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FCC Won’t Revamp Retrans Oversight

Broadcasters had feared losing leverage in high-stakes carriage deals 7/25/2016 8:00 AM Eastern
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The FCC has closed its probe into “good-faith” retrans negotiations without taking action, dealing a blow to MSOs.

WASHINGTON — Broadcasters have won a big victory at the Federal Communications Commission in their battle with cable operators over retransmission consent.

 

When FCC chairman Tom Wheeler announced in a blog post that the agency was closing its inquiry into its definition of good faith retransmission-consent negotiations without taking any action at all, TV-station owners breathed a big sigh of relief and cable operators cried foul, and probably a few unprintables.

 

The broadcast and cable industries have been in a pitched battle over the issue since Congress directed the FCC to look into whether it should update the factors in its “totality of circumstances” test for what constitutes good-faith — or alternately bad-faith — negotiations.

 

Broadcasters feared that the FCC could decide to make the blacking out of stations a de facto bad-faith move; prevent the bundling of TV stations and cable networks in retrans negotiations; mandate arbitration; or make any number of moves that cable operators had been pushing for.

 

Broadcasters said adding new, specific prohibitions would weaken their negotiating positions and tinker with a system that was working. Cable operators have contended that retransmission consent is broken and skewed toward broadcasters.

 

Wheeler has suggested that he holds the same view of the marketplace as broadcasters, but one veteran D.C. broadcast-industry lobbyist said he may also have lacked the votes to enact retrans reform.

 

“Though commenters complained about a variety of negotiating practices, none showed that those practices are the causes of the blackouts that occur,” Wheeler said in closing the review. “Further, a number of the practices complained of were said to have been engaged in by a single negotiating party or in a small number of negotiations and do not appear to be gaining currency in the marketplace.”

 

Adonis Hoffman, chairman of Business in the Public Interest and a former chief of staff to Democratic FCC member Mignon Clyburn, suggested Wheeler was turning to battles he could win.

 

“When the chairman looked at the calendar, I think he realized that a potentially bloody battle on retrans was not in his — or the public’s — interest,” he said. “There would be several congressional leaders who would have been adverse to another rulemaking on the subject.”

 

Wheeler has a full docket with the FCC’s just-announced game plan for freeing up 5G spectrum, his push for broadband-privacy rules and the set-top box plan stemming from yet another congressional mandate related to the STELAR renewal of the satellite compulsory license.

 

Wheeler signaled that the current “totality of circumstances” test for negotiations is better left as a general catch-all.

 

“Based on the staff’s careful review of the record, it is clear that more rules in this area are not what we need at this point,” Wheeler said. “It is hard to get more inclusive than to review the ‘totality of circumstances.’ To start picking and choosing, in part, could limit future inquiries.“

 

The chairman’s take on retrans mirrors his support for a general-conduct standard in the Open Internet order. Rather than come up with a lot of new bright-line prohibitions, the totality of circumstances test leaves the FCC free to step in, or not, depending on what all those circumstances are.

 

For instance, at the same time he was closing the book on that retrans review, the FCC was stepping into the ongoing retrans fight between Dish Network and Tribune Media.

 

Wheeler said the FCC has issued “comprehensive” data requests to both sides to it can figure out whether they are negotiating in good faith. “If that review reveals a dereliction of duty on the part of one or both parties, I will not hesitate to recommend appropriate commission action,” he said.

 

And as with the FCC’s review of zero-rating plans under the general-conduct standard of the network neutrality rules, Wheeler does not have to wait for a complaint.

 

“The commission can investigate a potential good-faith violation on its own and take enforcement action when a party fails to fulfill its statutory obligations,” he said.

 

But that was pretty much lipstick on a pig for the cable operators who have been arguing that new rules against program bundling and joint negotiations and blackouts are just what the process needs.

 

“Today is a sad day for television viewers,” American Television Alliance spokesman Trent Duffy said following Wheeler’s decision. ATVA has been carrying the flag for cable operators in the retrans fight.

 

The chairman’s office was not commenting, but it is a pretty clear signal this is it for revamping the FCC’s approach to retrans negotiations under Wheeler.

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