Channel Change Divides Cable, Broadcast

Ops, Programmers Just Can’t Agree on How to Share
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WASHINGTON — Broadcasters and cable operators have found something new to be at odds over: Whether to allow broadcasters to share channels outside of the spectrum auction, including preserving their must-carry rights when they share.

Other fronts on which the two are battling at the Federal Communications Commission, almost too numerous to mention, include the agency’s proposal to presume cable video service is competitive in local markets, which lifts basic-rate regulation; a proposal to eliminate broadcast-exclusivity rules; and the launch of a review of retransmission good-faith agreements.

In the latest dust-up, the FCC has proposed allowing channel sharing after the incentive-based auction of broadcast spectrum. The proposal would allow stations to save operating costs and increase profits by sharing equipment as well as spectrum.

‘MUST-CARRY’ HANGUP

Broadcasters are down with that: The more flexibility and opportunity to preserve their business model in a world gone wireless-mad, the better.

But cable operators have long considered the “must-carry” obligation (under which stations can opt for guaranteed placement on local cable lineups) a government taking of their property — channel space — and an infringement on their First Amendment rights to choose the speakers on their systems. Commercial broadcasters, represented by the National Association of Broadcasters, the Expanding Opportunities for Broadcasters Coalition and the major public- TV associations, all want the FCC to give broadcasters as much sharing flexibility as possible.

In the other corner are the National Cable & Telecommunications Association and AT&T, which want the FCC to limit sharing to stations participating in the auction and, if sharing is allowed, not to extend must-carry rights. Cable operators have been trying to hold the line on must-carry, or roll it back, for years. The broadcast incentive spectrum auction repack is a relatively new front in that fight.

With broadcasters lobbying for must-carry rights for sharing stations outside the auction, the NCTA pushed back in comments to the commission. The cable trade group said it was clear that must-carry rights only applied to a single primary video stream per channel.

The NCTA is not simply concerned about getting the definition right. It said allowing for two shared stations to get must-carry rights post-auction could result in expanding distributors’ carriage obligations, which would turn spectrum legislation on its head given that Congress said sharing within the auction should not artificially increase the number of stations MVPDs have to carry.

“It’s hard to imagine that Congress could have intended that if stations waited until after the auction to engage in channel sharing, it would then be permissible to expand the must-carry obligations on cable,” the NCTA said.

Cable providers also say they don’t want to provide a disincentive to station participation in the auction.

“Channel-sharing must not be used as a means to expand carriage rights,” AT&T told the FCC, also citing the legislative language about not artificially increasing MVPD carriage obligations.

NAB: DON’T FOCUS ON COSTS

The NAB said cable providers have it all wrong.

“Broadcasters will participate in the auction with channel sharing bids if they foresee the potential for an attractive financial return based on spectrum relinquishment by one channel-sharing partner, not due to perceived incremental cost savings associated with sharing facilities,” the broadcaster trade group said. “The opening bid prices and estimated high-end compensation levels the [FCC] has published dwarf any savings.

“[A]ssuring broadcasters that entering into channel-sharing agreements will not affect carriage or retransmission rights will help increase participation in the forthcoming broadcast spectrum incentive auction,” the group added.

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