Many Retrans Questions, Few Conclusions in Draft FCC Rulemaking Notice
A draft FCC rulemaking notice on retransmission consent deals asks many questions about rules and practices covering the broadcast and pay-TV industries and draws few tentative conclusions, commission and industry officials said Friday. The notice circulated about 7 p.m. Thursday, FCC officials said. The agency confirmed that it’s on the tentative agenda for the March 3 meeting, as had been expected (CD Feb 8 p1). Cable, DBS and telco-TV companies and public interest groups had sought such a rulemaking, while broadcasters have said retrans works well now. Other media issues to be voted on at next month’s meeting are an order that may make it harder for radio stations to move and a rulemaking on video descriptions, agency officials said.
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The retrans notice generally tracks a letter that Chairman Julius Genachowski sent Sen. John Kerry, D-Mass., saying the regulator largely lacks statutory authority to order carriage when TV stations or subscription-video providers don’t negotiate in good faith, agency and industry officials said. That tack was expected (CD Jan 27 p8). In a surprise to some, the rulemaking from the Media Bureau asks about eliminating network nonduplication and syndicated exclusivity rules that TV stations rely on, agency and industry officials said. The item doesn’t propose to do away with the rules, and it asks about issues broadcasters had sought in the rulemaking, including early termination fees, commission and industry officials said. The draft notice also asks about most-favored-nation contract clauses, commission officials said.
The draft item asks about the definition of “totality of the circumstances,” a showing those complaining to the regulator that good faith was violated can meet to help make their case, agency and industry officials said. The draft notes that the commission believes it doesn’t have the authority to order interim carriage or require arbitration when a retrans deal can’t be reached and one or both sides haven’t acted in good faith, commission and industry officials said. Genachowski had said as much in his letter to Kerry, who at the time was considering retrans legislation. The rulemaking “seeks comment on changes to rules governing or affecting” retrans “negotiations between broadcasters and multichannel video programming distributors,” the FCC said. A bureau spokeswoman declined to elaborate.
The NAB hopes the regulator recognizes that 99 percent of retrans negotiations are completed without any broadcast blackout, a spokesman said. “A few pay-TV companies are manufacturing a phony case of market failure in hopes that government will tip the scales of free-market negotiation in favor of one party. Injecting government into this process will only result in more disruptions in TV service, not less.” The American Cable Association believes the rulemaking will find that such talks aren’t “conducted in a purely free-market setting,” said President Matt Polka.
The scrutiny such a rulemaking brings helps pay-TV companies because broadcasters “know they are being watched very closely,” said analyst David Kaut of Stifel Nicolaus. Network nonduplication rules are “an area where they probably could affect the playing field some,” he said of the FCC, because letting pay-TV providers bring in out-of-market broadcasts for their subscribers “could give the telco, cable guys more leverage” in retrans talks, he said. “The good-faith rules seem to have their limits under the current statues."
One of the three other media issues that the commission tentatively plans to vote on March 3 deals with tribal issues, which are a focus of the meeting. It’s an order about “revising rules or establishing waiver standards that will make it easier for Native Nations to provide radio service to areas that are the functional equivalent of Tribal Lands and to Tribal Lands that are small or irregularly shaped,” the commission said. “A further notice invites additional comment on adopting a Tribal Bidding Credit and alternative ways to foster radio service by Native Nations on their lands.” The bureau spokeswoman also had no comment on the other media items preliminarily scheduled for a March 3 vote.
An order that may draw some attention from broadcasters would make it harder for radio stations to get FCC permission for what are called move-ins from rural to suburban or urban areas, an agency official said. The order appears to largely implement a rulemaking notice that proposed to make such moves harder, the official said. A rulemaking notice set for a vote at next month’s meeting proposes to largely reinstate video description rules that had been approved in 2000 by the commission but later rejected by an appeals court, the official said. The new notice proposes exemptions to the rules, the official said.