Policy

Lake: Retrans NPRM To Provide Good Faith Bargaining 'Guidance'

12/08/2010 1:19 PM Eastern

Federal Communications Commission Media Bureau chief Bill Lake made it official Wednesday, announcing at a Media Institute lunch that the FCC plans to issue a proposed rulemaking on retransmission consent, confirming an earlier report in Multichannel News.

Lake, in a copy of the speech obtained by MCN, said the commission plans to issue a broad notice looking at what more it could do "to advance the statutory objectives of allowing retrans fees to be set by market forces, while protecting the interests of consumers." In addition to posing that question, it will also provide "some limited guidance" on what good faith bargaining entails, and may also "try to identify additional practices that will be treated as per se violations of the duty to bargain in good faith," though leaving that open for public input as well.

In October, FCC chairman Julius Genachowski said he welcomed Congressional input on reforming retrans, but Lake said the question still remained whether the agnecy had done all it could to prevent consumer disruption with the authority it already has. "We have decided we should move forward with a Notice of Proposed Rulemaking to explore a number of available actions," he said.

Other possible remedies may be to provide more specifics on the "totality of circumstances test," which is conduct "sufficiently outrageous... as to breach a broadcaster's good faith negotiation obligation."

"If some of our broadcast rules are thought to interfere with market negotiations," Lake added, "we may want to look at those rules."
Cable operators have suggested that syndicated exclusivity, non-duplication and must-carry and other rules are thumbs on the scale for broadcasters that reduce MVPD leverage in the marketplace, though Lake did not elaborate on just what rules the FCC might look at.

Given that the goal is to protect consumesr, Lake said, the FCC may also strengthen its notification requirement for possible signal cut-offs, and put the impetus on broadcasters and other distributors in addition to cable.
Lake said that the "halcyon days" when "thousands" of retrans deals were done quietly without viewers being aware of them are over. "When a retrans deal expires today, there can be high drama," he added.

And while the FCC can enforce good faith negotiations, he said that obligation "does little to prevent impasses for negotiators and service disruptions for consumers."

Lake said that the FCC was spurred by the Fox/Cablevision retrans fight -- in which viewers lost cable access to two World Series games -- as well as the Time Warner Cable petition and public comment on retrans.

Lake noted that the current system or "regulated negotiation" is oxymoronic, like "managed competition" or "friendly argument," since it puts the onus on private parties to set the terms, but the FCC to "make sure the parties are negotiating in good faith and to watch that retrans fees don't produce unreasonable basic-cable rates."

Lake pointed to the petition for rulemaking by Time Warner Cable and others seeking reform of a broken system, and to Congressional calls for action based on consumer harm when parties fail to reach a deal and signals are cut off.

Lake suggested the FCC's NPRM is meant to address the old African saying that "when the elephants fight, it is the grass that suffers."

And in the spirit of the Christmas season, Lake pointed to a naughty-or-nice test of sorts for possible FCC action. "We will pay close attention to...future developments in the marketplace," he said. "Are the disruptions of the last year an anomaly -perhaps just a sign of friction as prices move to a new level? Or will we see a continuing pattern of disputes that threaten viewers' access to programming?"

The FCC NPRM is in part a response to a request by cable operators last March for fixes to a broken system. It was also the result of congressional input--Senator John Kerry (D-Mass.) has drafted a retrans bill--and high-profile retrans disputes--Fox Cablevision, Disney Time/Warner) that drove much of that Hill interest in keeping constituents from losing multichannel access to TV station signals.

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