Finance

Retrans Fight Stars in STELA Hearing

Broadcasters, MVPDs Debate Need for Retrans Reform 9/10/2013 1:15 PM Eastern

There may or may not ultimately be a clean reauthorization of the Satellite Television Extension and Localism Act (STELA), but the House Judiciary Committee subcommittee hearing on that legislation was anything but streamlined.

Tuesday's two-and-a-half-hour hearing in the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet featured a host of complicated issues, with broadcasters and MVPDs squaring off over retrans.

The gloves came off as National Association of Broadcaster witness Gerry Waldron called out Time Warner Cable, Dish and DirecTV for allegedly manufacturing the retrans blackout "crisis" for political purposes, saying it was a "distinct pattern" that 89% of high-profile impasses had involved those three distributors.

Witness Stanton Dodge from Dish said those companies had been involved because they represented large amounts of viewers and were in the best position to stand up to broadcasters who colluded in retrans negotiations.

Broadcasters seek a clean reauthorization of the satellite license if the alternative is a referendum on retrans, while cable operators and MVPDs generally are looking at STELA as the vehicle for what they say is that needed reform.

Up for sunset in STELA at the end of 2014 is the compulsory license that allows satellite operators to import distant TV station network affiliated signals. There was much conversation about that particular issue, which involves serving markets without a full complement of affiliated stations, as well as where satellite spot beams don't reach, or so-called orphan counties that may lack access to stations carrying nearby sports teams or news or politics more relevant to those viewers.

But retrans got a lot of attention as some legislators indicated STELA should be a vehicle for debating broader issues about access to video programming and changing delivery systems.

Teeing up that debate was Rep. Mel Watt (D-NC), ranking member of the subcommittee. 

He said while he said whether or not to extend the expiring license--he suggested he might be leaning toward not--was the focus of STELA, he said it was part of a complex statutory framework and was "virtually impossible" to consider in a vacuum.

Watt said he thought STELA was a unique opportunity to tackle some of the big issues that will define the future of video. But while he said that he might lean towards arguments by former Fox/News Corp. and Disney/ABC executive Preston Padden for getting rid of all the compulsory licenses--satellite and cable--he suggested the debate needed to be over whether that "abrupt dismantling" would hurt or help consumers and how it could impact industries that had developed a complex framework under a regime created by law.

The retrans regime was one of the larger issues that got plenty of the hearing's time and attention.

Subcommittee chairman Howard Coble (R-NC), pointed out that constituents weren't shy about demanding action when they lost access their favorite shows. He said the committee should be able to agree on some basics: Americans love their TV and want as much choice as they can get for the lowest price.

Waldron said that most retrans deals are done without incident. He told the committee that viewers were 20 times more likely to lose access to stations do to a power outage than from a retrans version of a blackout.

He argued that it was localism that the government would be protecting by not trying to reform retrans through STELA. A number of committee members echoed the importance of broadcast localism at the hearing, notably ranking full committee member John Conyers (D-Mich.), who said that people still highly value local news and sports and need their local channels for the delivery of community service and emergency info.

Waldron also suggested that the satellite distant signal compulsory license had outlived its usefulness given that the vast majority of satellite viewers can now get local stations.

Dodge said that blackouts were increasing each year, to the detriment of consumers, and that if broadcasters wanted to wrap themselves in localism, they should not be pulling signals and disenfranchising local viewers. Earle MacKenzie of Shentel, who was representing the American Cable Association, warned that recent super group broadcast combos could lead to more retrans negotiation "collusion" against cable operators.

Both ACA and Dish are members of the American Television Alliance and they carried ATVA's message that the government should step in to protect consumers from blackouts and give them more choice by allowing the importation of distant signals temporarily during impasses.

Waldron said broadcasters also wanted to give viewers choice, which was behind CBS's desire to be able to share its content with Web sites as well as Time Warner Cable. He also said viewers could get more choice if cable operators made it easier to switch services.

Next up in the STELA debate is the House Communications Subcommittee, which is holding a hearing on video regulation Wednesday (Sept. 11).

October