Conversation on video competition on Capitol Hill


U.S. CongressThe Senate Commerce Committee hit on a number of topics in its look at the Cable Act of 1992. The topics included retransmission consent, deregulation, a la carte and broadcast/print cross-ownership among others.

The witnesses included NAB’s Gordon Smith, Melinda Witmer of TWC, Martin Franks from CBS, ACA.WOW! exec Colleen Abdoulah, CFA’s Mark Cooper and Colorado professor and former broadcaster Preston Padden.

In response to a Johnny Isaakson (R-GA) question, consumer advocate Mark Cooper criticized the practice of program bundling. He said providers, not consumers, make the choices as to which station makes it into a bundle and consumers get it, and pay for it, whether they want the channel or not. He called the process anti-competitive and anti-consumer.

WOW!/ACA’s Colleen Abdoulah responded to a question from Mark Pryor (D-AR) said that she welcomes competition. However, she is forced into certain practices by large gate-keeper companies that limit her company’s ability to respond to its customers’ desires. She mentioned in particular the very high cost of sports programming that she has no control over.

Pryor asked TWC’s Melinda Witmer about program pricing is not transparent – why shouldn’t consumer know more about this? She said her company is very close to them, and understands their desire for transparency but does not believe they understand how its works. They don’t understand the negotiations required to bring programming to the. Abdoulah added that MVPDs are not allowed to make their specific contracted programming costs public.

John Thune (R-SD) asked if there would there be more or fewer blackouts under total deregulation. NAB’s Gordon Smith said this would bring a 10-fold increase in the number of contracts necessary, and it would increase by 10 the likelihood of disruptions.

Witmer complained that they can’t do anything until they have broadcast agreements.

CBS exec Martin Franks that sometimes, new platform providers are hard to even find much less negotiate with. He also added a story about a negotiation that was proceeding just fine until the FCC announced a retrans hearing, at which point the MVPD pulled back, hoping for assistance from regulatory Washington. He said the situation being described by MVPD people in the room does not remind him of the world he lives in.

Cooper said the only way to fix this market is to allow consumers to choose and pay for only the programs they want. You can fool around with retrans and shift the balance of power from one large entity to another large entity, but nothing will work unless the consumer is given the reins. He said this is basically what Abdoulah is in favor of.

Tom Udall (D-NM) said a small religious broadcaster is worried about damage if must-carry is done away with. NAB’s Gordon Smith said the idea for must-carry was to preserve small niche operations – rural, religious, foreign language, minority stations. He said even Fox wouldn’t have made it without must-carry. If it goes away, small markets may be wiped out and localism will go with it.

Asked if it was true that sometimes smaller operators pay more for programming than large ones. Abdoulah said small operators get stuck with higher rates than large operators because they lack leverage. Frank took exception – he said CBS has its problems dealing with Abdoulah’s company and complimented her ability as a tough negotiator.

Jim DeMint (R-SC) continued his call for deregulation and said he thinks everybody would end up loving it. He says for example that if existing players will not deliver a la carte programming consumers want, somebody will.

Kay Bailey Hutchison (R-TX) brought up cross-ownership, saying she was a strong proponent of the ban at one time, particularly due to a grand-fathered combo in Dallas. However, the proliferation of outlets in the past few years have changed the marketplace, and newspapers like the Picayune are suffering, so she has now changed her mind. Would eliminating the rule help or hurt localism?

Smith said it is a different world. He praised broadcasting’s “brothers and sisters” in newspaper, and their importance to the business of journalism, and said that if cross-ownership would allow them to survive it should be allowed. Preston Padden agreed, noting that new dynamics have definitely changed the picture.

Cooper pointed out that the rules have been relaxed and his organization supported it. In fact, the “failing firm” exception could have always been invoked. However, there have been no mergers in the places where they could be happening.

RBR-TVBR observation: This was not a discussion aimed at any particular legislative path in this area, although the deregulatory proposals of DeMint came up a number of times. Rather, it was a meeting where stakeholders were able to address their differences in a very civil conversation.

We do not expect anything to come of this in 2012 – Congress is about to go on its annual summer recess, and then many members will be focusing on re-election.
But things will get very interesting indeed if Republicans earn control of the Senate and DeMint takes the chair of this Committee. Stay tuned.