Uncertainty Lingers Around FCC Action, State of Digital Rights, as TWC-CBS Blackout Continues
While the FCC has expressed its concern for consumers affected by the blackout in the Time Warner Cable and CBS retransmission dispute, it’s unclear to what degree the commission will step in or whether it will address the blocking of online content, said consumer groups, analysts and cable industry experts in interviews this week. The FCC is engaged “at the highest levels with the respective parties and working to bring the impasse to an end for consumers and viewers in the affected markets,” said a spokesman. “We urge all parties to resolve this matter as quickly as possible so consumers can access the programming they rely on and are paying for.” The blackout is in its fourth week and the parties declined to say whether they're closer to reaching a deal.
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CBS and TWC have been giving updates on the blackout to FCC officials, but they haven’t been in recently to discuss the matter, an agency official said. Some people think the dispute will end closer to the start of the NFL season, but there isn’t firsthand knowledge that it will happen, the official said. TWC offered its customers a movie on demand included in a letter of apology Thursday (http://bit.ly/1dr5MTD).
TWC has had a few conversations with the FCC to update it on negotiations, a TWC spokeswoman said in an email. “We apologize for any inconvenience caused by this current broadcast channel blackout and appreciate your patience,” the TWC letter said. “The huge price increases demanded by broadcasters have a direct impact on your monthly cable bill and we are continuing to work hard to negotiate a fair deal.”
It’s Congress and the commission, not CBS or TWC, that should be feeling the most pressure, said Richard Greenfield, BTIG Research analyst. “Congress believed that the FCC was going to step in in these disputes. ... Why is Chairwoman Clyburn simply not doing anything?” Telling the parties to negotiate and work it out themselves prolongs the dispute, he said. Congress should be starting the process when it returns from recess, he said. “At some point, these video laws need to get updated."
Consequently, the FCC is the expert agency that has regulatory authority, said Matt Polka, American Cable Association president. “It feels much more pressure to have the issue resolved because it’s happening on their watch.” However, “I don’t know that they're doing anything other than encouraging the parties to settle,” he said.
Congress and the FCC should be feeling the most pressure to act, said a spokesman for the American Television Alliance, with members including ACA and Time Warner Cable. “It’s clear as the projections of the cost of retransmission consent skyrocket, that the system can’t hold.” While it’s encouraging that acting FCC Chairwoman Mignon Clyburn is expressing concern and getting involved, “we hope the FCC follows through,” he said. “The longer this goes on, the harder it will be for the FCC not to take action here.” If the commission sits on the sidelines for this fight, “then they're never going to take action and that’s troubling,” he added.
That the FCC may step in and try to facilitate good-faith bargaining is a sign of progress “that is kind of external to those two parties,” said Matt Wood, Free Press policy director. But if there’s any sign of either party “softening or changing their position, I really haven’t seen any sign of that in the press or in the few discussions with people we've had on both sides of the issue,” he said. The conventional wisdom is that companies don’t want to have FCC or congressional action forcing them to make a deal, “so maybe they'll be more reasonable once they see that that’s a possibility and that somebody has taken interest,” he said. But “I don’t know that it'll necessarily lead to a quicker or better resolution,” he added.
NAB credited the FCC with working with companies “to resolve retrans disruptions in the past while at the same time respecting its limited authority to change retrans rules,” said a spokesman by email. “If policymakers want to keep marquee sporting events available to all TV households -- including cord-cutters and cord-nevers -- a modest retrans revenue stream for broadcasters is essential."
CBS’s decision to block its content online could lead to long-term ramifications, said some observers. While it’s more of a business issue than a legal one, it causes great concern, said Mitch Stoltz, a staff attorney at Electronic Frontier Foundation. “It concerns me a lot that this dispute, which arose out of the Communications Act and is the legal regime for cable, has spilled over into the Internet.” TV networks are treating their own distribution of video on the Internet as “an adjunct perk, [or] side benefit” to their regular channel through the cable networks, he said. “All the major networks are hewing to this philosophy that you can’t watch TV on the Internet unless you are a cable subscriber.” That’s a real problem for competition, he said: “If that’s the norm, then it means you can’t make TV shows and distribute them on the Internet unless you already own a cable network or have multi-billion dollar deals with cable operators."
It’s not good that CBS is blocking its content, but it is the company’s content, Wood said. “We're not happy that CBS is taking content away from viewers based on nothing more than this dispute, but I also have trouble suggesting that there should be some kind of FCC remedy for that other than making the parties behave better and negotiate in better faith.” If TWC is trying to prevent CBS from selling its online content to online providers, “that seems especially anti-competitive, and it’s yet another way for the cable companies to preserve their own cable TV business while making online options less viable,” he said. If people want a broadband subscription, but not a cable subscription, and they want to get their video through Internet offerings instead, “that’s much harder to do if Time Warner Cable or any cable company is having discriminatory data caps or if they're refusing to deal with movie studios or networks that do sell to Amazon or Netflix,” he said. “The big sticking point is when CBS wants to put its programming on Amazon or Netflix, is the cable gatekepeer trying to say no?” the NAB spokesman said. Media reports have said TWC wants to keep some CBS content from going to online services, as part of any new deal.
If digital content continues to be blocked online in retrans disputes, it could become a legal problem, Stoltz said. “If there is explicit or a tacit agreement between TV networks not to make programming available on the Internet or only as a side perk of a cable subscription, that would be a legal problem.” More people may “cut the cord” as these disagreements continue, he said. “Disputes like this are precisely what’s going to push people to Netflix and Aereo and other Internet TV services.”