Presidential Election: From Net Neutrality to Piracy, The Issues Keeping Hollywood Up at Night

Presidential Election: From Net Neutrality to Piracy, The Issues Keeping Hollywood Up at Night

From media ownership regulations to indecency rules, there are plenty of entertainment industry issues facing either a President Obama or a President Romney

From the economic recovery to the war in Iraq, Mitt Romney and Barack Obama have espoused starkly different world views during their battle for the presidency, but what's keeping Hollywood up at night are a series of legislative and legal battles that could determine the future of the entertainment business.

Less often articulated than their policy differences on geo-politics have been the candidates' views on net neutrality, media ownership rules and piracy. But these issues are enormously important to studios and broadcasters. Lobbyists and analysts say the difference between a Romney and Obama administration could be the deciding factor on whether or not Tinseltown gets its way over the next four years.

TheWrap breaks down the issues for you:

ARTS AND PUBLIC BROADCASTING FUNDING

Public support for the arts has been on a steady decline since hitting a peak of more than $170 million in 1992 under President George Bush, but that drop will likely accelerate dramatically under a Romney administration. Indeed, the two candidates running for president this year have sharply divergent visions for the role that government should play in sponsoring public broadcasting and public arts.

Romney has pledged to take a chainsaw to arts funding as part of a larger effort to reduce the deficit. Despite his public embrace of Big Bird, he has said that he will entirely eliminate support for the National Endowment for the Arts and Humanities, as well as subsidies for PBS, saying it no longer makes sense for the United States to borrow money to support these programs. At other times, the Romney campaign has softened that rhetoric to say he would only reduce subsidies by 50 percent.

In contrast, President Obama has proposed a roughly $9 million hike in support for the National Endowment for the Humanities and the National Endowment for the Arts in the upcoming budget. Yet the president has also endorsed belt-tightening when it comes to government art subsidies. Last year, the president slashed arts funding by more than 13 percent. When it comes to public television and radio, he has proposed keeping the budget for the Corporation for Public Broadcasting at $445 million.

"On the issues of public support for the arts, the difference is incredibly clear,"  said Narric Rome, senior director of federal affairs with the advocacy group Americans for the Arts. "On one hand, you have a Republican ticket that wants to eliminate or at the very least dramatically reduce the endowment, and you have a Democratic ticket with a healthy track record for making the arts a priority."

NET NEUTRALITY

The ability of internet service providers to charge for premium access or block certain sites could well be decided by the outcome of the election.

"Net neutrality has become a political football," Matt Wood, policy director for the public interest group Free Press, told TheWrap. "We often joke that it's a solution in search of a problem, but there's a wide chasm between the parties. It will become a bigger issue as we see companies like AT&T push the boundaries of current regulations."

Under President Obama, the Federal Communications Commission has tried to crack down on companies that discriminate against online video or that bar apps that compete with their own services. FCC chief Julius Genachowski has introduced new regulations aimed at preventing this behavior, but telecommunications companies like Verizon have sued to overturn the rules. They could win by citing a 2010 federal court decision that found the commission lacked the authority to regulate the internet.

"If the court were to throw out the rules, a Romney FCC is unlikely to appeal such a decision or adapt new rules," Andrew Schwartzman, a communications attorney, told TheWrap. "If Obama wins, I would expect the FCC to do exactly that and get back to network neutrality one way or the other."

Getty ImagesIndeed, should Romney prove victorious, look for the FCC to do a 180 degree flip with regard to its enforcement efforts. The Republican nominee and his party are fiercely opposed to government intervention when it comes to the internet, with Romney describing the president's net-neutrality push as a bone for special interests — one he doesn't want to throw.

MEDIA OWNERSHIP

Restrictions preventing media companies from owning both a newspaper and a television or radio station in the same market have slowly weakened under both Republicans and Democrats. At the FCC, Genachowski has been open to reviewing these so-called cross-ownership rules, although Democratic commissioners have opposed efforts to water them down.

If Romney wins, analysts and public interest groups tell TheWrap that the drumbeat for further deregulation will grow louder and the decades-old ban on local media monopolies could become a thing of the past.

"I think nobody is in favor of having fewer voices and not having a diversity of viewpoints," Wood said. "But if the rule changes, without widespread opposition from the Democratic Party, there will more bigger stations controlling media markets and journalism will suffer."

However, media companies argue that these rules are outdated and that they need greater flexibility to compete in an internet economy where new media rivals are not hindered by geography.

