Light Reading
In twin moves, FCC bans broadcaster 'collusion' in retransmission-consent negotiations and weighs further changes to rules after spate of battles between broadcasters and pay-TV providers.

FCC Tackles Retrans Reforms

Alan Breznick
4/1/2014
50%
50%

Throwing its regulatory weight around, the FCC is moving to curb some of the power that broadcasters have in striking retransmission-consent deals with pay-TV providers.

In an order issued Monday, the Federal Communications Commission (FCC) banned two large broadcast TV stations in the same local market from banding together to negotiate retransmission-consent deals with a pay-TV provider. The ban applies if the two stations rank among the top four broadcasters in market audience share and don't share the same owner.

At the same time, the FCC's adopted a notice of proposed rulemaking (NPRM) to consider possible changes to the overall retransmission-consent rules. Although the Commission's power to modify the Congressionally set rules is limited, the agency will weigh whether it should "provide more guidance" to broadcasters and pay-TV providers on "good-faith negotiation requirements," give better advance notice to consumers about "possible service disruptions caused by impasses in retransmission-consent negotiations," and eliminate its network non-duplication and syndicated exclusivity rules.

The FCC's twin actions come after cable operators, satellite TV providers, and other pay-TV operators have complained strenuously to the Commission about broadcaster practices in retransmission-consent negotiations. Such negotiations have become tougher, louder, and uglier in some cases as retransmission-consent fees have soared in recent years, jumping from a mere $28 million in 2005 to $2.4 billion in 2012.

In particular, the American Cable Association (ACA) , which is holding its annual summit in Washington, D.C. this week, has lobbied hard for more restrictions on the broadcasters because of the impact on smaller and independent cable operators. But large cable companies, such as Time Warner Cable Inc. (NYSE: TWC), have called for regulatory reforms too after bruising battles with large broadcasters like CBS Corp. (NYSE: CBS). (See TWC, CBS End Their Feud.)

In a prepared statement, FCC Chairman Tom Wheeler said the Commission was imposing the ban on joint negotiations by the largest TV stations in a market to restore "fair and effective competition of retransmission-consent negotiations, to the ultimate benefit of consumers." Although Congress intended that the deals be negotiated on a one-to-one basis, he said, larger stations have increasingly banded together in the negotiations to gain higher carriage fees from pay-TV providers, leading to higher prices for consumers.

Wheeler, who signaled his position on the issue in a blog post early last month, cited one study indicating that joint negotiations by the largest stations increased carriage fees from cable systems by 20% to 40%. He argued that such carriage fee increases put "upward pressure on the prices" paid by cable subscribers, leading to higher monthly bills.

"The action we take to address joint negotiation by broadcasters will return retransmission-consent to one-on-one negotiations as Congress intended, rather than many against one," Wheeler said. "This should benefit the consumer by removing the leverage of collusion to inappropriately drive up retransmission-consent fees and with them consumer prices."

Not surprisingly, both the ACA and the National Cable & Telecommunications Association (NCTA) , which represents the big MSOs and cable programmers, hailed the FCC for instituting the ban on joint station negotiations, calling it long overdue. Just as predictably, the National Association of Broadcasters (NAB) blasted the move, noting that the FCC has never found a local station to have negotiated in bad faith.

It's not clear just how much of an impact the FCC's moves will have on the retransmission-consent market. But the NPRM will undoubtedly generate plenty of fiery arguments on both sides of the issue as the broadcasting and pay-TV industries continue to jockey for position.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/2/2014 | 2:29:30 PM
Re: FCC Zebras
There used to be some solid cross-ownership rules in place but we got rid of most of them because, you know, businesses can always be trusted to do the right thing.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
4/2/2014 | 1:17:42 PM
Re: FCC Zebras
No doubt the cross-ownership issue is huge. It reminds me of the concerns in the rabbit ear antenna days about control of the airwaves. Concentration of distribution and content can make it harder for other major networks get the same treatment as NBC does from Comcast.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/2/2014 | 1:03:42 PM
Re: FCC Zebras
In the bigger picture, the content conglomerates are extracting way more from video service providers than their products warrant (i.e., if you want our good channel, you have to take these dozen crappy ones also). Comcast to some extent is protecting its content assets by buying up more cable footprint. In fact, I'd argue that any review of the Time Warner Cable acquisition should focus more on cross-ownership (network and media) instead of just looking at the network side of things. Late entries to the video services business clearly are having second thoughts about the move (the margins are just too weak, and the service provider gets blamed for the unbridled greed of the media companies). OTT will happen because the video services business is turning out to be a loser for network operators.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
4/2/2014 | 12:00:01 PM
Re: FCC Zebras
Though these issues could accelerate some OTT movement, but before more people "cut the cord," they will want to get the same channels they can get on cable as well as the same Internet speeds. The additional I would need to pay for sports and questionable satellite transmission speeds keep me and several others from making the switch. 

