Policy

Cable Might NAB a Win

2/06/2005 7:00 PM Eastern

Washington— Barring a major script change, the Federal Communications Commission is about to hand the National Association of Broadcasters its biggest policy defeat in years, a setback cemented by last week’s announcement of a long-term digital carriage deal between cable and public broadcasters.

Broadcasters have been lobbying the FCC for seven years in a quest to secure mandatory cable carriage of every digital-TV service they provide free to their over-the-air viewers.

While limited to one signal in an analog world, broadcasters can use their digital capacity to pump out five or six programming services, potentially converting stations in each market into multichannel rivals to cable and satellite.

But broadcasters argue that multicasting for the benefit of viewers who don’t use pay TV is a digital pipe dream, if those services can’t reach cable’s mass subscriber base.

The FCC is scheduled to vote Feb. 10 to reject so-called multicast must-carry and retain the current policy of requiring cable carriage of just one digital programming service per station.

Carriage of multiple signals would be subject to negotiation, which so far has produced DTV carriage of more than 500 stations.

The FCC majority is expected to include chairman Powell and Republican commissioner Kathleen Abernathy. The all-important third vote is expected to come from Democrat Jonathan Adelstein, whom cable helped get re-confirmed late last year, when his FCC career was just days away from oblivion.

An FCC source last week said that agency officials told the National Cable & Telecommunications Association more than a year ago that any hope of securing Adelstein’s decisive vote was contingent upon completion of a carriage deal with public-TV stations, owing to Adelstein’s concern about the fate of 350 public-TV stations in an uncertain digital world.

KEY PIECES PLACED

Over the last few months, key pieces fell into place. The Bush White House gave Adelstein five more years at the FCC; Powell promised to schedule the vote; and cable and public broadcasters dusted off a carriage deal that some said had been ready to go for months.

Under the NCTA-APTS deal, cable operators agreed to carry all analog signals during the transition, plus up to four digital-multicast services provided by a single station in the market — most likely the most widely viewed one.

After the transition, when analog spectrum has been returned, cable operators will carry up to four digital multicast services from each public station in a market.

The agreement, however, calls for dropping multicast services if they duplicate services from other stations, a concession to cable’s interest in husbanding bandwidth. Yet public stations that surrender their analog signals before the formal end of the transition may exercise their multicast-carriage rights at that point.

The 10-year agreement includes the NCTA, the Association of Public Television Stations and the Public Broadcasting Service. The boards of the NCTA, APTS and PBS have already approved the deal, a cable-industry source said Friday morning. But MSOs serving 80% of cable subscribers and public stations reaching 80% of TV households must still ratify the pact.

Cable operators are to begin complying with the transition rules within 180 days of final approval.

“I’m confident our industry will support this agreement,” said NCTA president Robert Sachs.

Added APTS president John Lawson, “This is a fair agreement for all parties, and I am confident our members will approve it by large majorities.”

COMMERCIAL-PUBLIC SPLIT

Cable’s carriage deal with public stations drove a wedge between commercial and public TV stations. Although the NAB continued to push for mandatory multicast carriage at the FCC, APTS gave up working with NAB insofar as cable is concerned.

“As of today, we cease all advocacy on that question, one way or another,” Lawson said, adding he would continue to fight for mandated multicast carriage on direct-broadcast satellite.

To avert disaster at the FCC, broadcasters have the option of withdrawing their multicast petitions.

But that would preserve the status quo established in 2001, when the FCC ruled that DTV stations were entitled to carriage of a single service after yielding their analog spectrum.

By stopping a vote now, broadcasters would likely be able to revive multicasting under an FCC headed by a new chairman. Powell will leave the agency in March.

Even though Adelstein has been known to change his mind at the last minute, Powell was confident last week that Adelstein will supply the third vote to kill mandatory multicasting, an FCC source said.

BIG PHOTO OP

Adelstein’s endgame role in a political drama that has played out since 1998 was illustrated by his appearance at the National Press Building press conference where Sachs and Lawson unveiled their deal last Monday.

Usually, Powell would have been the one to bless such an important development. But Powell decided to let Adelstein reap the glory.

“This is a landmark and forward-thinking deal. It’s a win-win-win for the cable industry, for public TV, and for the American viewing public,” Adelstein said. “That’s how Washington should work.”

Adelstein left immediately, refusing to take questions and brushing off reporters who followed him to the elevator.

In the past, the NAB was the one to praise how Washington works. But sensing defeat at the FCC, it launched a counteroffensive designed not to pull Adelstein away from cable’s camp, but to pull the multicast vote from the commission’s agenda.

Belo Corp. and 650 station affiliates of ABC, CBS and NBC urged the FCC to postpone the vote, claiming the agency was dealing with the DTV transition piecemeal, while Congress planned to consider a major policy overhaul in the months ahead.

The broadcasters’ most aggressive move was a letter sent to President Bush last Wednesday from National Religious Broadcasters president Frank Wright asking for postponement.

Given Powell’s decision to leave the FCC in a few weeks, Wright told Bush, “It would seem exceedingly appropriate to wait and resolve this issue after you have selected the new chairman.”

FCC member Kevin Martin, a Republican Bush appointee, is in the running for the chairmanship. He is considered supportive of broadcasters’ cable-carriage goals.

POWELL 'RUSHING’

In remarks here last week, Philip Lombardo, CEO of Citadel Communications Co. and Joint Board chairman of the National Association of Broadcasters, accused Powell of rushing the vote.

“It’s unfortunate that chairman Powell has decided to push an item as he’s walking out the door,” Lombardo told the Media Institute, a First Amendment organization funded by various media companies. “I would hope that either [Powell] would reconsider, or that a number of commissioners would think that makes a lot of sense.”

An FCC source said Powell is moving ahead partly because Paxson Communications Corp., one of the largest TV station owners in the U.S., has asked a federal court to force the agency to decide multicasting issues within 30 days.

Lombardo said the FCC was under no pressure to act.

Powell “has already responded to the court that he will get around to it. He didn’t have to get to it this quick without any dialogue and without the ability to have other forces provide their thoughts on the matter,” Lombardo said.

An FCC source said the NAB’s imminent defeat was not so much the result of clever cable lobbying but the inability of NAB to seize two opportunities to win the battle.

The source said NAB could have received the necessary three votes — probably Martin, Adelstein and Democrat Michael Copps — had the trade group been willing to commit to concrete public-interest obligations in exchange for multicasting mandates. NAB refused, the source said.

The NAB would have also been able to secure multicasting had it agreed to return all analog TV spectrum no later than Dec. 31, 2008, under an FCC plan developed by Media Bureau chief Kenneth Ferree. It balked, the source said.