Regulators are fed up with programming blackouts — and are under orders from Congress to review their so-called “totality of the circumstances test” to determine whether station owners, cable and satellite operators are negotiating in good faith.
Broadcasters are driving hard to be paid for their signals. Their retransmission fees rose to about $6.3 billion in 2015, SNL Kagan estimates. That’s up from $1.2 billion in 2010 — and is headed to $8.6 billion in 2018.
And the National Association of Broadcasters says the proposals that the FCC voted in September to consider would, for the most part, just strengthen pay TV providers’ leverage in negotiations.
“The goal of pay TV providers is not to promote consumer welfare – which, given their past track record, is hardly surprising,” the trade group says in a 60-page filing. “Rather, for multichannel video programming distributors (MVPDs) this proceeding is solely about encouraging government intervention in the marketplace – in this one limited instance – to prevent broadcasters from negotiating for the fair market value for their signals. Nothing more, nothing less.”
Indeed, the NAB says, the proposed changes “will only put more money in the pockets of the likes of AT&T/DirecTV, DISH and Time Warner Cable/Charter/Bright House. The Commission should not be under any illusion that changes to its good faith negotiating standard will lower consumer prices, lead to more reasonable equipment charges or reduce sky-high early termination fees.”
The American Television Alliance, a cable and satellite-backed lobby group, says the NAB and its members enjoy playing with a stacked deck.
Although broadcasters “argue that they lack market power,” the ATVA says in its 35-page response that it “cannot square such claims with the 40% annual price increases imposed by broadcasters. Nor can we square them with the increasing number of broadcaster blackouts.”
It specifically attacked NAB’s calculations about the industries’ market capitalization.
The comparison “entirely omits station groups owned by the ‘Big Four’ networks—some of NAB’s biggest members. The market caps of the Big Four networks rival those of the biggest MVPDs. Worse yet, in calculating MVPD market caps, NAB included Comcast’s broadcasting properties, NBC and Telemundo.”
Regulators asked for comments about several related issues. For example, they wonder whether it’s a sign of bad faith if a broadcaster in a contract impasse prevents a cable company’s broadband subscribers from viewing its online content. They question whether it’s OK for a network to negotiate deals on behalf of affiliates, or for competing stations in a market to link arms in bargaining with a cable provider.
The FCC also looks for comment on whether it’s fair for a broadcaster to make demands ahead of a must-see sports or entertainment event. Or whether a pay TV provider, facing a black out of a local network affiliate, can import a signal from an affiliate in a different market.