Deborah D. McAdams / 07.24.2012 11:37AM
Retrans Battle Lines Drawn at Senate Hearing
Carriage regime blamed for cable tiers
Sen. Kay Bailey Hutchison summed up Tuesday's Senate Commerce Hearing on reforming
the 1992 Cable Act, which defines current retransmission consent and must-carry
“There’s not likely to be a lot of agreement on this,” the Ranking Republican
member from Texas said after Sens. Jim DeMint (R-S.C.) and John Kerry (D-Mass.)
came out on opposite sides of the issue.
“I do not believe that local broadcasters need government intervention to be
viable,” said DeMint, sponsor of a bill to eliminate must-carry, retransmission
consent and exclusivity, which prevents a pay TV provider from picking
up out-of-market TV signals. The bill would also eliminate the compulsory
copyright requirement that provides the foundation for retransmission, which
DeMint called “a construct of lobbyists and politicians.”
Further, DeMint said the current legal regime “violates property rights”
because it directs pay TV providers to carry broadcast signals on basic tiers.
“As I listened to Sen. DeMint,” Kerry said, “There’s a real divide here. He
would repeal must-carry, statutory copyright license, the buy-through
prohibition… and the basic tier requirement. It would essentially make
broadcast channels like any other channels; meaning cable operators would be
able to buy the programming from anywhere. It would have a profound impact on
the concentration of ownership… It would do nothing to resolve this question of
negotiating stalemate, and result in very few broadcasters being around.”
Kerry noted that in the recent retrans dispute between Time Warner Cable and
Hearst Television, Boston ABC affiliate WCVB-TV was pulled from the cable
system. He said the station had been named an Edward R. Murrow Outstanding
“We want to see it succeed, but we don’t want to see the pulling of signals used
repeatedly in these disputes,” he said, adding that he would not support
“radical” elimination of retransmission and must-carry law.
The witnesses at the hearing were similarly divided. Gordon Smith, president
and CEO of the National Association of Broadcasters, and Martin Franks of CBS,
implored lawmakers to leave the ’92 Cable Act intact. Colleen Abdoulah, chair of the American Cable
Association, along with Melinda Witmer of Time Warner Cable, urged the repeal
of retransmission consent.
Smith, who was previously a senator from Oregon, told his former colleagues
that must-carry, compulsory copyright, and retrans was “a three-legged stool.”
Pulling one leg out would “dramatically damage” the ability of small stations
to compete, households relying on over-the-air broadcasting to receive service, and smaller
businesses to advertise on TV.
Franks, executive vice president for planning, policy, government affairs for
CBS Corp., said retransmission “is neither broken nor does it need updated.” He
testified that 15,000 retransmission consent negotiations take place every
three years, “almost all of them successfully,” and that CBS had completed all
of its retrans deals in the last six years without incident.
“Bad weather is more disruptive than market failure,” he said.
Witmer and Abdoulah attacked retrans law on the basis of a la carte pricing. A la carte offerings that would allow
subscribers to pick and choose what channels they want versus bundled or
tiered pricing. A la carte advocates
have been calling for the demise of tiers and bundles for a decade, but pay TV
providers have claimed it would be too costly and confusing. At the hearing, Witmer
and Abdoulah blamed retransmission consent.
“Retransmission consent forces cable operators to bundle unrelated channels,”
said Witmer, executive vice president and chief video and content officer for
Time Warner Cable.
Abdoulah, who is also CEO and board chair for WOW! Internet, Cable and Phone,
said, “Consumers often ask why they have to pay for so many networks they don’t
want… that’s why they like the Internet….“We don’t have the right to determine
bundles. The broadcasters, the programmers, mandate how we have to carry [their
Abdoulah said that as a result of escalating retransmission fees, nearly 800 of
ACA’s members—mostly small cable operators—have gone out of business since 2008.
Smith testified that of more than 5,800 cable operators in the United States,
only one-third of one percent have had programming disruptions due to
retransmission stalemates. He said most involved Time Warner Cable, DirecTV and
“Broadcasters are not
the source of rising cable fees,” he said. “Margins are.”
Former Disney lobbyist, Preston
Padden, now an adjunct professor of law at the University of Colorado School of
Law, said he’d “come to embrace” repealing compulsory programming licenses. He
said they allowed cable and satellite operators free access to programming, while
Internet distributors were left out.
“The only way to level playing field between Time Warner Cable and Netflix is
to repeal compulsory licenses,” he said.
~ Deborah D. McAdams