FCC Looks to Update Retransmission Rules

WASHINGTON, D.C.: The Federal Communications Commission (FCC) is considering amending the rules that concern fee negotiations between broadcasters and pay-TV providers, as spats over retransmission consent have caused an increasing number of service blackouts for customers.

The FCC has released a Notice of Proposed Rulemaking (NPRM), which expresses its view that it doesn’t have the authority to require stations to provide their signals to pay-TV providers or to require binding arbitration. The NPRM seeks comment on proposals that would provide more guidance to the negotiations, though, based on "good-faith" requirements. It also calls for improved notice to customers about the possibility of blackouts caused by stalled negotiations. The proposal also calls for the elimination of rules that allow parties to enforce certain exclusive contractual rights to a network or its programming through the Commission instead of through the courts.

Time Warner has issued a statement in favor of the FCC’s decision to review the current rules: “We applaud the FCC for initiating a rulemaking to reform the broken retransmission consent system. By launching this proceeding, the FCC has recognized that it is time to change outdated government rules that favor broadcasters over consumers. We are pleased that the FCC has listened to the broad and diverse voices that have been calling for change, especially viewers who have suffered through broadcaster blackouts and blackout threats. We hope the Commission will explore the broad authority granted to it by Congress to address the issues raised in its Notice. We look forward to working with the Commission to achieve meaningful reforms that level the playing field and protect viewers.”

Cablevision Systems Corp. is also in support of the changes proposed by the FCC: "The FCC’s Notice Of Proposed Rulemaking is an important first step for consumers, because it recognizes that consumers are the ones who are harmed when programming is pulled—or threatened to be pulled – from cable systems," said Tom Rutledge, Cablevision’s COO. "The FCC has signaled its plans to examine certain broadcaster practices in retransmission consent negotiations – including the impacts of Most Favored Nation agreements and exactly what it means for a broadcaster to negotiate in ‘good faith.’"

Cablevision did outline three reforms to the requirement of "good-faith" negotiations that would protect consumers by reducing the threat of dropped signals. The reforms offer a market-based approach for resolving disputes, without the need for heavy regulatory intervention. The reforms "forbid tying," limiting retransmission consent agreements to the carriage of broadcast channels so that the actual cost of the station is clear; "require transparency," which would end the practice of programmers keeping the carriage cost secret; and "forbid discrimination," allowing broadcasters to set the price of carriage, but not allowing them to discriminate among providers based on size.

"Arbitration is necessary only in a broken market," Rutledge added.  "If these policies are adopted, consumers would be protected and binding arbitration would be a largely unnecessary solution."