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FCC Opens Retransmission Consent Rulemaking

Responding to a year-old request from a coalition supported by the American Cable Association, the Federal Communications Commission agreed March 3 to review its retransmission consent rules in an effort to shield consumers from powerful TV stations that pull their signals after failing to force pay-TV providers to pay excessive carriage fees.

"ACA believes an ‘Extreme Makeover: FCC Edition' is needed to protect consumers from price-gouging TV stations," ACA President and CEO Matthew M. Polka said moments after the FCC vote. "For many years, ACA has been in the vanguard by warning that retransmission consent is a badly outdated system that inflicts serious economic harm on consumers served by independent cable operators put on the defensive by the aggressive cash demands of market-dominant TV stations. ACA commends the FCC for agreeing that the time has come to give careful consideration to new TV station carriage rules to ensure they reflect the market as it exists today and that consumers get to realize the benefits of real choice and robust competition."

The FCC launched its retransmission consent review in the wake of several prominent disputes in which millions of cable or satellite consumers lost access to prime time network shows as well as many marquee events, including the Academy Awards, the World Series and regular season National Football League games.

Last weekend, LIN Media pulled TV stations in 17 markets from Dish Network, a satellite TV provider. The stations -- most of them CBS, Fox and CW affiliates -- went dark at midnight March 5 after the sides failed to conclude a new retrans pact. Consumer markets harmed by LIN's blackout action include Albuquerque, N.M.; Austin, Texas; Buffalo, N.Y.; Columbus and Dayton, Ohio.

On Feb. 18, Univision affiliate WUNI, owned by Entravision Communications Corp., pulled its signal from ACA member Full Channel TV Inc., which serves about 7,000 customers in the Providence, R.I. - New Bedford, Mass. designated market area. In a letter to FCC Chairman Julius Genachowski a few days after WUNI's blackout started, Full Channel explained that WUNI sought a hefty 33 percent increase for retransmission consent and made costly demands for multicast channel and high-definition delivery.

"Full Channel TV's Feb. 23 letter to FCC Chairman Genachowski underscores the difficulty that small cable operators face when negotiating retransmission consent with TV stations that have considerable market power and enjoy regulatory advantages granted long ago under entirely different competitive circumstances," Polka added. "Without new retrans rules, consumers served by ACA members will continue to experience sudden TV station signal loss and become repeat victims of broadcasters' 'blackmail or blackout' strategy that they think somehow fulfills their solemn statutory duty to serve the public interest."

Prior to the FCC vote, ACA representatives met with FCC officials to discuss the trade group's particular concerns with current retransmission consent policies. The meetings, held Feb. 22 at FCC headquarters, included media policy advisors to Commissioners Michael Copps, Meredith Attwell Baker, Mignon Clyburn and Chairman Genachowski.

In those discussion, ACA stressed the need to study rising retransmission consent fees when two stations from the Big Four (ABC, CBS, FOX, NBC) joined forces to negotiate jointly carriage deals with pay-TV distributors. ACA members have said in FCC filings that TV station duopolies charge more for retransmission consent than TV stations that negotiate on an individual basis. ACA's representatives also called on the FCC to review price discrimination by TV station owners against smaller multichannel video programming distributors.

TV stations and pay-TV distributors, regardless of size, are required by law to negotiate in good faith. ACA suggested to FCC officials that TV stations that jointly bargain for retransmission consent or charge smaller pay-TV providers discriminatory fees with no cost-based justification should be deemed in violation of the good faith standard.

In March 2010, ACA joined a large and diverse coalition that called on the FCC to reform retransmission consent rules that would stop broadcasters from employing several abusive practices, including the pulling of signals just prior to nationally important events in order to extract excessive compensation from multichannel video providers.
In addition to ACA, coalition members include: Bright House Networks, Cablevision, Charter Communications, DIRECTV, DISH Network, Insight Communications, Mediacom Communications, New America Foundation, Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), Public Knowledge, Suddenlink Communications, Time Warner Cable, and Verizon.


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