Regulators will not proceed with a proposal to change the rules governing these disputes, Wheeler said in a blog post. Cable and satellite companies supported the effort to revise the so-called “totality of the circumstances test” to determine whether station owners, cable and satellite operators are negotiating in good faith — including in situations when popular stations go dark.
“There is nothing in the record that suggests that our current totality of the circumstances test, which is intentionally broad, is inadequate to address the negotiating practices of broadcast stations or [pay TV distributors] in the marketplace today,” Wheeler says.
“Though commenters complained about a variety of negotiating practices, none showed that those practices are the causes of the blackouts that occur. Further, a number of the practices complained of were said to have been engaged in by a single negotiating party or in a small number of negotiations and do not appear to be gaining currency in the marketplace.”
Wheeler warned, though, that when there’s a blackout he is “prepared to use the authority Congress has conferred on the Commission to help to bring negotiations to a conclusion.”
That includes the dispute between Dish Network and Tribune Media– whose 42 TV stations and WGN America went dark on Dish on June 12.
The FCC is reviewing the situation. “If that review reveals a dereliction of duty on the part of one or both parties, I will not hesitate to recommend appropriate Commission action,” Wheeler says.
Wells Fargo Securities’ Marci Ryvicker calls the decision a “big win” for broadcasters that should “remove some uncertainty for these stocks.”
The National Association of Broadcasters lauded the decision to scrap more rule making.
“As Chairman Wheeler acknowledges, the vast majority of these negotiations are successfully concluded without incident or impasse,” says EVP Dennis Wharton. “Broadcasters remain fully committed to reaching agreements with pay TV companies in good faith so that consumers can continue to receive our high-quality local content whether over the air or through a pay TV service.”
But American Cable Association CEO Matthew Polka says he’s “shocked and appalled” by Wheeler’s shift.
“The Chairman’s decision ignores the plight of millions of consumers served by [pay TV distributors] who have repeatedly been victimized by broadcasters’ heavy-handed bargaining tactics, such as pulling signals prior to a marquee event like the Oscars or baseball’s All-Star game,” he says.
It will lead to “consumer harm on a colossal scale” with higher pay TV rates and blackouts, he adds.
Research firm SNL Kagan recently forecast that cable, satellite and telco payments to retransmit TV stations’ programming will increase nearly 51% to $11.6 billion in 2022.
The increase is even more dramatic when you look at how much the payments represent for each pay TV subscriber. Local stations will cost $2.21 a month in 2022, up nearly 58% from $1.40 this year, the firm projects.