NAB’s Smith Sees Stealth STELAR Play in Retrans Impasses

Points finger at AT&T, Dish, calling it ‘dangerous game’ they appear to be playing
Author:
Publish date:

National Association of Broadcasters president Gordon Smith put the blame on AT&T (DirecTV) and Dish Network for recent retransmission consent impasses with CBS, Nexstar Media Group (AT&T) and Meredith (Dish) TV stations, suggesting the timing of their failure to reach new agreements was part of a campaign to get Congress to renew STELAR and add some new retrans reforms.

Gordon Smith, NAB 2018 keynote

NAB president Gordon Smith

Smith's characterization of the impasses came in a speech at the Media Institute Tuesday (July 23).

Related: House Makes First Pass at STELAR

STELAR is the satellite compulsory license law that comes up for renewal every five years and is due to expire at the end of this year. MVPDs support its renewal, and using it to get retrans reforms like bans on blackouts and outside arbitration, while broadcasters would like to see it sunset. The renewal has become an ongoing battle ground between broadcasters and cable operators over retrans. The law requires broadcasters and cable operators to negotiate retrans in good faith.

Smith said that while 99% of retrans deals get done “without interruptions,” he estimated that figure could be 100% “if pay TV companies do not purposefully try to create a problem simply so Congress attempts to ‘fix’ it to their benefit.”

Smith spent a good deal of time setting up his point about the value of local TV, talking about the rise of uncivil discourse and fake news on social media, and said pay TV was “fraught” with unsettling “partisan bickering” over who got the last word. He contrasted that with trusted, hard-hitting, thoughtful local TV news and public affairs programming on stations licensed to serve the public and their communities.

But the contrast between broadcasters and pay TV providers went deeper than content.

“It’s unfortunate that at a time when this [broadcaster] trusted information is so critical to our communities, some of our pay TV partners, like AT&T and Dish, seem to be purposefully withholding broadcast signals from viewers — making them pawns in a political game that aims to upend the retransmission consent system,” he told his audience, an indirect reference to STELAR.

For their part, MVPDs say they are not going to pay what they say is a too-high asking price in a retrans systems tilted toward broadcasters.

And while Smith posed it in the form of a question, he seemed to be sure of this answer: ”Is their goal to manufacture the appearance of a ‘broken system’ to encourage Congress to intervene just as it deliberates the upcoming STELAR expiration? If so, that is a dangerous game and one that hurts viewers — their customers — the most.”

He put the black hats squarely on the heads of broadcasters‘ opposite numbers in the recent high-profile impasses.

“AT&T and Dish are the same companies that have been responsible for more than four out of five retransmission consent disruptions industry-wide over the past eight years,” he said. He also suggested AT&T was not keeping to the spirit of its pledges in acquiring Time Warner.

“AT&T is the same company that is currently making decisions to withhold its content from viewers on competing platforms in the immediate aftermath of a merger where they committed just the opposite to regulators.”

Bringing the issue explicitly to STELAR, Smith said: “AT&T is the same $300 billion dollar company that for years has chosen to exploit STELAR’s distant signal license rather than invest in the communities they serve.”

That is a reference to the fact that there are a dozen or so of the smallest markets in which DirecTV does not deliver local TV station signals (Dish does so in all markets). Satellite operators are not required to carry local TV station signals, as are cable operators. But if they choose to carry any in a market, they must carry all.

“Let’s stop subsidizing billion-dollar companies, like AT&T, and instead ensure all Americans have access to the most accurate and timely source of news, sporting events, weather and emergency information — their local TV broadcasters.”

The American Television Alliance, whose members include cable and satellite operators, has certainly been using the blackouts to argue that the retrans system is broken and needs fixing via STELAR.

“Congress should not only reauthorize STELAR to maintain the FCC‘s authority to enforce ‘good-faith’ rules,” ATVA's Trent Duffy said earlier this month, “but also modernize the retransmission-consent rules, which currently favor broadcasters at the expense of consumers and competition.” 

During a brief question-and-answer session following his remarks, in response to a question (from B&C/MCN) about the NAB's potential role in the current Washington kerfuffle about possibly breaking up "big tech" companies, Smith paused and with a wry smile, said: "I could really get in trouble here." He acknowledged that he doesn't know "where my Board will go" on how to deal with these huge companies (such as Google, Amazon, Facebook and Apple), so he offered a personal perspective.

"They control these platforms" and their actions "have huge public consequences," Smith said. He compared the companies to "nation-states" as they reach into more sectors of peoples' lives.

"It's not just about consumer protection, it's about public safety," he added. Later in a private conversation, Smith cited tech companies' plans to issue their own cryptocurrencies and other actions that bypass government policies. He acknowledged his Republican roots were challenged by the idea of imposing corporate regulation, but as his voice trailed off, Smith indicated that the tech giants may be ripe for some legislative restraints.

Smith also repeated his assertion that STELAR regulation "should sunset."

"Even the Copyright Office says it no longer is good policy," he said. "There is no technical reason" to retain those rules.

As for the FCC's examination of ways to free up C-band spectrum, Smith said that the NAB is "trying to be cooperative" as policies emerge. "We just want to make sure that our signals don't suffer interference," he explained, emphasizing the need to assure the clarity of broadcast signals."

Gary Arlen contributed to this story

Related