Lawmakers Urge FCC to Revisit Retransmission

WASHINGTON: Another Washington, D.C. lawmaker has asked FCC Chairman Julius Genachowski to revisit retransmission consent rules as a fight brews between two TV powerhouses. The retrans agreement between Time Warner Cable and Disney expires Sept. 2, and the two are already taking shots.

Meanwhile, Rep. Roy Blunt (R-Mo.) wrote a letter to Genachowski dated July 19, requesting a review. Blunt says he’s not choosing horses, but he does want a race.

“To be clear, we are not choosing sides in this matter nor are we advocating a specific resolution,” he wrote. “To the contrary: After further study, the commission might very well conclude that no changes to the current system are warranted. Hence, we advocate nothing more than that the commission, as the agency of primary jurisdiction, open a formal proceeding on retransmission consent and develop a complete record, with the goal of helping all concerned parties understand how this subject might be most productively addressed and the public interest most effectively served, be it through maintaining or altering the status quo.”

Retransmission rules allow broadcasters to negotiate for fees from cable and satellite operators for carriage of their signals. Since carriers charge for broadcast signals, broadcasters contend they are due compensation. Carriers argue that broadcasters have too much power in negotiations because they can pull signals, and carriers are prohibited from replacing them with out-of-market stations.

On March 9, Time Warner Cable, Cablevision, DirecTV, Dish, Charter, Public Knowledge, and several other entities filed a joint petition with the FCC, asking for retrans reform. The resulting docket, No. 10-71, generated at least 165 responses, and though the final reply comment period closed June 3, ex parte filings continue. The majority of ex parte filings are from cable companies, though one dated July 14 is from the chairman of the New York City Council’s Committee on Technology, Daniel Garodnick. He urged Genachowski to take up reform. The chairman’s been reluctant to do so. A senior Genachowski advisor attending a cable convention in May said broadcasters were not acting in bad faith by asking for more money, according to the Los Angeles Times.

Blunt is at least the fourth lawmaker to officially weigh in. Rep. Kurt Schrader (D-Ore.) filed comments in May indicating sympathy for the pay TV carriers. They want broadcasters prohibited from pulling signals when retrans contracts expire during contentious negotiations. The proposal is being referred to as the “standstill provision.”

“I have been hearing from many of my state’s smaller operators that they have a high cost of doing business and are... paying significantly high rates for programming,” Schrader wrote. “It is my understanding that many of these smaller operators may be at a disadvantage because they negotiate with larger content companies who have considerable leverage.”

Rep. Phil Hare (D-Ill.) expressed similar sentiments in his filing.

“Some of Illinois’ smaller cable operators are paying significantly higher rates for programming than larger operators,” he wrote. “Not seeing any legitimate economic justification for the vast differences in rates charged, I am concerned that my constituents are being placed at a disadvantage simply because they live in rural areas.... I am concerned that federal rules and regulations have not been able to keep up with the rapidly changing video-programming market which may be to blame forthe apparent price discrimination.”

Rep. Phil Gingrey (R-Ga.) sided with broadcasters.

“I am very concerned by the potential harm that the so-called ‘standstill provision’ coupled with the imposition of government arbitration is likely to cause,” he wrote. “Instituting a standstill would tilt the negotiating leverage entirely in the direction of the operator.”

The FCC has not yet placed retransmission on its agenda. The histrionics are escalating in the meantime. Time Warner Cable is leading the charge to reform retrans, especially now that Comcast is angling for regulatory approval of its NBCU takeover. (Comcast is conspicuously absent from the recently formed American Television Alliance, an industry consortium created to push retrans reform.) Comcast quietly reached retrans agreements earlier this month with Fox, CBS and ABC.

TWC, meanwhile, is trading brickbats with Disney. The two have used the FCC’s retransmission docket to argue data points, particularly how cable rates are affected by programming costs--and by extension, retransmission. (See “Disney Takes Aim at TWC’s Retransmission-Consent Analysis at the FCC” by Mike Reynolds of Multichannel News.)

Retransmission negotiations often are accompanied by consumer smear campaigns where both parties try to vilify the other. Both Disney and TWC have started ad campaigns, and Disney has put up a Web site,, specifically for the TWC negotiations.

“Our current agreements with Time Warner Cable to carry the ESPN Networks and--in certain markets--ABC stations, will expire on Sept. 2, 2010,” the site states. “The two companies are now in active negotiations to reach agreement before that date. It is in the best interests of consumers, as well as both companies, for us to successfully conclude these negotiations before the deadline to avoid interrupting service to Time Warner Cable subscribers. That is our goal.”

-- Deborah D. McAdams