Even with rising monthly fees, cable right now is still the best option for many (though the numbers are certainly dwindling). Luckily for me, I haven't missed anything yet due to the retransmission battles. But those are sure to accelerate. It reminds me of the days of all home NFL games being blacked out in the local market (yes, some of us are old enough to remember that).
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/1/2014 | 2:23:21 PM
Re: FCC Zebras
Yes, and this is why some of the newer entries in conventional video services are now much more skeptical of their prospects. Because the money is not working out so well for the middle entity, the migration to OTT is likely to accelerate. That is not good news for the content providers, who have gotten used to collecting money from video service providers for increasingly cheap and crappy content. Tacking more rules and regs onto a system that is fast becoming unworkable at best doesn't solve the problem and at worst only adds to it.
Carol Wilson
50%
50%
Carol Wilson,
User Rank: Blogger
4/1/2014 | 2:17:49 PM
Re: FCC Zebras
This seems to be to be a matter of trying to prevent broadcasters from killing the goose that lays their golden eggs. It may be hard to summon much sympathy for Comcast, TWC or AT&T, but there are dozens of smaller cable and telcoTV providers who are literally losing money providing video services because of the outrageous growth in re-transmission fees.

Those same broadcasters then make their content available on-line for viewing after it has aired. So the pay-TV providers aren't in a position, many times, to pass along the persistent fee increases to their customer base.

And that customer base blames the provider for any fee increases, when the cost of content is often responsible. 

I'm not saying the FCC's approach is the best one but some examination of the current state of affairs makes sense. 
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
4/1/2014 | 12:53:40 PM
FCC Zebras
Not to be outdone by the NFL, the FCC decides to address faulty rules by ... creating yet more faulty rules.
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Huawei Video Resource Center
Dr. Dong Sun Talks About Carriers' Digital Transformation & Huawei’s Telco OS

1|29|15   |   6:28   |   (0) comments


Dr. Dong Sun, Chief Architect of Digital Transformation Solutions at Huawei, discusses how telecom operators can become digital ecosystem enablers and deliver optimal user experiences that are in real-time, on-demand, all-online, DIY and social (ROADS).
LRTV Huawei Video Resource Center
Huawei's Chief Network Architect Talks about Network Experience & Operators’ Strategies

1|29|15   |   3:39   |   (0) comments


In the digital age, network experience has become the primary productivity especially for telecom operators. In this video, Wenshuan Dang, Huawei’s Chief Network Architect, discusses how carriers can tackle the challenge of infrastructure complexity in order to enhance business agility and improve user experience.
LRTV Documentaries
The Rise of Virtual CPE

1|27|15   |   01:38   |   (5) comments


As NFV strategies evolve from tests and trials to production telco networks, expect to hear a lot about virtual CPE (customer premises equipment) rollouts during 2015.
LRTV Documentaries
Optical Is Hot in 2015

1|23|15   |   01:56   |   (2) comments


Optical comms technology underpins the whole communications sector and there are some really hot trends set for 2015.
LRTV Custom TV
Policy Control in the Fast Lane

1|22|15   |   2:57   |   (0) comments


What's making policy control strategic in 2015 and beyond? Amdocs talks with Heavy Reading's Graham Finnie about the key factors driving change in the data services landscape. Find out what his policy management research reveals about the road ahead for policy control – and sign up for
LRTV Documentaries
Highlights From the 2020 Vision Executive Summit

1|21|15   |   4:33   |   (2) comments


In December 2014, Light Reading brought together telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Cisco's Doug Webster shared his company's ...
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Harmonic, Helping Carriers Accelerate 4K Video Deployment with Huawei

1|20|15   |   5:42   |   (1) comment


At IBC, Peter Alexander, Senior Vice President & CMO at Harmonic, speaks about the growing interest in pay-TV service and its branching into multiple devices.
LRTV Huawei Video Resource Center
Sony Marketing Director Olivier Bovis Discusses the Outlook for 4K and Cooperation With Huawei at IBC 2014

1|20|15   |   6:50   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Envivio, Helping Carriers Accelerate 4K Video Deployment

1|20|15   |   2:57   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Pay-TV's Networked Future

1|20|15   |   6:29   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about the future of the pay-TV industry and its transition.
LRTV Huawei Video Resource Center
Jeff Heynen: Distributed Access Will Help MSOs Compete in the Future

1|20|15   |   2:26   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about moving to distributed access and the future trend of cable business.
LRTV Interviews
Cisco Talks Transformation

1|20|15   |   13:02   |   (0) comments


In December 2014, Steve Saunders sat down with Cisco VP of Products & Solutions Marketing Doug Webster at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Cisco's approach to network virtualization as well as how service providers can begin to monetize high-capacity networks through the end of the decade.
Upcoming Live Events
February 5, 2015, Washington, DC
February 19, 2015, The Fairmont San Jose, San Jose, CA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
September 9-10, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
December 1, 2015, The Westin Times Square, New York City
December 2-3, 2015, The Westin Times Square, New York City
Infographics
Hot Topics
Google Continues Gigabit Expansion
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 1/27/2015
Cablevision's New WiFi Try – Freewheeling Enough?
Mari Silbey, Independent Technology Editor, 1/26/2015
Comcast Apologizes to 'A**hole' Brown
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/29/2015
Overture Builds on NFV Foundation
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/27/2015
Bumper iPhone Sales Boost Apple Profits
Iain Morris, News Editor, 1/28/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Weekly Executive Interview
Join us live for Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, and Universal, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he has to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.