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By Paul Barbagallo
The National Association of Broadcasters in an Oct. 3 letter strongly urged the Federal Communications Commission not to intervene in negotiations between television networks and pay-TV companies for the right to retransmit broadcast programming.
The letter was timed to coincide with the deadline for broadcasters to send their so-called “must-carry/retransmission consent” election notices to cable operators and direct broadcast satellite systems. That election, due Oct. 1, will take effect Jan. 1, 2012 and run through Dec. 31, 2014.
In the one-page letter, NAB President and CEO said that broadcasters remain committed to serving local viewers by reaching “fair and timely” retransmission consent agreements with pay-TV providers.
“I call on all parties to stay focused on concluding agreements through marketplace negotiations, rather than through calls for unnecessary government intervention or overheated rhetoric in company press releases,” Smith wrote. “Even indications of government intervention in these private, market-based negotiations can impede their progress and slow their completion. The mere prospect of government intervention introduces uncertainty and distorts incentives in ways that disrupt the bargaining process and only make it more difficult to reach fair and equitable arrangements.”
Under the current law, there are two ways that local broadcast stations get on cable systems: must carry or retransmission consent.
The rules stipulate that cable operators generally must devote up to a third of their channel capacity to carrying signals from local broadcast stations. If a cable system has not reached that cap, a local broadcaster can insist that the system “must carry” its signal.
If a broadcast station asserts its must carry rights, then it cannot demand a fee from the cable operator. However, rather than demand must-carry status, a local broadcaster can instead say that the cable operator must negotiate retransmission consent.
If a TV station chooses to negotiate a price for its signal under the retransmission consent regime, until the cable operator and broadcaster reach an agreement, the cable operator is essentially prohibited from carrying that signal.
When the two sides fail to come to an agreement, viewers sometimes see their channels go dark, as was the case last year after a dispute between Cablevision Systems Corp. and Fox Broadcasting Corp. Cablevision had refused to give in to Fox's demands for more than $150 million a year, more than double what the company had reportedly paid for Fox's programming.
While these types of contract disputes have been waged for years, 2010 witnessed much-publicized standoffs between Cablevision and Disney—which left 3 million Cablevision subscribers in New York, New Jersey, and Connecticut temporarily without access to ABC—and between Time Warner Cable Inc. and News Corp.—which nearly left 14 million homes without Fox Broadcasting Corp. programming on New Year's Day, one of the biggest sports days of the year.
In March, the FCC adopted a notice of proposed rulemaking to explore whether the agency should, or could, do more to prevent blackouts of television programming when negotiations to renew retransmission consent agreements reach an impasse.
The agency has yet to take any substantive action in the matter, however.
For the letter, visit http://www.nab.org/documents/newsRoom/pdfs/100311_Retrans_FCC_letter.pdf.
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