April 16, 2014 SIGN IN | REGISTER

Congress Is Tuning In to Revise TV Industry Rules

Scott J. Ferrell/CQ Roll Call File Photo
Eshoo circulated a draft bill that would give the Federal Communications Commission explicit authority to step in during retransmission disputes to ensure that cable subscribers don’t lose access to broadcast stations, but broadcasters were not onboard.

Predictably, the broadcasters balked; pulling their signals during negotiations has proved one of the most effective tactics in ensuring they come out on top. CBS was able to more than double the amount it receives in fees per subscriber from Time Warner Cable, by some reports, and ensure that its new sports network, a potential cash cow, will also be carried.

Eshoo’s bill drew favorable comments at the hearing, where Rep. Steve Scalise, R-La., praised her for attempting to address the issue, despite some personal reservations about the bill. Scalise introduced legislation in 2011 that would repeal the retransmission consent law, along with a host of other TV regulations.

Still, while there is growing dissatisfaction on Capitol Hill with the current state of the TV industry, there remains little agreement on what should be done.

The broadcasters contend things are fine, noting the vast majority of retransmission negotiations are completed with little fanfare and no blackouts. They point out that broadcast programming, especially NFL and college football, is by far the highest-rated programming on television, that big cable companies are wildly profitable and that subscribers can still receive broadcast signals over the air by using an antenna.

“Nothing is more free market than retransmission consent. It simply says that somebody who takes somebody else’s product and resells it for a profit has to negotiate carriage rights for that product,” said Dennis Wharton, executive vice president for communications at the National Association of Broadcasters.

Wharton said many broadcast stations cost less per subscriber than cable channels such as TNT, whose lineup includes many reruns of broadcast programming. The rising cost of cable programming, particularly sports programming, has also come under political fire as of late, including from Sen. John McCain, R-Ariz., who has drawn increased attention for his long-term campaign to allow consumers to purchase channels a la carte.

But cable providers, particularly small and medium-sized cable providers such as those represented by the American Cable Association, say that the current retransmission consent regime gives broadcasters too much leverage. Ross Lieberman, ACA vice president of government affairs, said consumer desire for broadcast programming like sports, combined with political and economic pressure, means most cable providers have no choice but to submit to broadcasters’ demands in negotiations.

“When you’re negotiating with a broadcaster, they have too much leverage,” Lieberman said. He accused the broadcasters of growing “increasingly greedy in their demands for retransmission consent, with not only smaller but larger operators.”

Those larger cable operators, according to Lieberman, have more leverage to try to hold out during negotiations and the subsequent blackouts. But he suggested that the broadcasters’ approach might have been counter-productive, as it has drawn political scrutiny on their behavior.

“There’s evidence that the broadcasters are coordinating their negotiations. That’s a kind word for colluding,” Lieberman said.

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