Cablevision: Free Retrans Market Means No Must-Buy, Syndex or Free Spectrum

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Cablevision COO Tom Rutledge plans to tell legislators Wednesday that Federal Communications Commission action to "fix or scrap" the retransmission-consent regime is imperative.

According to a copy of his prepared testimony for a Senate Communications Subcommittee hearing Nov. 17 on the retransmission consent, Rutledge argues that the negotiations are not free market deals, but are conducted "under an umbrella of statutory provisions and FCC rules that heavily favor the broadcaster over the cable operator or multi-channel video programming distributor (MVPD)."

Rutledge also counts the ways in which cable operators see the government's thumb on the scale in favor of broadcasters. For one, he says, the government has given broadcasters a local monopoly by not allowing cable operators to import "must-have programming" from affiliates outside their market.

Then there is are the must-carry rules, or as cable sees it, must-buy rules, since "government rules require that every one of our subscribers buy and pay for the broadcast channels as part of any cable service--even if the subscriber doesn't want them and no matter how much money the broadcaster charges us to carry their signal."

Rutledge argues that the rules shield broadcasters from the consequences of their pricing, since subs have to buy the product regardless of that price.

He also points to what cable operators see as the inequity of government rules that prohibit cable operators from pulling TV station signals during sweeps periods when ad rates are set, but allow broadcasters to pull signals before big events like the World Series. Cablevision lost access to Fox signals in Philadelphia and New York last month during part of the 2010 Fall Classic.

In his testimony for the hearing, News Corp. president Chase Carey calls for a marketplace free of government intervention.

Rutledge agrees: "We welcome calls to allow a free market, free of this heavy government intervention, to flourish in the broadcast, cable and satellite space. This would mean eliminating free spectrum and special privileges for broadcast, rolling back retransmission consent and must carry, permitting broadcasters to compete, free of rules on 'syndicated exclusivity,' 'network non-duplication,' and 'must buy.' Eliminating these laws would allow a free market to exist, where programming content, distributors and consumers can choose among options without the weight of government intervention.

Unlike Carey, Rutledge does not even mention the recent retrans fight between them, instead he will talkgenerally about the need to reform the system and offering up the following fixes after conceding that getting rid of the regime is a "longer-term goal."

In the short term, he says, the FCC should require all broadcast negotiations be stand-alone, meaning not tied to carriage of other networks. He notes that would prevent a "historic abuse" in which "broadcasters have sought carriage of their affiliated programming networks, increasing the cost of expanded basic service, displacing independent programmers and exacting enormous compensation from cable operators."

Rutledge also wants the government to require that carriage terms be disclosed and not allow broadcasters to charge different prices to different multichannel video providers. The American Cable Association has notably pushed for that condition, arguing its members suffer from discriminatory pricing. ACA teamed with Cablevision, Time Warner Cable and others to petition the FCC to reform retrans.

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The Senate hearing was called by Subcommittee chairman John Kerry (D-Mass.), who has drafted legislation that would allow for FCC-mandated arbitration and standstill agreements to keep TV stations on cable systems during retrans impasses. FCC chairman Julius Genachowski has not endorsed the bill, but he has endorsed Kerry's call for congressional review of the process.

Both Kerry and Genachowski point to the impact of blackouts on consumers as a key reason for reviewing the negotiations and the commission's power over them.

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