Cable Companies Take Retrans Fight to FCC, Congress

Letters sent to Washington argue the system is broken

Last Updated: March 10, 2010 @ 3:13 PM

Disney’s battle with Cablevision over retransmission fees has produced a new fight in Washington — one that could threaten broadcasters’ hopes of getting big dollars from new deals.

Major cable and satellite companies — with the exception of Comcast and Cox — sent letters Tuesday to congressional leaders and a petition to the Federal Communications Commission, saying the Disney-Cablevision battle demonstrated the “harm” posed to consumers by such disputes.

Citing “increasingly contentious negotiations” over retransmission fees, the cable and satellite operators urged action be taken to reform consent negotiations.

Cablevision subscribers in three states missed part of the Oscars telecast on Sunday before a tentative deal was struck.

“The [ABC-Cablevision dispute] is just the latest example of how the retransmission consent regime is broken,” said the letter signed by Cablevision, Bright House Networks, Time Warner Cable, Charter Communications, DirecTV, Dish Networks, MediaCom, Sudden Link Communications, Insight Communications and the American Cable Association. “Consumers are caught in the cross-hairs.”

The Media Access Project, a public-interest law firm that works on FCC issues, also urged changes.

“The system is out of balance,” said MAP president-CEO Andrew Jay Schwartzman in a statement. “Increasingly, broadcasters are demanding that the public pay them for access to their TV channels, even though they receive free use of public airwaves. People are tired of paying ever more for the same thing. Viewers should not be used as pawns in contract negotiations.”

The target of the cable systems’ ire is a 1992 law requiring cable providers negotiate for rights to retransmit the same TV signals that local viewers can often see for free by putting up an antenna. Originally, broadcasters offered the retransmission consent for free, but in an era of shrinking advertising revenue, they have moved to start charging for it.

Cable systems argue that the current law is out of balance — giving too much power to broadcasters in negotiations — or that the FCC hasn’t done enough to set up procedures for resolving disputes.

“As broadcasters now demand significant cash for carriage of their signals, consumers are held hostage as [cable systems] must choose between a rock and a hard place: Pay exorbitant carriage fees and raise consumer rates, or be forced by broadcasters to drop local signals,” says the petition to the FCC.

“The recurring threats of blackouts, high-stakes public ‘showdown’ negotiations and recent economic analyses have all confirmed what programming distributors have known for years: The retransmission consent regime is broken,” the petition says.

Broadcasters argue that the fees are fair compensation because cable systems are making money retransmitting their programming.

National Association of Broadcasters executive VP Dennis Wharton warned that without the payments, local broadcasting could be in trouble.

"The unintended consequences of pay TV providers attacking the free-market-based retransmission consent model could be the demise of local programming,” he said. “Modest retransmission consent revenues help local TV stations fund news operations, community service and life-saving weather information that viewers across America rely on every day.

"Vertically integrated cable operators routinely compensate each other for their own less-watched cable-owned networks, while raking in profit increases five times the amount of their programming costs," Wharton added. "To see billion-dollar pay TV companies asking for government intervention to protect their exorbitant profits is just plain wrong."

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