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Policy

Cable Presses Hard for Real Retrans Reform

2/28/2011 12:01 AM Eastern

Washington — Cable operators almost certainly
will not get their wish list of interim carriage and
arbitration orders when the Federal Communications
Commission votes this week on proposals for
clearer on retransmission-consent rules.

By all accounts, the proposed rulemaking will ask
a lot of questions and provide a healthy amount of
time for comments, but will make it clear the FCC
isn’t going there.

Whether as a bone to Congress or a signal to the
cable industry that there is still hope, the draft of
the FCC notice of proposed rulemaking circulated
last week offered up some changes to the definition
of good-faith vs. bad-faith bargaining.

Those changes could provide a “lite” version of
the reform cable operators seek, people familiar
with it said.

MANY VISITS TO FCC

Cable companies by the dozens have filed comments
and paid visits to FCC commissioners’ offices
the past few weeks, making the case for serious
retransmission-consent reform that would include
keeping stations on the air while negotiations proceed
and using arbitration to resolve disputes.

Visits by broadcasters have been relatively few
and far between, according to more than one top
commission adviser.

Perhaps broadcasters are confident that so-called
standstill carriage agreements and arbitration will
remain off the table.

Sources who have seen the draft said it still does
not contain proposals to require broadcasters to
keep their signals on the air during retransmission disputes
or suggest the two sides have to seek arbitration.

The draft pointedly states the commission lacks the authority
to do so, even if it wanted to.

“A lot of ink is spent saying, ‘We’ve made a determination
that we don’t have the ability to mandate interim carriage
or mandate arbitration,’ ” one person who read it said.

“It talks about everything but standstills and mandatory
arbitration,” another FCC
source said. “We don’t have the
authority to do that.”

Time Warner Cable last week
continued to argue to commission
staffers, including those who work
for commissioners Michael Copps
and Mignon Clyburn, that the FCC
does have authority to mandate
standstills and arbitration.

The FCC imposed arbitration
and standstill conditions on
Comcast’s merger with NBC Universal,
supporting the argument
that nothing in the Communications
Act precludes the FCC from
exercising that authority. An FCC
spokesman declined comment
on that assertion.
If the FCC holds to its assertion
of limited authority, either
Congress will have to step in or,
for the foreseeable future, signalpulling
will remain a card broadcasters
are free to play in their
negotiations.

The FCC in March 2000 revised
its retransmission rules at
the direction of Congress, establishing
a two-part test for good-faith negotiations.
The first part is a set of several procedural standards for
broadcasters.

The second gives the cable operator a chance to show
how the “totality of circumstances” might show bad faith,
even without violating any one of those standards.

Some of the proposed tweaking to the bargaining standards
is in the weeds of the negotiations, including whether
it is bad faith not to put forward a “bonafide proposal on an
important issue,” or not to respond “reasonably promptly.”

At least two proposed changes get to the key issues.

BROADER ‘SWEEPS’ BAN

For example, cable operators currently cannot pull TV station
signals during sweeps periods, but the FCC is considering
extending that prohibition to satellite operators and
perhaps to broadcasters, the latter of which would mean
that, for almost four months out of the year — including for
the Super Bowl, if it is scheduled for February — stations
would be unable to pull signals even if contracts expired.

A source close to the authors of the draft said it only
proposes extending the sweeps carve-out to satellite operators
and makes clear the FCC’s past analysis has been
the carve-out does not apply to broadcasters. It does ask
for comment on whether or not that analysis is correct,
though, the source conceded.

Were the FCC persuaded that it could be applied to broadcasters,
Entravision-owned WUNI-TV, a Univision affiliate
in Boston, would have been prevented from pulling its signal
Feb. 18 in a retransmission dispute with Full Channel
TV. The small operator in Rhode Island filed a letter with
the FCC pointing to that impasse and saying it needed the
agency to balance the power of a station owner and a system
with 7,000 customers. (See Viewpoint.)

Another proposed addition to the standards would be a
finding that refusal to submit to voluntary, nonbinding arbitration
during impasses is a sign of bad-faith bargaining.

The FCC is at least raising the question of whether a station
contracting away its retransmission rights to another
broadcaster — or ceding control or veto power over retransmission
deals to a broadcast network — are violations of
good-faith bargaining. That’s a key reform sought by the
American Cable Association, which represents small- and
medium-sized independent systems.

“Fixing the current system hinges on new rules that prevent
broadcasters from entering into collusive agreements
where two TV stations jointly negotiate retransmission consent
in order to gain even more bargaining leverage over
small operators,” ACA president Matt Polka said.

As of press time, retransmission reform was on the
FCC’s March 3 meeting agenda.

RETRANSMISSION ETIQUETTE

The FCC’s current do’s and don’ts for broadcasters
in retransmission negotiations:

1) A broadcaster may not refuse to negotiate with an MVPD;

2) A broadcaster must appoint a negotiating representative with the authority to bargain;

3) A broadcaster must agree to meet at reasonable times and locations and cannot delay the course of negotiations;

4) A broadcaster may not offer a single, unilateral proposal;

5) In responding to an offer proposed by an MVPD, a broadcaster must provide reasons for rejecting any
aspects of the offer;

6) A broadcaster is prohibited from entering into an agreement with any party conditioned upon denying retransmission
consent to any MVPD; and

7) A broadcaster must agree to execute a written retransmission-consent agreement that sets forth the full
agreement between the broadcaster and the MVPD.

SOURCE: Federal Communications Commission

September