Time Warner, CBS Carriage Dispute Shows Need for Retransmission Rules Changes

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By Bryce Baschuk  

Federal policymakers should revise rules to prevent companies from blacking out television content during retransmission consent negotiations, consumer advocacy groups said Sept. 3.

The calls came after Time Warner Cable Inc. and CBS Corp. agreed to a new retransmission consent deal that will end a 32-day blackout of CBS programming to millions of Time Warner subscribers.

The terms of the agreement were not disclosed.

Acting Federal Communications Commission Chairwoman Mignon Clyburn said she was pleased the companies resolved their retransmission consent disagreement “which for too long have deprived millions of consumers of access to CBS programming,” in a statement released Sept. 2. “At the end of the day, media companies should accept shared responsibility for putting their audience's interests above other interests and do all they can to avoid these kinds of disputes in the future.”

The Communications Act prohibits cable companies or other multichannel video programming distributors from retransmitting a broadcast station's signal without the station's consent. Disagreements between broadcasters and cable or satellite companies over the terms of retransmission consent has risen in recent years and led the FCC initiate a notice of proposed rulemaking in 2011 to reconsider the rules.

Rules Outdated?

Time Warner Cable Chief Executive Officer Glenn Britt said he was encouraged that more than 50 consumer groups supported Time Warner Cable's calls to reassess the 1992 retransmission consent rules: “The rules are woefully out of date, are the primary reason cable bills are rising, and too frequently leave our customers without the programming they love,” Britt said. “We sincerely hope that policy makers heed that call and take action to prevent these unfortunate blackouts soon.”

The retransmission consent market is “broken and outdated rules governing these negotiations need to be updated to reflect current market conditions,” American Cable Association President Matthew Polka said. “If CBS can leave millions of pay-TV viewers in the dark for 32 days, no one can say with a straight face that the marketplace is working well for consumers,” he said.

The resolution of this dispute could lead to higher bills for consumers, said Public Knowledge Senior Staff Attorney John Bergmayer. “Broadcasters have proven effective at leveraging their government-protected business models to generate ever-higher revenues, and the structure of the cable TV market makes it possible to pass along rate hikes to consumers who have few competitive alternatives,” he said. “If any good comes of this month-long viewer blackout, it should be to focus policymaker's attention on a dysfunctional video marketplace that is not serving the needs of viewers.”

Broadcasters Reject Federal Intervention

Broadcasters “deserve to be fairly compensated for the most-watched programming on television,” said National Association of Broadcasters spokesman Dennis Wharton. “The unfortunate reality is that in the last two years, 89 percent of all retransmission consent disruptions have involved three companies: Time Warner Cable, DirecTV and DISH,” Wharton said. “Rather than create a manufactured 'crisis' that would inject government into the free-market, these three firms might better spend their time working toward amicable resolutions over TV programming most valued by viewers,” he said.