The FCC said it will propose new rules governing negotiations between television broadcasters and cable providers for the carriage of their channels. The retransmission changes will seek to prevent situations that result in broadcast channels being pulled from cable providers — leaving viewers without television channels.
The FCC action is in direct response to cable television customers in the Northeast being left without access to the first two games of the World Series this year when News Corp., owner of the Fox network, fought a nasty and highly public retransmission dispute with regional cable TV provider Cablevision.
The chief of the FCC’s Media Bureau, William T. Lake, revealed the new rulemaking in a speech last week before a Media Institute luncheon in Washington, D.C. He said the current system of “regulated negotiation” is oxymoronic, like “managed competition” or “friendly argument.”
The new rule, once approved by Congress, puts the onus on private parties to set the terms, Lake said, but the FCC to “make sure the parties are negotiating in good faith and to watch that retrans fees don’t produce unreasonable basic cable rates.”
Lake said the “halcyon days” when retransmission deals were done quietly without viewers being aware of them are over. “When a retrans deal expires today, there can be high drama.”
By law, the FCC cannot force the parties into binding arbitration or act to prevent a disruption of television service. But it can ensure that both sides negotiate in good faith, and Lake said the commission would consider new definitions of exactly what “good faith” means.
The FCC will consider remedies to behavior that is “sufficiently outrageous ... as to breach a broadcaster’s good faith negotiation obligation,” Lake said. Also, to be considered is whether some FCC rules “interfere with market negotiations” by giving one side an unfair advantage.
“If some of our broadcast rules are thought to interfere with market negotiations,” Lake said, “we may want to look at those rules.”
One rule that may be reconsidered now disallows cable companies from importing the signal of a network affiliate from across the country if the local affiliate failed to provide its signal, he said. That rule gives an advantage to the broadcaster. Another rule for reconsideration requires cable companies to carry the broadcast channels in their basic tier channel lineup, perhaps giving broadcasters another advantage.
Lake said the FCC might identify certain practices that will be treated as violations of duty to bargain in good faith. Those might include a broadcast network’s arrangements with its affiliates that reserves the network’s right to approve or disapprove a retransmission contract.
He said the FCC might also reconsider its notice requirements, which requires cable companies to give customers 30 days notice of a possible interruption in service. That rule does not currently apply to broadcasters or noncable distributors, including satellite providers.
Lake said the FCC would prefer that Congress act to deal with the problem. Julius Genachowski, the FCC’s chairman, said in an October letter to Sen. John F. Kerry, D-MA, the chairman of the subcommittee that oversees the commission, that he believed it is “time for Congress to revisit the current retransmission law,” and possibly give the commission better tools to deal with the disputes.
However, given the difficulty of the gridlocked Congress’s enacting legislation, combined with the expiration of some retransmission contracts near the end of the year, the FCC has decided to act on its own.
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