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TMT Perspectives Insight & Commentary on Business, Legal and Policy Developments Affecting the Telecom, Media, and Technology Sectors

Retransmission Consent Reform—The “Must Haves” for Cable and Satellite Companies

Posted in FCC, Legal Developments

ThinkstockPhotos-497350805Retransmission consent refers to the system by which pay TV providers (principally cable and satellite companies, which for convenience we will call “CableCos” and which FCCers call MVPDs) pay broadcast TV stations to carry the programming they broadcast. Years ago the payments were marginal or non-existent. Today the payments are growing, in part because increasingly the payments are shared by the TV stations and the networks with which they are affiliated (NBC, Fox, etc.). This increases the price consumers pay for cable and satellite TV. Price disputes between broadcasters and CableCos are subject to commercial negotiations based on “good faith negotiations,” however currently the broadcasters have the ability to withhold programming from the CableCos in the event of a dispute, meaning that such programming gets blacked out to cable and satellite consumers. This severely limits CableCos negotiation power.

The FCC will shortly release a proposal to revamp the retransmission rules, which were first developed in the early 1990s. As a result, the American Television Alliance, made up of CableCos and some programming interests—all of whom are opposed to the broadcasters’ unilateral ability to black out programming in the event of a dispute—have informed the FCC of ATVA’s “must haves” in reforming retransmission consent rules. They are:

  1. Broadcasters should not be able to block CableCos customers’ access to the broadcasters’ online programming when there is a negotiations impasse between the broadcaster and the CableCo.
  2. Broadcasters should not be allowed to require CableCos to purchase content they don’t want in order to get content they do want, which is referred to as “forced bundling.” Any bundling requirement that is not based upon the specific economics related to the content the CableCos want would be considered forced bundling.
  3. Broadcasters should not be allowed to withhold, or threaten to withhold, marquee events, such as certain sporting events.
  4. If Broadcasters withhold content during negotiations, CableCos should be able to get that same content from somewhere else (FCC rules currently prohibit this in a variety of ways).
  5. Broadcasters should not be able to cede rights to negotiate retransmission consent to third parties (such as the TV networks). In other words, individual television stations or station groups should have to negotiate with the CableCos.
  6. Broadcasters should not be permitted to demand that CableCos make use of any particular technologies (e.g. set-top boxes).
  7. Broadcasters should not be permitted to charge CableCos rates based upon the CableCos’ total number of subscribers, but only on the number of subscribers that purchase the particular content controlled by the broadcaster.