Retransmission Consent Policy Making in 2013 Unlikely

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It’s gratifying when an hour-long discussion about the contentious issue of retransmission consent concludes with unanimous agreement from broadcast and cable lawyers.

The title of the Nov. 30 webinar was “Is 2013 the Year for a Revolution in Retransmission Consent Rules?”  Ultimately, all parties said, “No.” 

After blaming rights holders – especially sports programmers – for the onerous prices and costly retrans battles and acknowledging that Congress has higher priorities, the panel could merely agree that retransmission consent policy revisions will be “evolutionary, not revolutionary.” 

Matt Polka, president/CEO of the American Cable Association, Chris Cinnamon, partner of Cinnamon Mueller (ACA’s lobbying representative) and John Hane, an attorney at Pillsbury Winthrop Shaw Pittman and counsel to TV stations (especially smaller group owners), also agreed that Congress needs a better education about retransmission consent, beyond the high-profile flare-ups and threats of popular TV channels being yanked from cable and satellite line-ups.

“Given that Congress hasn’t looked at [retrans] since 1992, there’s a perception that not much has happened,” Polka said.  He suggested that “it is incumbent upon law makers” to review the retrans situation on a regular basis, much as they review the satellite carriage act every five years.

Hane stressed that there is a “huge amount of resistance to change among almost everyone in the value change, starting with rights holders.”  He contended that “everyone wants flexibility,” but all parties, including policy makers, are slow to change the norms.

“The laws and regulations should be updated so that it would be more of a market situation than it is today,” said Polka, during the webinar run by Lightbulb Communications. Polka contended that Capitol Hill may eventually take some action when offices are overwhelmed with calls from “angry consumers” who call their congressmen and senators.  He insisted that “the best advocates for reform of the rule … are the networks themselves [when they] negotiate the rights deals.” 

Polka stressed that the expensive rights deals have been negotiated under regulations “that are 20 years old and older.”

“So much has changed that we need to take a broader look and do what we can to revise [the rules] so there is some benefit to consumers,” he said. “The laws and regulations should be updated so that [there] would be more of a market situtation than it is today. 

“It really has reached the point of being out of control,” Polka said.

Hane countered:“Complaining about retransmission consent doesn’t get to the root of the issue. All the distributors have chosen not to differentiate themselves.” He gently lambasted cable’s policy of putting ‘the best programming” on paid tiers where “you can charge anything.” Hane also repeated the familiar argument that MSOs complain about the cost of programming, but they still want to make sure that “the free alternatives become less attractive.”

Cinnamon insisted that cable companies face “substantial competition from satellite and wireline” operators, but that there’s an “absence of competition between broadcast outlets.”  During a predictable scuffle about broadcast competition – which floated into a sidetrack about cable carriage of out-of-market TV stations – Hane observed that such actions are “an euphemism for letting me carry your signal without your consent.”  Polka’s response: “We’re trying to take us back away from the ledge.”  He pointed to “orphan DMAs,” which often involve a disservice to viewers who are prohibited from watching channels from a TV station in the same state just because a broadcaster across the state border is closer.

Finally, when the discussion attempted to get back to its theme, the outlook for retransmission consent, Polka predicted that “in 2013 and beyond” Congress will look at the issue. He also noted that the FCC has been remarkable silent about retrans.

Hane noted that factors such as local station ad revenue “get lost in the regulatory debate.” He insisted that “advertising can support a significant percentage” of quality programming.

The panelists agreed that the introduction of disruptive technologies accentuate the need for a legislative review.

“One factor is the increase in programming cost, driven in part by rising retransmission fees … at least on the margin,” Cinnamon said. 

In a final spar, Hane said he does not “foresee any congressional involvement in retrans in 2013 “unless there is a rewrite” of the Telecommunications Act, which he considers unlikely. In addition, he said, “The FCC won’t do anything regarding jurisdictional changes.”

“Retransmission consent has nothing to do with … regulatory or legislative change,” said Hane.  “It’s market forces.  If retransmission consent fees were doubled or if they were eliminated, it would have no significant effect.”

Cinnamon countered by saying that retransmission consent is a significant contributor to broadcasters’ bottom line.’

“Going forward, I’m hoping for moderation in retransmission rates,” Cinnamon added.  “With that moderation will come less heat on this topic as cable operators and broadcasters continue on with the business. For the foreseeable future, their destinies are closely connected.”

That’s the kind of stalemate that encourages Congress to keep hands off.  Hence, the panelists’ agreement that there will be no revolution in 2013 seems accurate.

Gary Arlen is president of Arlen Communications LLC in Bethesda, Md., and a long-time interactive TV enthusiast. Reach him at GArlen@ArlenCom.com.

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