CABLE BLACKOUTS

Once the exclusive purview of the corporate boardroom, the often-heated negotiations between cable providers and broadcasters over retransmission consent fees have increasingly played out in the public eye. As cable subscribers from New York to Los Angeles know, when talks break down between the likes of DISH and AMC the result can be blocked signals that prevent viewers from watching programs like "Breaking Bad" or "Mad Men."

Congress and the FCC have resisted calls from cable companies to impose stricter guidelines for how these talks can take place, but if more blackouts pile up, the pressure to act may be too strong. That's something broadcasters desperately want to avoid. They believe the push for reform is just an excuse by cable and satellite companies to reduce or excise carriage fees, and that's a big source of cash for the TV industry.

"They want to engineer a phony crisis rather than compete in the marketplace," Dennis Wharton, executive vice president of communications for the National Association of Broadcasters, told TheWrap. "This is an important source of revenue for broadcasters, and it's what allows them to support local news and sports programming and what keeps the Super Bowl on free TV."

PIRACY

Getty ImagesHollywood was caught napping earlier this year when two pieces of anti-piracy legislation went up in flames, casualties of a grass-roots campaign fostered by Facebook and Wikipedia. These internet giants claimed that the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA) were too far-reaching and analogous to censorship.

For now, the movie business' main lobbying arm, The Motion Picture Association of America, says it has no plans to push for fresh bills, preferring instead to win over Silicon Valley players through persuasion, not legislation.

"We'll see how that plays out, but we recognize that there is a private sector role to be played, while also realizing that historically talks with interested parties have also been in concert with the government,"  said Michael O'Leary, the MPAA's senior executive vice president for global policy and external affairs. "There is no specific legislative initiatives on the Hill and we are much more clearly focused on working voluntarily with others, but the government will still have a role in promoting American industry around the world and opening up markets and ensuring they are not anti-competitive."

For now, the MPAA may be in a legislative holding pattern. But since many foreign markets like China have become increasingly important to studios' bottom lines while maintaining a flexible appreciation for copyright laws, patience is finite. Should the DVD business continue to flounder or domestic attendance swoon, piracy will no doubt be partly blamed and the cries for government intervention may become more pronounced.

For Obama, that could pose a problem. After all, both Hollywood and Silicon Valley remain major sources of fundraising for his campaign. 

Romney may be harder to read. He has opposed SOPA, but he has also endorsed robust copyright regulations and some analysts predict that he will be less sympathetic to claims that new rules could cut down on freedom of expression than Obama.

"If there's another fight between Northern and Southern California over piracy, Southern California will be a lot happier with a Romney administration," Schwartzman predicts. 

BROADBAND SPECTRUM

The rise of smartphones and other wireless devices is creating a spectrum crunch, and the big losers may be the broadcast industry. That's likely to be the case whether Democrats retain control of the White House or Republicans manage to wrest the presidency back into their corner.

However, the approach that the next Oval Office occupant takes could differ. Though both Romney and Obama would likely focus on spectrum auctions that would call on broadcasters to surrender some of their territory to wireless players like AT&T and Verizon, Obama's team would likely be more inclined to pair that with the development of new spectrum-sharing technologies.

If either side asks broadcasters to free up too much spectrum, there will be fierce blowback. There is a growing sense among broadcasters that they already gave at the office, having previously surrendered parts of their claims on broadband spectrum to meet rising demand. The NAB, broadcasters' main lobbying arm, supports a voluntary auction of spectrum, but is concerned that the process will favor telecommunications companies.

"We want to make sure that TV stations don't get hurt in the process of implementing legislation," Wharton said. "The ones that will close won't be the network affiliates, it will be truly independent stations — the religious and foreign-language channels providing free programming to local communities — and it will be in the name of giving spectrum to behemoths like Verizon and AT&T."

INDECENCY RULES

Policing on nudity and obscenity on the airwaves has ratcheted down dramatically from its Janet Jackson/nipplegate high during the George W. Bush years. The Obama administration has shown less enthusiasm for taking broadcasters to the mat over nudity or errant profanity, analysts say.

That could change if Romney is elected. In deference to religious conservatives who support him, Romney may make cleaning up television a priority.

"However unhappy the entertainment industry has been with the enforcement of indecency and pornography in this administration, I think we are likely to see much more aggressive enforcement under a Romney FCC," Schwartzman said.

Many indecency cases were placed on hold by the Obama White House pending the outcome of the Supreme Court's recent decision not to uphold stricter regulations that would have penalized networks for fleeting shots of flesh and swear words uttered at public events. Should control shift at 1600 Pennsylvania Ave., some of those cases may move to the top of the stack.