Programmers, Operators Balking at FCC Channel-Cost Requests
Cable programmers and operators are objecting to FCC requests for information that they usually keep confidential on channel costs, industry executives said. The companies believe the agency is overstepping its authority by asking Comcast, Time Warner Cable, Verizon and eight other pay-TV companies to disclose by Thursday what they pay for channels they've moved from analog to digital tiers (CD Nov 6 p10), they said. Some of the 11 companies that received Enforcement Bureau letters of inquiry may not answer them fully. In a letter to FCC members Wednesday, NCTA President Kyle McSlarrow called the inquiry “unlawful.”
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Because the FCC doesn’t regulate expanded-basic cable rates, some in the cable industry and at the FCC believe that Chairman Kevin Martin lacks authority to ask the bureau to request pricing data, said industry and commission officials. Martin has said the FCC is acting properly (CD Nov 12 p11) in checking on subscribers’ complaints that operators didn’t reduce the prices of analog packages moving channels to digital-only packages. But some in industry and at the FCC said Martin should have sought a vote of the commissioners to request the data.
Cable operators can mark any private documents as confidential “if they have any concerns about any part of that request for information,” an FCC spokesman said. The commission has authority to look into subscriber complaints against any company it oversees, said a spokesman. “We have a number of complaints against each company that are growing” in volume, so the commission “felt it necessary to look into this issue more closely as we would with any other regulatory area that we are involved with,” he added. Any company that refuses to meet a government request for data would be referred for enforcement action, FCC representatives said.
Sending the letters violated the Paperwork Reduction Act and “constitutes an abuse of the Commission’s processes,” McSlarrow wrote. He asked the commission to rescind the letters, saying they amount to a notice of inquiry because they seek industrywide data. The letters’ 14-day reply deadline is far too short, considering the “voluminous information they request,” McSlarrow said. “The Bureau’s demand triggers private liability questions: for example, might divulging such information in these unprecedented procedural circumstances constitute a breech of contract?” He called the letters a “broad fishing expedition” that’s “masquerading as an investigation.”
The NCTA is advising its members, nine of which got the letters, that the commission has no authority to ask about channel costs, industry officials said. It’s suggesting to its members that the FCC didn’t follow proper procedure in asking question 8b in the Oct. 30 letters of inquiry, and that the operators should respond accordingly, they said. That question asks, for the period beginning Nov. 1, 2006, the operator to disclose, for each channel moved to digital, “the per-subscriber fees related to that channel paid by Company to the video programming distributor responsible for that channel.”
Cable programmers are telling some pay-TV providers that they would void their carriage deals by disclosing the per- subscriber costs, industry officials said. That may provide further impetus for some of the letter recipients not to respond fully to the commission, they said. Some programmers have threatened to yank channels if certain operators disclose the pricing data, they said. An NCTA spokesman declined to comment beyond the group’s letter to the FCC.
Verizon has said the FCC data request effectively is made moot because the telco didn’t yank any analog channels and instead stopped simulcasting some networks in that format when it went all-digital. But the company will provide a “full response” to the letter, a Verizon spokesman said. Some smaller operators that got the bureau letters are struggling to gather large amounts of information to reply to the letters, and also may face increased pressure from programmers, industry officials said. Bend Cable, GCI, Harron and RCN are among the smaller pay-TV providers. Company officials declined to comment or didn’t reply to messages. Bright House Networks, Cablevision, Cox, Charter and Suddenlink also received letters, the FCC has said.