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ACA Applauds FCC's New Effort On Retransmission Consent Reform

The American Cable Association applauded the Federal Communications Commission's recent decision to conduct a pro-consumer review of its current retransmission consent policies, but the trade group warned that millions of consumers would not obtain badly needed relief if broadcasters can continue to charge small cable providers much more per subscriber than larger pay-TV distributors competing in the same market.

"ACA believes that the retransmission consent regime is broken and needs FCC intervention to protect consumers and promote competition. Neither will be fully achieved, however, if the rules continue to allow broadcasters to engage in rampant price discrimination against small cable companies for no cost-based justification," American Cable Association President and CEO Matthew M. Polka said.

On March 9, ACA joined 13 others, including cable and satellite TV companies as well as non-profit organizations, in asking the FCC to conduct a rulemaking designed to protect consumers from losing access to broadcast content as a result of breakdowns in retransmission consent negotiations. Nine days later, the FCC agreed to seek public comment on the reform proposals recommended by the coalition. Comments are due April 19, 2010 and reply comments on May 4, 2010.

The FCC's move comes in the wake of the Walt Disney Co.'s decision on March 7 to pull its ABC signal in New York City from 3 million Cablevision Systems Corp. customers just a few hours before the broadcast of the annual Academy Awards show. Although Disney restored the signal a few minutes into the Oscars broadcast, millions of cable consumers were left confused and uncertain about their ability to see ABC that night.

Retransmission consent continues to serve a growing source of revenue for many broadcasters. Nine TV stations groups that are publicly traded recently reported large percentage increases in retransmission consent revenue in the fourth quarter of 2009 compared to the same period in 2008. The average increase was 116%. Triple-digit increase were reported by Gray Television Inc., up 346%; Gannett Co., up 200%; E.W. Scripps Co., up 100%; Journal Communications Inc., up 100%; and Meredith Corp., up 100%. Sinclair Broadcaster Group has stopped reporting retransmission consent revenue to investors because CEO David Smith said the company did not want to be seen "feeding at the trough."

ACA and its coalition partners put forward a number of proposal, such as interim carriage rights if the pay-TV distributor is negotiating in good faith and the establishment of compulsory arbitration or expert tribunals to referee price disputes.

"These proposals are a good start and something the FCC needs to consider. But ACA believes that the FCC has to address price discrimination to protect consumers served by small cable companies from being forced to pay egregiously high retransmission consent fees or losing access to broadcast content that is unattainable from sources outside the local market," Polka said.

In addition to ACA, the coalition includes Public Knowledge; DIRECTV, Inc.; DISH Network Charter Communications; New America Foundation; OPASTCO; Time Warner Cable; Verizon; Cablevision Systems Corp.; Mediacom Communications Corp.; Bright House Networks; Insight Communications Company, Inc.; and Suddenlink Communications.

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