William T. Lake, the FCC Media Bureau Chief, told a gathering at the Media Institute that “when the elephants fight, it is the grass that suffers.” In this case, the elephants are broadcasters and MVPDs, and consumers are the grass. But he said the FCC has determined it has very few tools to protect consumers during contentious retransmission negotiations. NAB’s Gordon Smith commented on Lake’s comments, advocating consumer education on their options during an impasse.
Describing the current retransmission situation, Lake said, “We all know the nub of what has happened. The broadcasters see their ad revenues down and see the allure of a dual revenue stream. And the distributors feel stress on the amounts they have planned to pay for programming. The cash demands of broadcasters are rising faster than the distributors’ willingness to pay, and the result has been a growing number of cliffhanger negotiations – and some that have fallen off the cliff. Some observers say that the retransmission landscape changed forever when Cablevision subscribers missed two games of the World Series. But just think how much more it would have changed if the Yankees had been in the Series!”
Lake said all the Commission can do is make sure that negotiations are being carried out in good faith, which has proven inadequate to prevent the occasional disruption of service.
He said the Commission has read comments filed on its pending retransmission proceeding, and takes seriously its mandate to protect consumers, and will put together a Notice of Proposed Rulemaking to look at what it might be able to do. “One thing we’ve heard is that uncertainty exists about what good faith means,” said Lake. “Our rules provide some limited guidance on this; but, if we can provide greater certainty to the marketplace, that could help to guide the negotiating parties and reduce the number of failed deals and dropped signals.”
He added only a few other thoughts, saying, “We may be able to provide more specifics about the meaning and scope of the ‘totality of the circumstances’ test. Because a principal concern is to protect consumers when talks break down, we may propose to strengthen our notice requirement and extend it to non-cable distributors and broadcasters. If some of our broadcast rules are thought to interfere with market negotiations, we may want to look at those rules.”
Concluding his remarks on the topic, Lake said, “We will pay close attention to the comments we receive and also to future developments in the marketplace. Are the disruptions of the last year an anomaly — perhaps just a sign of friction as prices move to a new level? Or will we see a continuing pattern of disputes that threaten viewers’ access to programming? We hope that a rulemaking will help us to find the most constructive role we can play to protect consumers under the retransmission law as it now exists.”
A full transcript of Lake’s remarks can be read here.
NAB President/CEO Gordon Smith commented on the proceeding, saying, “NAB strongly endorses educating consumers with the multiple options available to them in the exceedingly rare instance when a retransmission consent dispute arises, including the antenna TV option. In the final analysis, injecting Washington into private business negotiations that have a 99 percent success rate only serves to embolden pay-TV companies. If the pay-TV giants succeed, there will be further migration of premiere sporting events like the Super Bowl away from free TV, and a reduction in financial resources that sustains quality foreign language programming, local news and entertainment to a growing audience of more than 30 million Americans who rely exclusively on over-the-air television.”
RBR-TVBR observation: In our humble opinion, a new NPRM that focuses on determining what even a better-defined “good faith” is will serve mainly to consume time to no particular end. Broadcasters would argue that MVPDs are not bargaining in good faith right now, in hopes of scaring up some regulatory or legislative relief in Washington.
It seems that MVPDs are deliberately failing to come to terms, forcing broadcasters to withhold programming, and then running to Washington and blaming broadcasters for the whole mess.
MVPDs point to must-carry as a regulatory thumb on the scale in broadcast’s favor. We’d point out that just as soon as basic cable programmers are saddled with a public interest responsibility and are reliable providers of local news and information programming, than perhaps they would also qualify for a little special treatment. But that won’t happen.
The simple fact is that it is not within the reasonable realm of possibility to expect anybody at the FCC or anywhere else to divine whether or not somebody is bargaining in good faith. The guarantor of good faith is the fact that MVPDs need broadcast programming and broadcasters need MVPD distribution platforms. Let’s just go ahead and let those mutual facts coupled with the free and open market determine where the good faith line is.