In an online debate with representatives from the broadcast TV industry, American Cable Association Vice President of Government Affairs Ross Lieberman asserted that retransmission consent rules are broken and outdated, giving TV station owners a major leg up in carriage negotiations with pay-TV providers, especially smaller independent cable operators.
Lieberman stressed that current regulations embolden broadcasters to make unreasonable cash demands, noting that retrans fees have soared from $215 million in 2006 to an estimated $1.4 billion in 2011. TV stations, he added, are harming consumers not only by escalating the cost of retransmission consent but also by engaging in signal blackouts until their cash demands have been met.
The online debate, a 90-minute webinar hosted by BroabandUS.TV, took place on Jan. 26 with all the participants speaking live from the same studio. To see the full video, please visit: http://www.tvworldwide.com/events/broadbandpolicy/120126/
Moderated by communications attorneys Jim Baller of the Baller Herbst Law Group and Marty Stern of K&L Gates, the panel included broadcast attorneys Antoinette Cook Bush of Skadden, Arps, Slate, Meager & Flom and John Hane of Pillsbury Winthrop Shaw Pittman.
Explaining the cable sector's many concerns with retransmission consent were Cristina Pauze of Time Warner Cable and Richard Waysdorf of Starz Entertainment. John Bergmayer of Public Knowledge also participated.
In his comments, Lieberman said that broadcasters are employing a "blackmail or blackout" strategy with pay-TV providers and consumers, an unfortunate trend that involved 40 cities last year and five cities so far in 2012, including Corpus Christi, Texas, where 80,000 Time Warner Cable customers did not have cable access to the Super Bowl due to a seven-week blackout by Cordillera Communications. Cordillera controls that market's NBC affiliate KRIS in addition to three other stations: Telemundo affiliate KAJA, CW South Texas and independent station KDF.
Separately owned same-market broadcasters engaging in price fixing is another problem, Lieberman said.
In 2010, ACA identified 36 pairs of separately owned same-market broadcasters in 33 markets that used a single representative to negotiate retransmission consent. The purpose? To extract higher fees from coordinating together rather than dealing separately. Evidence submitted to the FCC shows that coordinated negotiations increase retrans fees anywhere from 21% to 161%. ACA believes coordinated negotiations by broadcasters violate retransmission consent rules, media ownership rules, and antitrust statutes, he said.
Lieberman revealed that broadcasters engage in price discrimination against ACA members. Available empirical evidence, he said, suggests that smaller cable operators pay, on average, double the retransmission consent fees of larger operators. Anecdotal evidence suggests the number is, in fact, much higher.
Federal regulations designed to aid TV stations are hurting consumers by enhancing broadcasters' bargaining leverage, Lieberman said. For example, stations have the option to elect mandatory cable carriage; have the right to favorable cable tier placement and channel positioning; have "must buy" protections under certain circumstances that grant access to all cable subscribers; and generally have exclusive distribution rights for broadcasters within their local markets.
Retransmission consent is under review on Capitol Hill and at the Federal Communications Commission. The FCC examination is occurring via a notice of proposed rulemaking and a statutorily required quadrennial review of media ownership rules. In Congress, Rep. Steve Scalise (R-La.) and Sen. Jim DeMint (R-S.C.) have introduced bills that would, among other things, repeal retransmission consent.
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