FCC Votes Unanimously To Launch Retrans Rulemaking

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The Federal Communications Commission voted unanimously Thursday to propose several changes to its retransmission-consent oversight rules meant to better clarify what bargaining in good faith means, as well as possibly eliminating the syndicated exclusivity and nonduplication rules to give cable operators an alternative source of station programming.

The commission has the authority to insure that broadcasters and MVPDs' negotiations meet a good-faith requirement, but FCC Media Bureau Chief Bill Lake said that recent retrans disputes have become more "contentious and more public." He did not say more frequent, which broadcasters argue is not the case. Commissioners Meredith Attwell Baker and Robert McDowell pointed out during the FCC's meeting to vote on the proposed changes that most deals are done privately and quietly.

The FCC

Lake emphasized the moves were driven by the FCC's desire to reduce consumer disruptions, while preserving the marketplace negotiation framework Congress imposed.

The Notice of Proposed Rulemaking voted on Thursday essentially asks a lot of questions and comments on proposed changes. FCC chairman Julius Genachowski said at the meeting that those would require statutory change. It issues from the starting point that the FCC does not have the authority to mandate carriage or arbitration. But it does suggest a number of possible changes, specifically to "provide more guidance to the negotiating parties on good-faith negotiation requirements; improve notice to consumers in advance of possible service disruptions caused by impasses in retransmission-consent negotiations; and eliminate the commission's network non-duplication and syndicated exclusivity rules, which provide a means for parties to enforce certain exclusive contractual rights to network or syndicated programming through the commission rather than through the courts."

"There's concern that the Commis sion is looking into network non-duplication and syndicated exclusivity rules," said National Association of Broadcasters spokesman Dennis Wharton. "But we're optimistic that a fair review will demonstrate convincingly that these are two rules that are the lynchpin for preserving local broadcasting."

Lake clarfified in a press conference that the FCC was just asking the question of whether it should eliminate the rules, but that could be said of the other proposals it was making, and it did tee it up as something it was proposing to eliminate.

NAB was happy that the FCC steered clear of arbitration and standstills. ""NAB is pleased the FCC correctly concluded that the marketplace is best equipped to negotiate private business contracts, and that it lacks authority to impose the heavy-handed government tools that pay-TV providers desire," it said in a statement. "We will actively engage in the Commission's new proceeding."

Other issues raised include the impact of early termination fees on the ability to switch providers to avoid blackouts, whether networks should be allowed to negotiate retrans for affiliates, and whether a station should be able to negotiate for a station it operates under a joint services agreement.

Genachowski and Republican Robert McDowell both emphasized that parties currently negotiating remain at the table. McDowell said he was concerned they would see the FCC move as a sign the commission would be intervening. He said they should not assume any particular action by the commission. The chairman echoed that in his statement, saying "this is not a signal or excuse for foot-dragging," and the FCC could view such foot-dragging as "bad faith negotiation."

House Energy & Commerce Committee chairman Fred Upton (R-Mich.) cautioned the FCC against doing too much. "The government should not be intervening in program carriage arrangements in this competitive marketplace," he told Multichannel News. "The parties should be free to negotiate over compensation for programming or carriage, and to walk away from the table if they do not reach mutually agreeable terms."

The rulemaking came in response to a petition by cable operators including Time Warner Cable and those represented by the American Cable Association. They had been pushing the FCC to take action on arbitration and standstills that would keep station signals on during impasses. ACA said it still thought the time was ripe for "Extreme Makeover: FCC Edition," but gave the FCC props for taking some action. "ACA commends the FCC for agreeing that the time has come to give careful consideration to new TV station carriage rules to ensure they reflect the market as it exists today and that consumers get to realize the benefits of real choice and robust competition," said ACA president Matt Polka.

NAB had no immediate response to the proposal to eliminate the synidcated exclusivity or network non-duplication rules, which currently prevents cable operators from negoiating with similarly situated, out-of-market stations if it cannot strike a deal with a local station. That would obviously strengthen the cable operators hand in retrans deals.

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