The last straw was the wild ride more than 3 million New Yorkers had after ABC pulled its local signal from Cablevision just before the network was to broadcast the Academy Awards on March 7. Only hours later, a group of major television programming providers asked the FCC to change the rules governing the retransmission of television stations. The FCC chairman responded that the commission is working on it.
In its FCC petition and a letter to congressional leaders, the programming providers — including Time Warner Cable, Cablevision, Verizon, DIRECTV, Dish and a host of smaller carriers and nonprofits — said the current retransmission system is “broken and in need of repair.”
FCC chairman Julius Genachowski agreed, at least with part of the petition. He told the Senate Commerce Committee that due to the outcry over the threatened loss of sports programming during the recent holidays that the commission began reviewing its rules and role in retransmission disputes.
“A lot of consumers wonder why their lives should be affected because of business disputes between two different media companies,” Genachowski said during a hearing on the proposed merger between Comcast, one of the country’s largest cable operators, and NBC Universal.
“Media companies have a right to engage in transactions and determine the terms of those transactions,” he added. “But the events of the last two or three months confirm that this a subject that should be looked at seriously,” with the goal of “a framework that works for consumers and is fair for the parties involved.”
Genachowski said the FCC is increasingly hearing arguments that the retransmission framework has lost pace with changes in the marketplace. The commission, he said, is considering whether there are improvements that can be made and whether reforms are sensible.
The Academy Awards situation in New York was the apparent tipping point. During contentious negotiations between ABC and Cablevision, ABC withheld its programming for about 21 hours until a tentative deal was struck. Viewers missed the first 15 minutes of the Academy Awards during the standoff, but at that point many had already made plans to watch the awards show elsewhere.
Current retransmission regulations, established in 1992, were designed to ensure that pay television providers carried terrestrial television stations. In the early days, retransmission was mainly about ensuring carriage. In recent years, however, more stations want to be paid for their programming.
This, the providers say, gives the stations far too much leverage. The Dish Network said the retransmission negotiations now resemble “a hostage situation, not a free market negotiation.”
The television providers asked the FCC to take greater control during the negotiations, using strategies that include mandatory arbitration or an “expert tribunal” to speed the process. They also want the commission to require stations to keep providing a signal as long as the provider “continues to negotiate in good faith.”
The coalition argued that the FCC should make it clear that “a mechanism for resolving retransmission consent disputes will involve only stand-alone agreements for the broadcast signal. Broadcasters must no longer be permitted to exploit their many government-granted preferences that preclude normal, market-based negotiations.”
The program providers also want the untying of retransmission consent negotiations from other programming services like co-owned cable channels and even Internet content. It would be a violation of good faith bargaining “to insist on tying retransmission consent to negotiations for carriage of other programming services.”
Until now, the FCC has largely resisted intervening in disputes between local stations and the cable and satellite companies that carry them. With the Academy Awards fiasco as the tipping point, that may change.