FCC chief targets broadcasters to end TV blackouts, helps cable industry friends

By Josh Peterson | Watchdog.org

WASHINGTON — Tom Wheeler, the cable industry lobbyist-turned Federal Communications Commission chairman, quickly won the support of cable providers Thursday when he announced his plan to combat television blackouts.

Cable and satellite companies, along with the Federal Communications Commission chairman, think fees to carry broadcaster content are too high and harmful to consumers.

Wheeler’s proposal, scheduled for an FCC vote March 31, aims to end collusion between broadcasters during price negotiations with cable and satellite companies.

“By law, broadcasters can demand that cable and direct broadcast satellite operators compensate them to carry their stations,” Wheeler said.

Collusion between broadcasters to set prices, while currently legal, has caused plenty of grief between industries about the costs of carrying broadcaster content, called retransmission consent fees.

For example, when recent negotiations between Sinclair Broadcasting Group and Toledo-based Buckeye Cable over fees to carry programming from a local Sinclair-owned NBC affiliate fell apart, Sinclair encouraged Buckeye subscribers to switch cable services.

The two companies were already at odds in December 2013 when Buckeye was forced to drop WNWO, the NBC-affiliate, after
the retransmission consent contract expired.

Federal law prohibits cable and satellite companies from carrying broadcaster content without their permission, and increased fees — which the FCC says get passed on to subscribers — are at the center of the current debate Wheeler aims to tackle.

“The cost of these retransmission consent agreements has skyrocketed from $28 million in 2005 to $2.4 billion in 2012, a nearly 8,600 percent increase in seven years,” Wheeler said.

Others believe increased fees signal a successful marketplace.

Fred Campbell, director of the Center for Boundless Innovation in Technology, recently argued in an op-ed in Communications Daily that the rise in fees was a sign of increased competition between cable operators.

The National Association of Broadcasters, the broadcast industry’s Washington,D.C.-based advocacy group, expressed its disappointment in Wheeler’s proposal, stating it would kill jobs, hurt consumers and solely benefit two industries — cable and wireless providers.

Public interest groups and congressional Democrats applauded Wheeler’s proposal, as did trade groups representing the cable industry.

The National Cable & Telecommunications Association responded to Wheeler’s announcement by stating it was “pleased” the chairman was looking to rein in broadcasters, and agreed with his assessment that consumers bear much of the cost of continually rising retransmission consent fees.

Matthew M. Polka, president and CEO of the American Cable Association, said in a statement that Wheeler deserved “high praise” for his proposal, condemning the retransmission consent market as broken.

The ACA represents small and medium-sized independent cable companies.

“Adoption of Chairman Wheeler’s proposed order would represent a victory not only for fair competition, but also for millions of consumers who are being victimized by TV station conglomerates, which have the perverse idea that collusion is somehow consistent with their legal charter to bargain in good faith,” Polka said.

The FCC is required to review its retransmission consent regulations every four years.

If the agency passes the proposal, companies like Sinclair would have two years to comply, Bloomberg reported.

The issue is also heating up on Capitol Hill; current law governing retransmission consent fees, the Satellite Television Extension and Localism Act, expires at the end of the year.

House Energy and Commerce Committee Chairman Greg Walden released a discussion draft for the law’s reauthorization bill Thursday. The committee has scheduled a hearing for Wednesday to discuss STELA’s reauthorization.

A bill introduced in December 2013 by Louisiana Republican Congressman Steve Scalise that aims to modernize the nation’s television laws is also up for consideration.

Contact Josh Peterson at jpeterson@watchdog.org. Follow Josh on Twitter at @jdpeterson

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Rob Port is the editor of SayAnythingBlog.com, a columnist for the Forum News Service, and host of the Plain Talk Podcast which you can subscribe to by clicking here.

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