanwhile, to the FCC potentially refreshing its long-dormant docket (14-261) on reclassifying streaming services as virtual MVPDs to fix a perceived disparity in retransmission consent rules, as expected (see 2309120059).

The Wednesday panel was “just the beginning of this conversation,” said House Communications Chairman Bob Latta, R-Ohio. Streaming services’ increasing share of the video marketplace is one instance of how “the media landscape has drastically evolved” while the regulatory environment “has largely remained the same.” Congress “must resist the temptation to impose more regulations on a competitive, innovative” streaming industry because of those changes, he said: “Rather, we should focus on deregulating an overly regulated industry instead of imposing archaic 1990s-era regulations onto a new and vibrant” one.

House Commerce Committee Chair Cathy McMorris Rodgers, R-Wash., likewise said she does “not support” simply updating the 1992 Cable Act to cover streaming services. “That approach would be irresponsible,” as it would lock both the cable and streaming industries “into outdated laws,” she said. Rodgers also noted she and Latta urged FCC Chairwoman Jessica Rosenworcel in August against refreshing the MVPD reclassification docket’s record (see 2308090065), something NAB CEO Curtis LeGeyt strongly endorsed during the hearing. Senate Commerce Committee Chair Maria Cantwell, D-Wash., also backs reopening the docket.

“The evolving video marketplace is complex” and recent uncertainty means it’s “more important than ever to put consumers first and make sure that they are not being ripped off by these companies because of high prices and junk fees,” said House Commerce ranking member Frank Pallone, D-N.J. “My focus will remain on consumers and the timeless principles of competition, localism, and diversity in the Communications Act.” U.S. “statutes and regulations have clearly not kept pace as the media landscape has changed,” but “the solution is not to throw it all out, give up any oversight, and abandon consumers,” he said: “We must remember why those statutes and regulations were enacted in the first place. Only then can we decide how best to carry those values forward on behalf of American consumers.”

House Communications ranking member Doris Matsui, D-Calif., said she’s “going to be laser-focused on stopping” the rising number of content blackouts resulting from failed retrans talks. “It’s an experience that is all too common” and “must stop” because the stoppages are “unfair” to consumers, she said: It means they “pay for something they never get.” Matsui later focused her questions on how blackouts affect local broadcasters, in part citing the successful carriage agreement between Charter Communications and Disney that prevented a blackout of Disney’s content for some Spectrum customers (see 2309110034).

Rep. Anna Eshoo, D-Calif., was blunter, saying Congress “needs to cure” the proliferation of content blackouts. It’s a “tool of negotiation by people that think of themselves as being innovators and entrepreneurs” but are effectively saying “let’s just screw the consumer,” she said: Eshoo pledged to again refile her Modern Television Act (see 2103110064) which would repeal parts of the 1992 Cable Act, including retrans rules. That would “prevent blackouts and allow free market negotiations to happen under traditional copyright laws,” she said.

House Communications Vice Chair Buddy Carter, R-La., pressed industry representatives about whether sports leagues’ “significant media rights” and associated fees are affecting the rise in retrans costs, giving the executives an opportunity to temporarily unite behind a common boogeyman. He later questioned whether it’s “even possible” to put all parties under the “same regulatory framework.” Cable companies “desperately need a level playing field,” but “this won’t be a bill that we can pass in one” Congress, said ACA Connects CEO Grant Spellmeyer. “It’s going to take some time, but it does need to happen or prices will continue to escalate, blackouts will continue and consumers will lack choice.”

Sports leagues’ fees are “directly related” to retrans fees “and it’s driving” rising costs, Spellmeyer said. He cited fees charged by the NFL and NBA and said they and other leagues are stopping cable companies “from telling anybody what the price is that we’re paying” for sports content. “The content providers” are also the ones “forcing us to” bundle together larger channel packages rather than allowing a la carte selections, Spellmeyer said.

“Sports rights are the elephant in the room” when “we talk about what are the costs of putting out a product that are putting pressure on everyone in this media landscape,” said NAB CEO Curtis LeGeyt. “The viewing that has the most value, especially to advertisers, is the viewing that you have to do in real time, and that’s sports.” There “is no doubt that the regulatory framework that has enabled local broadcasters to negotiate retransmission consent … has resulted in tremendous investment in local content,” he said: The FCC “needs to examine whether, as audiences are migrating to streaming, that some elements of that regulatory framework may be relevant there.”