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Senate Hearing Showed Broken Retrans Regime

With millions of televisions viewers increasingly victimized by TV station blackouts, the Senate Subcommittee on Communications, Technology, and the Internet held a hearing Nov. 17 on the strained state of retransmission consent negotiations between broadcasters and cable service providers around the country.

The subcommittee, led by Sen. John. Kerry (D-Mass.), convened to hear concerns of consumers and many cable and satellite service providers that the outdated retransmission consent law is encouraging TV stations to engage in eleventh-hour, strong-arm tactics and black out popular television channels.

"The hearing held by Sen. Kerry demonstrated that members of Congress don't believe that retransmission consent negotiations are conducted in a purely free-market setting. A watershed event, this Senate hearing exposed that retransmission consent is a rigged game that broadcasters exploit to gouge millions of consumers who subscribe to pay-TV service. As Sen. Kerry suggested, these consumers are the same people who let TV stations use publicly owned spectrum worth billions of dollars for free," American Cable Association President and CEO Matthew M. Polka said.

Kerry has circulated draft legislation that would allow the Federal Communications Commission to take a more active role as a mediator of retrans disputes.

The Senate hearing came just a few weeks after News Corp. blocked about 3 million Cablevision System Corp,. viewers from accessing Fox station programming, including the World Series, for 15 days. For one day, News Corp. blocked all Cablevision's broadband customers from viewing Fox shows on Fox.com and Hulu.com

Although Cablevision pushed for FCC intervention, a request supported by ACA, the FCC declined to enter the dispute. Cablevision asked the agency to restore carriage of the Fox signals and require binding arbitration

FCC Chairman Julius Genachowski told Kerry in a letter that he believes the FCC lacks the regulatory tools to prevent TV blackouts, adding that Congress needed to change the law for bolder FCC action to occur.

"The hearing testimony clearly revealed that retransmission consent is a classic case of a government policy allowing the powerful to prey on the weak. To bring about genuine reform, Congress must step in and adopt policies that prevent TV station owners from taking advantage of smaller pay-TV providers by charging them higher rates than larger ones and from forming local pacts to negotiate jointly retransmission consent, which give TV stations even more bargaining leverage over ACA members," Polka said.

Polka endorsed a proposal by Tom Rutledge, Chief Operating Officer of Cablevision Systems Corp., that TV stations should not be allowed to discriminate among pay-TV providers by coercing smaller providers into paying much more per-subscriber than larger providers that serve the same local market.

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