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ACA Applauds FCC For Retransmission Consent Rulemaking

In response to requests from the American Cable Association and others concerned about the failing retransmission consent law, the Federal Communications Commission is planning to consider new rules that would potentially protect pay-TV customers from broadcasters that suddenly pull their signals to pressure cable operators into paying excessive fees for carriage.

William Lake, chief of the FCC's Media Bureau, said the agency would conduct a rulemaking next year to determine what the FCC can do better to protect consumers from broadcasters' increasing reliance on signal blackouts to gain leverage over pay-TV distributors in retransmission consent negotiations.

"ACA applauds the FCC's intention to launch a rulemaking to review the broken retransmission consent regime that local TV stations have been abusing to gouge cable operators and their customers for many years, especially in small markets where ACA members are most active," said ACA President and CEO Matthew M. Polka.

According to Bloomberg News, TV blackouts in the U.S. have reached the highest level in a decade. Disputes over fees caused six blackouts in 2010, the most since 2000, affecting about 22 million pay-TV subscribers. In October, a dispute between Cablevision Systems Corp. and News Corp.'s Fox Broadcasting left 3 million cable customers in the New York City and Philadelphia metropolitan areas without access to Fox television stations for 15 days, including two World Series games.

Broadcasters and pay-TV providers have a legal obligation to bargain in good faith.

In a Dec. 8 speech at the Media Institute, Lake said the FCC would issue a broad notice looking at what more it could do to protect the interests of consumers while letting market forces set retransmission consent fees. He said the FCC would also seek to provide some limited guidance on what good-faith bargaining involves and perhaps identify additional practices that the agency might treat as per se violations of the good-faith requirement.

"Procedural reforms designed to supply consumers with timely information and protection them from broadcasters' `blackmail or blackout' stratagems are a solid first step," Polka said.

For many years, ACA has urged the FCC to look at discriminatory fees broadcasters charge small cable operators and the effort by some TV stations to form local duopolies in order to gain even more pricing power over small cable companies.

"As the FCC moves ahead with its rulemaking early next year, ACA looks forward to pointing out the many flaws in a regulatory scheme that permits broadcasters to charge discriminatory fees to small cable providers and gain even more bargaining leverage over ACA members by entering into collusive agreements where one TV station jointly negotiates retransmission consent with a second station in the same local market," Polka said.

In the wake of the FCC announcement, Sen. John Kerry (D-Mass.) issued a statement saying he would not introduce legislation anytime soon to reform retransmission consent. Kerry held a hearing on retransmission consent on Nov. 17, less than three weeks after Cablevision agreed to meet Fox's cash demands.

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