FCC Ruling Restricts Cable Providers From Pulling Channels During Carriage Disputes

So-called “stand-still order” means cable/satellite providers can’t pull channels off their services until the FCC can render a ruling in any given carriage dispute

Last Updated: August 1, 2011 @ 4:41 PM

The Federal Communications Commission has issued a ruling restricting the ability of cable and satellite TV providers to pull channels off their services during carriage disputes, according to an order released on Monday. 

The FCC’s so-called “standstill order” means that a cable or satellite company must continue to carry an affected channel under terms of the previous contract until the commission offers a ruling on any complaints stemming from a carriage dispute.

Carriers are also prohibited from denying distribution to independent program suppliers in order to carry programs in which the cable or satellite company has a financial stake.

Over the past two years, debates between cable/satellite companies and content providers have increasingly played out in the public eye.

Some disputes over rates have deteriorated to the point where major media markets have suffered blackouts of television events such as the Oscars or the World Series. The FCC has made noise in recent months about playing a more active role in preventing future breakdowns in negotiations between cable companies and content makers. 

Monday’s order is a victory for independent producers and channels, providing them protection from what some consider to be the near-monopolistic reach of cable distributors. The order also provides a mechanism for wronged parties to receive lost revenue if a complaint is found to have merit.

“Congress expressed concern that the market power held by cable operators would
adversely impact programming vendors, noting that ‘programmers are sometimes
required to give cable operators an exclusive right to carry the programming, a financial
interest, or some other added consideration as a condition of carriage on the cable
system,’” reads the FCC order.

“Congress also explained that increased vertical integration in the cable industry could harm programming vendors because it gives cable operators ‘the incentive and ability to favor their affiliated programmers,'" the order added.

The agency’s move was an effort to update the 1992 Cable Act, created to “promote
diversity and competition” in the cable television industry, as well as to streamline a
process that it acknowledged did not resolve complaints in a timely manner.

FCC commissioners Michael J. Copps and Mignon L. Clyburn offered statements supporting
the commission’s decision.

“Video distributors are now more likely to be producers themselves, often with far
greater leverage and new incentives to favor their own content over that of independent
producers,” said Copps. “Modernizing these rules is essential to ensure that consumers
have the ability to view a variety of diverse programming at the lowest possible cost and
hopefully to foster more independent production.”

Clyburn added, “Our complaint process has been called slow, impractical, and unfair, and
the deadlines we establish for the FCC’s Media Bureau and Administrative Law Judges
when acting on program carriage complaints will offer a greater element of predictability
to programmers and operators awaiting a decision.”

Commissioner Robert M. McDowell, while approving expedited hearing timelines to
weed out frivolous complaints, did not agree with the “standstill” aspect of the order.
The cable industry reacted with less than enthusiasm.

Michael Powell, former FCC chairman under President George W. Bush and current
president and CEO of the National Cable and Telecommunications Association, was more forceful in disagreeing with the commission moves.

He said the agency was overstepping its mandate. 

“The FCC’s program carriage decision represents an unfortunate trifecta: a flawed process that the FCC stubbornly refused to correct, substantive policy discussions that show little regard for the limits of agency authority or constitutional rights, and a disturbing lack of appreciation of the potential impact of government intervention on consumers or the marketplace," Powell said in a statement. "In other words, we are profoundly disappointed not only in what the FCC did but how they did it. Regrettably, we must now explore other avenues for redress.”