Kerry Outlines Retrans Bill To FCC

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Senate Communications Subcommittee chairman John Kerry (D-Mass.) has proposed his new "consumer protection" bill in a discussion draft of retransmission consent reform legislation sent to FCC chairman Julius Genachowski Tuesday.

The legislation would include imposing fines for bad-faith bargaining, standstill agreements and the FCC as mediator, but not arbitrator.

A committee source on background said the senator is "exploring the possibility" of holding a hearing on the bill the week of Nov. 17, just after Congress returns for its lame duck session.

Calling it a "broken system," Kerry said the legislation would try to fix the two-party system, in this case negotiating parties, for the sake of a third party: consumers.

As he telegraphed in a statement following Fox and Cablevision's failure to come to terms Oct. 15, the bill would keep signals on the air while the FCC evaluates both parties and recommends, or doesn't recommend, binding arbitration, during which carriage would also continue.

He said that at the "end of the day," the broadcaster would retain the right to pull the signal when there is a "good faith" impasse, but the end of the day would come after the FCC stepped in to mediate to the degree above.

He outlined four scenarios in which he saw that process coming into play:

"Scenario 1 - The FCC finds that the broadcaster is negotiating in good faith and making an offer consistent with market conditions but the distributor is not. In this case, the distributor shall agree to the broadcaster's last best offer or terminate carriage and the FCC may fine the distributor for negotiating in bad faith. In lieu of termination of the signal, the broadcaster can withdraw the last best offer and ask the Commission to require binding arbitration.

"Scenario 2 - The FCC finds that the broadcaster is not negotiating in good faith or making an offer consistent with market conditions and the distributor is negotiating in good faith and making an offer consistent with market conditions, then the FCC can require binding arbitration. The penalty for the broadcaster is forced participation in binding arbitration.

"Scenario 3 (This will be the most likely scenario in most cases). The FCC finds that both parties have negotiated in good faith but reached a true impasse based on an honest disagreement on the value of the signal. In this case, the FCC may request them to submit to binding arbitration. If one party or the other refuses to engage in binding arbitration, then the FCC will provide both parties with a model notice by which to inform consumers of the potential loss of service as well as the difference in offers on the table so that consumers can judge for themselves who was making the fairest offer. This adds a more consumer friendly and transparent way to end transmission of services if necessary and creates an attractive option for arbitration for both parties.

"Scenario 4 - The FCC finds that neither party is negotiating in good faith, then it can require binding arbitration and fine both parties."

The FCC is already empowered to take action if either party is not negotiating in good faith.

"ACA commends Sen. Kerry for demonstrating courage and leadership in crafting draft legislation that would address the needs of consumers when injured by rash and reckless signal-pulling by TV broadcasters, who have been given billions of dollars in free spectrum to serve the public interest," said American Cable Association President Matt Polka. ACA is among those directly petitioning the FCC to reform retrans.

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