Retransmission Consent Reform Advocates Encouraged By STELA Hearings

The current regime “leads to a double whammy for consumers,” said John Breyault, National Consumers League vice president-telecommunications and fraud public policy. There seems to be growing interest in addressing the underlying legal framework that has created this situation, he said. The Eshoo bill and the Television Consumer Freedom Act from Sen. John McCain, R-Ariz., are looking to address the situation, and “hopefully hold some promise for helping consumers get out of a situation where they either pay more or they pay for nothing,” said Breyault.

Retrans isn’t all about copyright and compensating the creators of programming, said John Bergmayer, Public Knowledge senior staff attorney. That’s not what it was intended to do and it’s not what it does, he said. PK wants retrans reformed, “not just to protect viewers better, but also just to make the system fairer and easier to understand, and ultimately we want it to be the copyright holder who is being compensated for their content,” he said. Broadcasters should produce local programming that they own the copyrights to and that they're able to get a lot of money for, he added.

If the issue goes unregulated, “this tilted playing field on retransmission consent fees is going to drive up pay-TV rates,” said Michael Calabrese, director of the New America Foundation’s Wireless Future Project. “We're at a moment when pay-TV providers are facing more and more competition from over-the-top video.” Consumers should be benefiting from price constraint, but “instead the government is allowing broadcasters to drive those rates up much more than they would otherwise,” he said.

There’s no reason to change the law unless it’s tweaked to include rebates for consumers during disputes or an end to early termination fees, said an NAB spokesman during a teleconference. “Maybe we should do a better job notifying viewers of possible impending disruptions, which could prompt people to explore other options.” He reiterated that the retrans model works the way Congress intended. The money from retrans fees is used to keep marquee programming, like the Superbowl, Glee and Modern Family, free and on local TV, he said. It’s also used for local news and emergency services, he added.

Some retrans reform advocates lauded the Eshoo bill, while others preferred a reintroduction of the deregulatory TV bills sponsored last year by Rep. Steve Scalise, R-La., and then-Sen. Jim DeMint, R-S.C. The provision in Eshoo’s bill that would give the FCC authority to forestall consumers losing a signal should go a step further, said Calabrese. The FCC should have the ability to require alternative dispute resolution, including binding arbitration, if necessary, he said.

One of the best ways to resolve many issues is to move forward on legislation similar to the Scalise and DeMint bills, said Tom Schatz, president of Citizens Against Government Waste. The bills called for a repeal of rules, like media ownership caps and sports blackout rules, he said. The rules and regulations should be lifted, he said: Some of the rules “have caused many of the problems that we now see in the marketplace.” He cautioned against more government involvement in the industry: If somebody wants to put up an antenna, they can do that now, he said. Through retrans negotiations, however, “consumers lose viewing time and pay increased costs,” he said. But that can be resolved by repealing some of those regulatory schemes, he added.

A “really good regulatory housecleaning” is needed, said Adam Thierer, senior research fellow with the Technology Policy Program at George Mason University’s Mercatus Center. The Eshoo and McCain proposals exacerbate the “old mess by trying to move the government’s regulatory thumb slightly from one side of the scales over to the other a bit,” he said. The industry shouldn’t expect lawmakers to intervene and speed up negotiations or set content prices, because “it would simply disrupt the normal allocation of programming by putting that thumb on one side of the scale,” he said.

Making a case for keeping the retrans consent model in place will be a top priority along with spectrum for NAB, its spokesman said. “We're going to be very aggressive.”

The commission has a seeming unwillingness to use its bully pulpit authority, Breyault said. “In the absence of legislation, the FCC at least could be out there and banging the drum and talking about how this is not an acceptable situation.” Agencies are permitted to change the interpretation they give to their own statutes as long as it’s reasonable, Bergmayer said. “There is a lot of latent authority that the FCC has."

The pressure on the FCC has diminished because there’s an interim chair, “who cannot take on a new, very controversial issue,” said Calabrese. When the new chairman is confirmed and if the blackout trend worsens, “then there will be much greater pressure and possibly a reconsideration of the FCC’s authority,” he said.

If FCC authority were expanded, the question is “can it keep pace with the nature of these blackouts,” Thierer said. Commission proceedings take a long time to get started, he added: “Needless to say, we don’t want to delay these things even longer than they're already delayed in terms of getting signals back on the air.”