Top Media Execs Discuss Retransmission Consent in Senate Hearing

WASHINGTON, D.C.: A number of leading media executives, including News Corporation’s Chase Carey and Univision’s Joe Uva, appeared before the U.S. Senate Committee on Commerce, Science, and Transportation yesterday to discuss retransmission consent and faced some tough opening remarks from Committee Chairman Jay Rockefeller.

The hearings come in the wake of several high-profile disputes between networks and pay-TV platforms, most notably the recent spat between News Corporation and Cablevision that kept parts of the baseball World Series off air for the platform’s New York subscribers. The Communications, Technology, and the Internet Subcommittee hearing included Glenn Britt, chairman, president and CEO of Time Warner Cable; Joe Uva, CEO and president of Univision Communications; Tom Rutledge, COO of Cablevision Systems Corp.; Chase Carey, deputy chairman, president and COO of News Corporation; and Charles Segars, CEO of Ovation.

Opening the session, Senator Rockfeller told the executives present, "The system we have for developing television content, packaging that content and distributing that content is broken. It may serve companies well, but it does not serve us well as consumers and probably more importantly as citizens."

He continued, "Our entertainment machine is too often in a race to the bottom…. As citizens we are paying one heck of a price in the dumbing down of America, you’re partly responsible for that."

Rockefeller took the panelists to task for the absence of an a la carte pay-TV model. "Why do consumers have to order so many channels? Why do they have to pay so much when households watch so few channels? Why do we pay so much? It’s money for you, agony for a lot of consumers. No wonder they are cutting the cord."

Mentioning the recent transmission spat between FOX and Cablevision, Rockefeller went on to say, "If you fail to fix this situation, we will fix it for you. But when we do, we will seek to do more than referee your corporate disputes. Because more than just retransmission consent ails our television markets. We need new catalysts for quality news and entertainment programming. We need slimmed down channel packages that better respect what we really want to watch. And we need to find ways to provide greater value for television viewers at a lower cost."

Senator John F. Kerry, Chairman of the U.S. Senate Subcommittee on Communications, Technology, and the Internet, added, “I am concerned that without a better, more transparent process for dealing with impasses in negotiations and adequate FCC oversight, more fights and disruptions of service will come, prices for consumers will rise, and independent programming will get crowded out.”

Speaking from the pay-TV platform perspective, Time Warner Cable’s Britt commented, “Retransmission consent negotiations occur in a vastly different environment today. The pay-TV industry has become robustly competitive, while local broadcasters have retained their government-granted monopolies and other benefits that now distort carriage negotiations. Under these rules, pay-TV providers are limited to dealing with only one broadcast supplier in a local market. This has allowed broadcasters to play multiple distributors off of each other and has encouraged broadcasters to take more extreme, disruptive positions rather than to seek compromise. Consumers, caught in the middle, are the ones getting hurt.”

Cablevision’s Rutledge noted, “Retransmission consent negotiations do not take place in a free market but rather under an umbrella of statutory provisions and FCC rules that heavily favor the broadcaster over the cable operator or multi-channel video programming distributor (MVPD). It is a scheme based on a perception of the video marketplace that is 20 years out of date. As a result, consumers are increasingly faced with broadcast blackouts, threats of blackouts, and spiraling fee increases. This is because of outdated laws and regulations that literally put the government at the negotiating table. These laws reward brinksmanship and blackout threats with higher fees, undermining the very public interest that the law is intended to support.”

News Corp.’s Carey argued that "retransmission consent law is experiencing growing pains because broadcasters like FOX are, for the first time, seeking cash compensation for their content. But the good news is, the actual interruptions in service are few and far between, and this period of adjustment will be short-lived once distributors accept that they have to pay a fair price for the right to re-sell broadcast content just like they have to pay for all the other content they provide to their customers. Keeping the focus on consumer education and protection is the most effective and efficient way to help consumers weather this temporary and short-lived unrest.”

Univision’s Uva stated, “I certainly understand concerns by elected officials that their constituents not have to face even the temporary loss of a favorite station’s signal on cable or satellite. But we are very concerned that government mandates—such as requiring Univision to keep providing our programming to a distributor even where we failed to reach a deal—would distort the market by removing our distributors’ primary incentive to reach agreement.”

Offering up a viewpoint from an independent, Ovation’s Segars said, “This is a call for a level playing field. If large broadcasters are allowed to use the airwaves owned by all Americans to extract payment for historically free TV service, then let’s not allow them to bundle all their other services with it. If an alternative dispute resolution process for distributors and programmers is to be considered, do not limit it only to those programmers who are trading on retransmission consent, but open that dispute process to all programmers, including the few remaining independent ones.”