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FCC Seeks to Tweak Retrans Rules

3/07/2011 12:01 AM Eastern

Washington — Cable operators were
making the best of the Federal Communications
Commission’s launch of a
rulemaking proposal last week to tweak
its retransmission-consent enforcement
regime.

The FCC voted unanimously last
week to propose several changes to its
retransmission-consent oversight rules
meant to better clarify what bargaining
in good faith means, as well as possibly
eliminate the syndicated exclusivity and
nonduplication rules to give cable operators
an alternative source of station
programming.

The bad news, which had been expected,
was that the FCC tentatively
concluded that it does not have the
authority to impose arbitration or
mandate carriage in retransmissionconsent
impasses. The good news was
that the commissioners sought comment
on whether they were right.

“We didn’t get everything we wanted,
obviously,” said Time Warner Cable chief
government affairs officer Gail MacKinnon,
who also said her company would
continue to try to make the case that the FCC does have
the authority to mandate arbitration and standstills.

The other good news for cable operators was that the
FCC had at least voted unanimously to propose doing
something. Cable operators have been arguing that the
system is broken and needs a major fix, while broadcasters
were advising the government to leave it alone.

TWC joined with Cablevision Systems, Charter Communications,
telcos and others to petition the FCC to step
in. And while MacKinnon conceded they did not get all
they wanted, she said it was “a very good day for pay TV
subscribers,” calling it a net positive for, at the very least,
getting the issue moving at the commission.

“This issue a year ago, wasn’t anywhere on the FCC’s radar
screen,” she said “The fact that they put out an NPRM
asking a lot of good questions about the system is very
good for PTV providers and their customers. This is a marathon,
not a sprint.”

The American Cable Association said it still thought the
time was ripe for “Extreme Makeover: FCC Edition,” but
gave the agency props for taking some action. “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 FCC has the authority to ensure that broadcasters
and MVPDs’ negotiations meet a good-faith requirement,
and FCC Media Bureau chief Bill Lake said last week that
recent retrans disputes have become more “contentious
and more public.” He did not say more frequent, which
broadcasters argue is not the case. Commissioners Meredith
Attwell Baker and Robert McDowell pointed out during
the FCC’s meeting to vote on the proposal that most
deals are done privately and quietly.

Lake emphasized the moves were driven by the FCC’s
desire to reduce consumer disruptions, while preserving
the marketplace negotiation framework Congress imposed.

He also clarified that the FCC was still seeking input on
whether to get rid of the network non-duplication rules
and syndicated exclusivity rules.

MacKinnon agreed that would give
cable operators more leverage in negotiations,
though that would not be hard
to do since, she said, they currently
have “none.” It would also give broadcast
networks more power in affiliation agreement
negotiations, since the FCC
rules providing geographic exclusivity
are currently a backstop to those agreements.

“There’s concern that the Commission
is looking into network nonduplication
and syndicated exclusivity rules,”
said National Association of Broadcasters
spokesman Dennis Wharton. “But
we’re optimistic that a fair review will
demonstrate convincingly that these are
two rules that are the lynchpin for preserving
local broadcasting.”

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

The “marathon” will continue with comments due
60 days after publication in the Federal Register (which
should come within a week to 10 days), and replies due
30 days after that.

The FCC’s Democratic chairman, Julius Genachowski,
and Republican commissioner McDowell both emphasized
last week that parties currently negotiating should
remain at the table. McDowell said he was concerned they
would see the FCC move as a sign the commission would
be intervening.

“So those of you who are working on retrans deals
in 2011 and beyond should stay seated, and engaged,
at the bargaining table, and reach a deal on your
own,” McDowell said. The chairman echoed that in his
statement, saying, “This is not a signal or excuse for footdragging,”
and the FCC could view such foot-dragging as
“bad-faith negotiation.”

House Energy & Commerce Committee Chairman
Fred Upton (R-Mich.) cautioned the FCC against doing
too much. “The government should not be intervening in
program-carriage arrangements in this competitive marketplace,”
he told Multichannel News. “The parties should
be free to negotiate over compensation for programming
or carriage, and to walk away from the table if they do not
reach mutually agreeable terms. These deals almost always get done because both sides have something of value with which to negotiate, and neither side ultimately wants to lose access to consumers. For the same reason, I think we should discuss whether existing government intervention is inappropriately skewing those negotiations. The government should not be picking winners and losers."

RETRANS QUARTET

The FCC boiled its more-than-30 page retrans notice of
proposed rulemaking down to the bone in this summary:

1. Provide more guidance under the good-faith negotiation requirements to the negotiating
parties by specifying additional examples of per se violations in Section
76.65(b)(1) of our rules and further clarifying the totality of the circumstances
standard of Section 76.65(b)(2);

2. Improve notice to consumers in advance of possible service disruptions by extending
the coverage of our notice rules to non-cable MVPDs and broadcasters as
well as cable operators, and specifying that, if a renewal or extension agreement
has not been executed 30 days in advance of a retransmission-consent agreement’s
expiration, notice of potential deletion of a broadcaster’s signal must be
given to consumers regardless of whether the signal is ultimately deleted;

3. Extend to non-cable MVPDs the prohibition now applicable to cable operators
on deleting or repositioning a local commercial television station during ratings
“sweeps” periods; and

4. Allow MVPDs to negotiate for alternative access to network programming by eliminating
the Commission’s network non-duplication and syndicated exclusivity rules.

SOURCE: FCC

September