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Martin Cable Plan Is Losing Steam

12/12/2008 7:00 PM Eastern

Federal Communications Commission chairman Kevin Martin is coming under intense pressure to abandon his dream of bringing cable networks and TV stations under tighter federal regulatory control.

He faced his strongest push-back last week from the two Capitol Hill Democrats who will be running the commerce committees in the House and Senate next year, Sen. Jay Rockefeller (D-W.Va.) and Rep. Henry Waxman (Calif.).

In a joint letter last Friday, the lawmakers effectively told Martin to give up on optional cable regulation and instead focus on TV stations’ mandatory transition to digital transmission on Feb. 17, 2009.

SOURCE: FCC filings
The Walt Disney Co.
Viacom
NBC Universal
CBS
DirecTV
Motion Picture Association of America
National Association of Broadcasters

“We strongly urge you to concentrate the [FCC’s] attention and resources only on matters that require action under the law and efforts to smooth the transition to digital television,” Rockefeller and Waxman wrote in their two-paragraph letter.

The letter came one day after Martin released the FCC’s Dec. 18 meeting agenda, which included his plan to place new limits on the bargaining power of cable programmers in their negotiations with pay TV distributors. TV stations that seek compensation from cable operators would face identical restrictions.

None of the other four FCC members has indicated support for Martin. In the past, Martin has readily dropped agenda items when he couldn’t find two more votes — the minimum — to pass a new regulation.

“We just received the letter from Sen. Rockefeller and Congressman Waxman. We are reviewing it and will reach out to the other offices,” FCC spokesman Matt Nodine said last Friday.

Open opposition also emerged last week from such big media names as Viacom, NBC Universal, CBS, DirecTV, the Motion Picture Association of America and the National Association of Broadcasters. The Walt Disney Co. had already gone on record strongly opposed to Martin’s proposal.

Viacom’s D.C. lobbyist, DeDe Lea, joined by BET chairman and CEO Debra Lee, recently visited with FCC Democrat Jonathan Adelstein to complain about Martin’s regulatory scheme.

“We pointed out the [FCC] has no statutory authority to regulate either independent programmers or the wholesale market for the sale of video programming,” Viacom said in a Dec. 8 filing at the FCC.

Martin’s plan would bar any cable network from demanding access to a specific programming tier or to a certain percentage of subscribers. TV stations that insist on compensation could not demand access to all cable subscribers. Contracts in conflict with FCC policy would be void.

At bottom, Martin would empower cable operators unilaterally to decide nearly all pricing and packaging options for consumers.

Martin believes that would reduce pressure on cable operators to raise their rates each year because they could break up expanded basic into smaller units, but nothing in Martin’s plan would actually require MSOs to do that.

Martin’s chief defender among media corporations has been Cablevision Systems, the Bethpage, N.Y., cable operator, which has been encouraging him to crack down on cable networks that refuse to be marketed in specialty tiers or on an a la carte basis.

The Rockefeller-Waxman letter reinforced the same message Martin received in September from then-Senate Commerce Committee chairman Daniel Inouye (D-Hawaii). He told Martin that the FCC’s overriding mission, through actions undertaken by the FCC’s Media Bureau, was a smooth DTV transition.

“Pursuing contentious policy initiatives, such as the unbundling of wholesale subscription-television channels, would divert attention of the bureau at this critical time,” Inouye said.

If the FCC approved Martin’s plan on Dec. 18, the agency would launch a notice of proposed rulemaking (NPRM), which wouldn’t conclude in a vote until long after Martin has stepped down as chairman, probably in January.

Martin — an outspoken critic of cable program bundling — has himself tied the cable-programming regulation proposal to a proposed order designed to help independent programmers use an FCC complaint process to gain cable carriage.

The American Cable Association — a group of small cable operators which supports Martin’s goal of taking bargaining leverage away from cable programmers — voiced concern about Martin’s program-carriage reforms, especially provisions that would allow a cable network to file a complaint against a cable operator that didn’t own a competing channel.

“Non-vertically integrated operators do not have an incentive to engage in conduct that would unreasonably restrain independent programmers’ ability to compete fairly,” the ACA said in Dec. 9 FCC filing.

A cable-industry source and an FCC source said last Wednesday that Martin had removed the language that ACA found troubling.

Cablevision executives made the rounds at the FCC last Monday, stumping on behalf of Martin’s programming NPRM in the offices of FCC Democrat Michael Copps and FCC Republicans Deborah Taylor Tate and Robert McDowell.

“The time is ripe to explore a proposed rule that would preclude programmers from dictating placement of expensive programming in the expanded basic tier,” Cablevision vice president of legal and regulatory affairs Michael Olsen said in a Dec. 9 FCC filing.

Cablevision’s support for Martin has created a glaring split among cable-industry leaders on a major regulatory issue. In its FCC advocacy, Cablevision has not been relying on its long-term D.C. law firm, Mintz Levin Cohn Ferris Glovsky and Popeo, for support.

Mintz, Levin also represents the National Cable & Telecommunications Association.

Nor has the public record included participation by Catherine Bohigian, who left Martin’s office in September to become Cablevision’s first full-time D.C. lobbyist since at least 1992. Media lobbyists, who asked not to be named, said Bohigian has been making calls trying to drum up support for Martin.

Cablevision chairman Charles F. Dolan and chief operating officer Thomas Rutledge (who also happens to be chairman of the NCTA) called FCC Republican Deborah Taylor Tate last Wednesday to lobby in support of Martin’s plan.

The NAB is protesting Martin’s position that cable operators should be allowed to sell TV stations a la carte, or in an optional package if stations demand compensation.

“We urge the [FCC] to reject proposals calling for improper government intrusion in the free market retransmission consent process created by Congress,” NAB attorney Erin Dozier said in a Dec. 10 FCC filing.

The MPAA, representing Hollywood studios, made the same point.

“The [FCC] has absolutely no authority … to change the statutory provisions regarding cable carriage of broadcast stations,” MPAA said in a Dec. 5 letter to the FCC.

 

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