D.C Rematch for Fox, Cablevision

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Washington —Cablevision Systems chief operating
officer Tom Rutledge and News Corp. president Chase
Carey are slated to be in the same room here next week,
but not under the circumstances Cablevision had been
hoping for.

They are among the invited witnesses at a Senate Communications
Subcommittee hearing on retransmission
consent, according to a source with access to the witness list.

The cable operator had called on the Federal Communications
Commission to host talks at the agency
between both sides during their retrans impasse to broker
a deal. But now that a deal has been struck — under
terms Cablevision has openly criticized — the two sides
are being brought together by the Senate Communications
Subcommittee.

That is a consolation prize of sorts for Cablevision, since
it has been calling on Congress or the FCC to intervene in
what it and other cable operators say is a broken system.
Broadcasters say it is fine and should be left alone.

The list also includes Glenn Britt, CEO of Time Warner
Cable (which has pushed hard and prominently for retrans
reform); CEO Joe Uva of Univision Communications (representing
broadcasters); and CEO Charles Segars of Ovation
(representing independent networks).

The hearing was prompted at least in part by the impasse
between Fox and Cablevision. Committee chairman
John Kerry (D-Mass.) drafted legislation during that stalemate
that would require arbitration and keep stations on
the air past their contract dates if deals can’t be done.

One notable absentee will be FCC chairman Julius
Genachowski, who is not expected to testify, according to
a commission source. He has a prior speaking engagement
in San Francisco.

Genachowski publicly backed a congressional review of
retransmission-consent rules in a letter to Kerry (the senator
had sent the chairman a copy of his draft legisltation).
“I share your concern that the current system relegates
television viewers to pawns between companies battling
over retransmission fees,” he told Kerry two weeks ago in
response to the letter, adding that the FCC’s power was
confined to the “limited ability to encourage agreement
by ensuring that the parties negotiate in good faith.” Cable
operators disagree, arguing that the FCC has broad authority
to protect consumers.

According to several industry sources, there had also
been talk of inviting FCC Media Bureau chief Bill Lake to
the hearing, but he was not on the tentative list.

Broadcasters do not want the government to take any action,
arguing it is a marketplace negotiation that is working.
Further, broadcasters have said the increases and cash they
are seeking simply reflect their value to the cable industry
and the migration from growing co-owned cable nets or
other non-cash compensation to the dollars that will give
them the second revenue stream they say they need in a
down economy and a changing media landscape.

Cable and satellite operators say the system is broken,
that the government already has a thumb on the scale in
favor of broadcasters — must-carry requirements — and
that the FCC needs to fix that system.

The FCC has yet to act on a petition by TWC, the American
Cable Association, satellite providers and telcos, and
others to reform retransmission-consent rules, including
mandating arbitration and standstill agreements that
would keep signals on the air.

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