Threat of Blackouts in Retransmission Debates Underscores Need for FCC Proceeding, Some Attorneys Say

This situation is “very typical,” said Barbara Esbin, a Cinnamon Mueller attorney. “All the retransmission consent disputes follow a fairly similar trajectory,” she said: “I expect that over time there will be an agreement reached.” Over time, broadcasters have gained additional leverage during negotiation, which allowed them to vastly increase prices, she said. CBS is a monopoly provider of a network signal and it’s bargaining with one of several distributors in a market, she said. It’s a completely different dynamic “and what ends up are these huge negotiating impasses over vastly increased demand for compensation from the programmer and cable operators facing a natural limit on how much they can pass through to subscribers without the subscriber saying, ‘I'm not paying for this anymore,'” Esbin added.

This dispute involves a top-rated network and major markets, said broadcast lawyer Scott Flick of Pillsbury Winthrop. A deadline extension shows “the parties are working to try to reach a resolution without causing a viewing disruption,” he said. But on the other hand, every time there’s an extension, “you tend to read about it in the news. ... It’s inadvertently perhaps gotten more coverage than it might otherwise,” he said.

While some broadcasters and programmers do sometimes extend retransmission agreements, it isn’t a proper solution to the overall retransmission consent model, another attorney said. There were nearly 100 disruptions last year, “so clearly they don’t always get done,” the attorney said. “Even if they do get done, it doesn’t mean that it doesn’t end up harming consumers through higher prices."

Some attorneys pointed to FCC Chairman nominee Tom Wheeler’s concern about how retransmission disputes harm consumers. His concern about subscribers being held hostage “is a matter of concern to everybody,” Esbin said. There are many things the FCC can do to resolve the retransmission consent agreement model, said the previously mentioned attorney speaking on background. In its open proceeding on governing retransmission consent, “the FCC asks a lot of questions on what would or wouldn’t be good faith negotiations in that proceeding and hopefully that will get resolved soon,” the attorney said. But “there is a lot within their authority they can do.”

Under new leadership the FCC can revisit retransmission consent, Flick said. But “at the end of the day, it will be a very uphill battle to step in in a more concrete manner unless it involves good faith negotiations or just the bully pulpit of encouraging the parties to reach a timely resolution of it,” he said. Consumer Action is looking forward to “fresh thinking” under a new chairman, said Linda Sherry, director-national priorities for the group. But it’s a “thorny issue” and broadcasters “have tremendous political power in pushing for a decision that’s better for them than the other parties involved,” she said. “It behooves the FCC to look at it now and not dismiss it as something that is politically untenable.” Unless consumers speak out, it looks hopeless for consumers, Sherry added: “They're not really speaking out about it in any great numbers."

It’s time to think more deeply “about what these disputes show us about the state of the media and communications marketplace,” Public Knowledge said in a blog post (http://bit.ly/165bTIh). Broadcasters “are increasingly forgetting about the ‘free, over-the-air’ part of their mission and focusing more and more on getting cable subscribers to pay higher bills,” it said.