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Lobbying on TV Law Reauthorization Intensifies Ahead of House Panel Markup

Wednesday, May 7, 2014

By Bryce Baschuk  

May 6 — Some of the nation's top media companies and associations have increased their lobbying expenditures this year as Congress seeks to reauthorize the 2010 Satellite Television Extension and Localism Act.

Senate records show that satellite, cable and broadcast groups spent more than $20 million in the first three months of 2014 as Congress weighs changes to the law before it expires on Dec. 31. Broadcasters' expenditures were up markedly over the first quarter of 2013.

Lawmakers will determine whether to use STELA as a means to modify Section 325 of the Communications Act and Section 119 of the Copyright Act, which govern certain broadcast carriage rules between multichannel video programming distributors (MVPDs) and TV stations.

Cable operators and satellite TV providers have sought changes to laws governing negotiations between television networks and pay-TV companies for the right to retransmit broadcast programming. The issue drew significant attention in the first quarter when the Federal Communications Commission enacted a series of changes to broadcast carriage and station ownership rules that roiled the industry.

May 8 Markup

Democrats and Republicans on the House Energy and Commerce Committee recently finalized their negotiations over legislation that would renew the law for another five years, industry sources told Bloomberg BNA. The draft bill includes language that would retire FCC rules that govern video set-top box controls and eliminate rules that prohibit MVPDs from blacking out broadcast TV content from their lineups during sweeps weeks rating measurements.

Committee members will meet May 7 at 4 p.m. in 2123 Rayburn to deliver opening statements and then reconvene on May 8 at 10 a.m. to mark up the bill. The House and Senate Commerce committees share jurisdiction over STELA with the House and Senate Judiciary committees.

JSA Amendment

House Energy and Commerce members previously tussled over a provision that sought to prevent the FCC from revising its media ownership restrictions regarding broadcast stations with joint sales agreements (JSAs).

Broadcast companies have increasingly used JSAs to combine advertising and resources between TV stations that compete in the same market. FCC Chairman Tom Wheeler said some stations have used the arrangements as a loophole to circumvent the FCC's media consolidation rules. The FCC currently prohibits broadcast companies from owning two or more full-power television stations in the same local market.

The committee's STELA reauthorization bill originally sought to prohibit the FCC from modifying its media ownership rules regarding JSAs until the agency completes its 2010 quadrennial review of media ownership rules. On March 31 the FCC adopted a report and order (MB Docket No. 04-256) that clarifies that certain JSAs are now attributable under the commission's current media ownership restrictions and gave stations two years to unwind any agreements found to violate FCC rules.

The committee now plans to vote on a manager's amendment that would expand the timeline for broadcast stations to unwind their JSAs, sources told Bloomberg BNA. The amendment would permit stations to file for a waiver within 90 days of the bill's passage. If the FCC denies any such waiver, broadcast stations would be permitted to maintain their JSA relationships until 2017 or possibly later under the revised language of the bill.

Broadcasters Go Big

The National Association of Broadcasters led the sector's advocacy push in the first quarter of 2014 with $5.28 million spent, a 26 percent increase from the same period a year earlier.

Broadcasters have called STELA a “government-granted subsidy for the satellite industry” and urged lawmakers to restrict satellite carriers' ability to play distant broadcast signals. The NAB has repeatedly urged lawmakers to sunset Section 325 of the Communications Act and Section 119 of the Copyright Act, which exempts satellite providers from having to obtain retransmission consent in order to offer distant signals to consumers in areas unserved by broadcast signals.

Broadcasters have sought higher fees from distributors to retransmit their network programming as a means to offset declining advertising revenues and increased sports programming costs. Total retransmission fees for 2013 were estimated at $3.3 billion and are projected to increase to $7.6 billion by 2018, according to estimates by SNL Financial LC.

Retransmission consent agreements have come under the scrutiny of some lawmakers who want curb the rise of TV blackouts. Section 325(b) of the Communications Act requires broadcast TV stations and MVPDs to negotiate retransmission consent agreements “in good faith.” When negotiations break down MVPD's are prevented from carrying broadcast signals, which results in program blackouts, sometimes lasting weeks, for millions of cable and satellite customers.

Broadcasters argue that a majority of retransmission consent negotiations are completed without disruptions for viewers and emphasize that broadcasters' signals are always available to consumers free over the air.

Satellite Providers Seek Updates.

Satellite providers DirecTV and Dish Network Corp. have urged lawmakers to enact changes that would end local programming blackouts, curb retransmission consent rate increases, and offer more network programming to rural residents.

The companies warn that sunsetting Section 325 of the Communications Act and Section 119 of the Copyright Act would seriously harm rural consumers' abilities to view distant broadcast signals. Nearly 1.5 million Americans receive distant signals authorized by STELA, according to estimates conducted by the Satellite Industry Association.

Dish increased its lobbying expenditures by 11 percent to $390,000 in the first quarter, up from $350,000 a year prior. DirecTV spending fell to $690,000 during the first quarter of 2014, down 7 percent from the same period in 2013.

Cable Company Consolidation

Cable groups have lobbied lawmakers to use STELA as a vehicle to end the FCC's set-top box integration ban which they say has cost the industry millions of dollars.

Section 629 of the 1996 Telecommunications Act requires the FCC to ensure that consumers have adequate access to navigation devices in order to view multichannel video programming. In 2003, the FCC adopted industry-developed standards for a CableCARD security device that would permit video navigation devices to allow televisions to display encrypted multichannel video programming content. The commission subsequently ordered an integration ban that prohibited MVPDs from using built-in security features in their set-top boxes in lieu of permitting CableCARD accessibility.

The National Cable and Telecommunications Association spent $4.14 million to lobby Congress in the first quarter of 2014, a 1 percent decrease from the year prior. The American Cable Association spent $130,000 on lobbying during Q1, the same amount it spent during the same period last year.

Lawmakers and regulators have recently increased their attention on the issue of cable industry consolidation amid the $45 billion proposed merger of Comcast Corp. and Time Warner Cable Inc. Comcast spent $3.1 million in lobbying during the first quarter of 2014, a 31 percent decrease from the year prior. Time Warner Cable increased its quarterly lobbying 3 percent to $1.93 million, versus a year prior.

The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law plans to examine the proposed merger of Comcast and Time Warner Cable at a hearing scheduled for May 8 at 9:30 a.m. in 2141 Rayburn. At 2 p.m. on May 8 the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law will hold a STELA hearing in the same room.

To contact the reporter on this story: Bryce Baschuk in Washington at bbaschuk@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

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