FCC Influence in TWC-CBS Resolution Seen Having Little Impact on Retrans Deal
The FCC’s role in encouraging Time Warner Cable and CBS to reach a retransmission consent agreement was likely very minimal, said consumer advocates and cable industry professionals in interviews Tuesday. The agreement disclosed Monday between the companies ended a month-long blackout of CBS programming to Time Warner Cable customers in eight markets. Acting FCC Chairwoman Mignon Clyburn urged media companies on both sides of retrans deals to accept shared responsibility when disputes affect customers (CD Sept 2 Special Report). The resolution shows that the FCC shouldn’t intervene in such disputes, a broadcast attorney said.
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CBS programming also was restored to Bright House Networks customers in Detroit; Tampa, Fla.; and Bakersfield, Calif., that cable operator said in a written statement Monday night. “The goal was to hold down rising costs as best as we can and retain our ability to deliver a great experience and value for our customers,” said Bright House CEO Steve Miron. “We certainly apologize to our customers for any inconvenience they experienced as a result of this dispute.”
CBS’ blackout of Time Warner Cable and Bright House “showed that the retransmission consent market is broken and outdated rules governing these negotiations need to be updated to reflect current market conditions,” said the American Cable Association. Pay-TV subscribers “should know that broadcaster blackouts that enrich firms like CBS while pushing cable bills even higher are the new normal,” said ACA CEO Matt Polka in a news release (http://bit.ly/1dJegXl).
Reaching a resolution is “a watershed event in the sense that the real winner is those who wanted efficient negotiations,” said Scott Flick, a Pillsbury Winthrop broadcast lawyer. Looking to the FCC or Congress to step in slows down retrans negotiations, he said. The negotiations accomplished “an understanding on behalf of both broadcasters and cable and satellite operators that it’s a waste of time to be looking to the government for involvement on one side or the other,” he said. It’s a success for the FCC “in the sense that people will hopefully stop calling on the commission to leap into every negotiation,” he said. Both parties had adequate incentives to reach an agreement, Flick said. He said he doubts that people will be looking for the FCC to intervene in future negotiations. “They're going to realize if the FCC didn’t attempt to step in in a more concrete way than it did, the likelihood of it doing on some future negotiation doesn’t seem terribly high,” he said.
The outcome is “not surprising,” said John Bergmayer, a senior staff attorney at Public Knowledge, which wants changes to retrans rules. The resolution likely was related to new programming for the CBS fall season and the upcoming sports season, he said. “That really forced the issue,” said Bergmayer. Time Warner Cable “needs to carry this programming, so I think they were both motivated to find a solution."
The dispute had caused Clyburn and Commissioner Jessica Rosenworcel to consider FCC action (CD Aug 12 p1). “The commission’s statements were certainly helpful, but given this backdrop of the commission’s public downplaying of its actual legal authority to resolve disputes, it’s hard to see what real teeth is behind these statements they've put out,” Bergmayer said.
The American Television Alliance is pleased that the FCC spoke up, but it could have gone a lot further, said a spokesman for the alliance, with members including Public Knowledge and Time Warner Cable. “We think that the FCC can and should take action to resolve the sorts of disputes that we just saw.” Bergmayer agreed that both parties should try to avoid disrupting viewers, but “we shouldn’t automatically just apportion blame 50/50 every time.” Every case is different, he said. “Sometimes maybe one side is being reasonable and the other side isn’t."
The blackout most likely didn’t change the legislative outlook on retrans, said Guggenheim Partners analyst Paul Gallant in a research note. “The odds still appear to be below 50 percent that Congress will revise the retrans law in 2014.” However, “the chances of the FCC addressing its retrans authority have risen,” he said. Clyburn was under significant political pressure to try to protect consumers, “and her involvement might have affected the negotiations,” he said. “But we also suspect such informal FCC involvement will not prove feasible long term, as it could encourage pay-TV distributors to provoke blackouts and wait for the FCC to step in."
Refreshing the record on the current retrans consent rulemaking proceeding isn’t necessary, some of the media experts said. “I don’t think there’s any need to refresh the record,” said Barbara Esbin, a Cinnamon Mueller cable attorney. “This is not a stale record -- unless the commission wants to propose additional rule changes. But it has put out a lot of issues for comments, and it’s fully able to move forward if it chooses to."
There’s ample evidence that system needs to be changed, said the ATVA spokesman. “We're hopeful that a new administration will make it a priority to put an end to the sorts of disputes that are so harmful to consumers,” he said of FCC Chairman nominee Tom Wheeler. A tremendous number of consumer and civil rights groups as well as Congress members have spoken out against this blackout, said the spokesman. “At this point, the noise is deafening and one wonders what it’s going to take for Congress to actually listen.”