Retransmission and Must Carry Rules Must Go! | Citizens Against Government Waste

Retransmission and Must Carry Rules Must Go!

The WasteWatcher

Television has changed vastly since the days analog signals carried only three major networks and one or two other channels over the airways. Today, there is a wide range of viewing options available to consumers, ranging from cable and fiber optic networks on the ground, to satellite feeds and online distribution of programming.

The House Energy and Commerce Subcommittee on Communications and Technology held a “Future of Video” hearing on June 27, 2012, to examine how technology has changed the way Americans now view entertainment across the spectrum of available choices. This hearing was followed on July 24, 2012 with a Senate hearing on “the Cable Act at 20,” where some of the witnesses discussed how advancements in video technology are at odds with existing laws governing broadcast television programming.

Twenty years ago, due to cable television rate increases following deregulation, a lack of competition in the cable marketplace and the concern of broadcasters that their local stations would not be carried by cable companies, Congress passed the Cable Television Consumer Protection and Competition Act of 1992 (P.L. 102-385), also known as the 1992 Cable Act. This law amended the 1934 Communications Act by prohibiting cable operators and other multichannel video programming distributors (MVPDs), which now include satellite and fiber optic networks, from rebroadcasting or “retransmitting” commercial television, low power television and radio broadcast signals without first obtaining the originating broadcaster’s permission.

The 1992 Cable Act provides broadcasters with a choice every three years to either demand that an MVPD carry their local commercial and noncommercial television broadcast signals under “must carry” rules, or negotiate a price with the MVPD to give permission to “retransmit” their signal. If the broadcaster decides that the MVPD must carry its signal, the broadcaster cannot demand compensation from the MVPD for retransmission of the signal. MVPDs are also restricted to dealing with a single local station under “non-duplication” rules, despite the fact that other external markets might carry the same programming and are willing to negotiate a lower price. For example, a cable or satellite distributor serving metropolitan Washington, D.C. cannot currently negotiate for a lower price with a local CBS affiliate in nearby Baltimore, Maryland. By inserting “must carry,” “retransmission,” and “non-duplication” provisions into the law, Congress sought to protect broadcasters with a choice in how their broadcast signals would be carried, and open up the cable marketplace to more competition by placing subscriber rates in non-competitive markets under the authority of either a franchising authority or the Federal Communications Commission (FCC) and prohibiting exclusive franchises within a local market.

Despite the 1992 Cable Act’s intentions, its provisions have caused broadcasters and MVPDs to be at odds during numerous retransmission negotiations. In 2010, blackouts occurred that caused viewers to lose access to events such as portions of the Oscars and New York Knicks games. In May 2012, subscribers in North Dakota were unable to access their local CBS and NBC programming when disagreements occurred during negotiations between Dish Network and Hoak Media Corporation. In another retransmission consent dispute, Midcontinent Communications subscribers in Minnesota and North Dakota temporarily lost access to local Fox stations in April 2012.

The most recent breakdown in negotiations between a broadcasting company and an MVPD led to nearly 10 days of local broadcast channels being blacked out in 15 markets. This dispute between Time Warner Cable and Hearst Media was finally resolved on July 22, 2012. According to testimony provided by Melinda Witmer, executive vice president and chief video and content officer of Time Warner Cable, during the July 24, 2012 Senate Commerce Committee hearing, there has been an increase in the number of blackouts that have occurred during retransmission negotiations, rising from 12 in 2010 to 51 in 2011 to 69 blackouts to date in 2012.

Current law does not adequately address the problem of these programming blackouts experienced by millions of consumers who have fallen victim to tense negotiations between broadcasters and MVPDs, as broadcasters have used their upper hand to “hold hostage” their programs in an effort to force MVPDs to pay exorbitant fees or carry extra channels on their basic tiers. As a result, consumers not only sometimes experience a programming blackout until a deal has been reached, but also see an increase in their bill as broadcasters’ ransoms are passed off in the form of higher rates.

In March 2011, the Federal Communications Commission (FCC) adopted a notice of proposed rulemaking on potential changes to the retransmission consent rules. Specifically, the FCC has asked for comment on proposals that would provide more guidance on good faith negotiation requirements, improve notice to consumers of possible service disruptions caused by impasses in negotiations, and eliminate the FCC’s network non-duplication and syndicated exclusivity rules. It would also allow disputing parties to enforce certain exclusive contracted rights to network or syndicated programming through the commission rather than the courts. However, further action on this proposed rulemaking has not yet occurred.

Legislation has been introduced in Congress to amend the 1992 Cable Act to eliminate outdated regulatory schemes such as must carry, retransmission and non-duplication rules. H.R. 3675 and S. 2008, the Next Generation Television Marketplace Act, introduced by Rep. Steve Scalise (R-La.) and Sen. Jim DeMint (R-S.C.) respectively, would repeal provisions in the 1992 Cable act that require MVPDs to set aside portions of their channel capacity for mandatory carriage of local commercial broadcast stations, and direct the FCC to repeal network non-duplication, along with other burdensome regulations, including syndicated exclusivity and sports blackout rules.

This legislation would also repeal media ownership caps, which limit the number of broadcast stations a single company can own in a given media market, and lift the ban on broadcasters owning a newspaper in the same market. Additionally, the bills would repeal the compulsory copyright license, in which the government dictates the royalties MVPDs pay to broadcasters for their content instead of allowing these royalties to be determined by a free market.

In retransmission consent negotiations, consumers lose both viewing time and pay increased costs. It is time to repeal antiquated regulatory schemes, including retransmission consent, and provide a new regulatory structure that reflects the current competitive marketplace.

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