FCC Issues NPRM on Retransmission Consent 'Totality of Circumstances' Rules
The FCC is seeking feedback on 15 negotiation practices and whether they should figure into a "totality of circumstances" test for good faith negotiations. Pay-TV and broadcasters have been filling docket 10-71 in recent weeks with arguments on what should be considered as the FCC follows through on congressional direction in the Satellite Television Extension and Localism Act Reauthorization (STELAR) Act that it revisit good faith negotiation rules (see 1508270036).
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Multichannel video programming distributors (MVPDs) and their allies were pleased with the NPRM issued Wednesday. "As local broadcast station blackouts continue to rise across the country and retransmission consent rates skyrocket, real reform is needed to protect consumers," Dish said in a statement Wednesday. Saying its members "have virtually no bargaining power when negotiating for carriage of local broadcast television stations," ITTA President Genny Morelli said in a statement: "The outdated retransmission consent rules have allowed broadcasters to adopt a ‘take it or leave it’ attitude, particularly when negotiating with smaller and new entrant video distributors, which has hurt video competition and increased costs for consumers. Strong and enforceable good faith rules will protect innocent consumers from blackouts as well as other tactics used by broadcasters to extort more money during retransmission consent negotiations. By enacting clear standards for prohibited conduct, the Commission will deter bad faith behavior, ensure negotiations are conducted fairly, and meet its enduring obligations to protect consumers and promote competition.” NAB didn't comment. The deadline for comments in the NPRM will be 60 days after its publication in the Federal Register.
The FCC singled out 15 practices that might be inconsistent with good faith bargaining. Some are broadcaster-centric: the threat of a blackout just before a marquee event, preventing an MVPD from temporarily importing an out-of-market signal during a blackout, demanding an MVPD limit subscriber use of lawful devices or functions, charging MVPDs per-subscriber fees for subscribers who receive the broadcast signal over the air or receive an MVPD's services other than video, an MVPD-affiliated broadcaster discrimination on prices or terms "based on vertical competitive effects," demanding tier placement commitments, imposing minimum penetration requirements, failure to make an initial contract proposal at least 90 days prior to the current one's expiration, preventing an MVPD from disclosing rates, terms or conditions of a contract proposal or agreement to the FCC or other government body in connection with a legal or administrative proceeding, price discrimination among MVPDs in market without showing legitimate economic benefits to doing so.
Some of the practices under FCC scrutiny involve either side, such as an MVPD or broadcaster refusal to provide information that substantiates reasons for positions taken in bargaining, engaging in "surface bargaining" aimed at delaying negotiations, demanding or receiving retransmission consent based on "most favored nation" provisions, failure to negotiate retrans consent terms and conditions based on actual local market conditions, and attempting to manufacture a retrans consent dispute "in hopes of encouraging government intervention."
The FCC said its totality of circumstances examination won't necessarily stop there. "We also seek comment on any other practices that should be considered evidence of bad faith," the agency said.