FCC Chairman Tom Wheeler is about to hand a big victory to cable operators, and a loss to broadcasters, when they have a dispute over retransmission consent terms. He says in a blog post today that he plans to circulate an order that would enable a pay TV company to import a signal from an out-of-market station if a local broadcaster pulls its programming in a contract dispute.
So if a major network affiliate goes dark on a cable or satellite service, the operator could still provide the popular programming from another station.
With the change, the agency “takes its thumb off the scales and leaves the scope of such exclusivity to be decided by the parties” as the FCC did last year when it scrapped sports blackout rules. “In so doing, the Commission would take 50-year old rules off our books that have been rendered unnecessary by today’s marketplace.”
In addition, Wheeler wants a “robust examination” of the standards it uses — from an order in the Communications Act — to determine whether broadcasters and pay TV services are negotiating deals in good faith. “The goal of the proposed rulemaking is to ensure that these negotiations are conducted fairly and in a way that protects consumers,” the chairman says.
This could be a big deal: Broadcasters are driving hard for deals to be paid for their signals, which pay TV operators say has pressured them to raise consumer rates. Broadcast retransmission fees have risen to about $6.3 billion this year, or 12.5% the total outlays for basic cable channels and regional sports networks, SNL Kagan estimates. That’s up from $1.2 billion, or 4.1% in 2010 — and is headed to $8.6 billion, or 13.7%, in 2018.
Last week CBS chief Les Moonves told analysts that his company will “exceed our goal of $2 billion in revenue” by 2020 from retransmission consent payments and cash that affiliates pass along from similar deals.
The National Association of Broadcasters vows to fight the changes.
“Exclusivity rules are a lynchpin of the local broadcast business model and help sustain viewer access not only to high-quality network entertainment programming, but also to local news and lifeline information” says Communications EVP Dennis Wharton. The changes “threaten the vibrancy of our uniquely free and local broadcast system.”