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FCC strengthens power to intervene in retransmission disputes

In a unanimous vote, the FCC approved a rulemaking concerning retransmission issues in hopes of preventing future blackouts of popular TV channels when disputes get nasty, as they have in several regions of the country.

The commissioners took a soft approach, saying they will consider possible changes to regulations that dictate how retransmission negotiations take place. For example, they want to clarify what "bargaining in good faith" means, and they said they may eliminate syndicated exclusivity and nonduplication rules to give cable operators an alternative source of station programming.

Last October’s standoff between Fox and Cablevision triggered the rulemaking. In that case, some 3 million New York-area subscribers were prevented from viewing key playoff and World Series baseball games.

Rule changes could be bad for broadcasters, however. Retransmission fees have become an important source of profits for them, particularly as a decline in ad revenue has left many networks scrambling to maintain their profit margins and find alternative revenue streams.

The FCC has the authority to ensure that broadcasters and multichannel programming distributors meet a good-faith requirement. However, FCC Media Bureau Chief Bill Lake said that recent retransmission disputes have become more “contentious and more public.” The FCC’s action, he said, was driven by the commission’s goal to reduce consumer disruptions.

FCC Chairman Julius Genachowski said many retransmission issues would require statutory change, noting that the FCC doesn’t have the authority to mandate carriage or arbitration.

He said that a number of changes are possible, however. Those include the FCC providing “more guidance to the negotiating parties on good-faith negotiation requirements; improved notice to consumers in advance of possible service disruptions caused by impasses in retransmission consent negotiations; and the elimination of the commission’s network nonduplication and syndicated exclusivity rules, which provide a means for parties to enforce certain exclusive contractual rights to network or syndicated programming through the commission rather than through the courts.”

“Since Congress enacted the retransmission consent regime in 1992, there have been significant changes in the video programming marketplace that have contributed to changes in negotiations for retransmission consent,” the chairman said.

Other issues raised at the meeting include the impact of early termination fees on the ability to switch providers to avoid blackouts, whether networks should be allowed to negotiate retransmission agreements for affiliates and whether a station should be able to negotiate for a station it operates under a joint-services agreement.

The rulemaking came in response to a petition by cable operators including Time Warner Cable and those represented by the American Cable Association (ACA). They had been pushing the FCC to take action on arbitration and standstills that would keep station signals on during impasses.

“ACA commends the FCC for agreeing that the time has come to give careful consideration to new TV station carriage rules to ensure they reflect the market as it exists today and that consumers get to realize the benefits of real choice and robust competition,” said ACA President Matt Polka.

The NAB had no immediate response to the proposal to eliminate the syndicated exclusivity or network nonduplication rules, which currently prevents cable operators from negotiating with similarly situated, out-of-market stations if it cannot strike a deal with a local station. That would obviously strengthen the cable operators’ hand in retransmission deals.

Two consumer organizations, Free Press and Public Knowledge, criticized what they call a weak FCC response.

“The FCC needs to do more to help consumers, instead of just helping the cable companies and broadcasters,” Free Press political adviser Joel Kelsey said. “This market is broken, and so-called good-faith bargaining does little to prevent subscribers from losing access to channels they are paying for when a dispute arises.”