March 3, 2011

FCC To Vote On Cable Disputes

Federal watchdogs are looking into new ways to try to avoid TV signal disruptions caused by disputes over programming fees between broadcast companies, cable companies and pay TV operators.

The Federal Communications Commission (FCC) plans to vote Thursday on a possible review of federal rules that oversee negotiations over the fees that cable, satellite and other companies pay TV stations to carry their signals. Broadcast companies, searching for advertising revenue, have recently started demanding cash for signals they once gave out for free, which adds to rising cable bills.

The new actions taken on by the FCC follows a series of standoffs that have affected millions of viewers, leaving them without their local stations.

Last October, failing negotiations between Cablevision Systems and News Corp's Fox network left some 3 million Cablevision subscribers in the New York viewing area without some stations for more than 2 weeks. The signal shutdown affected viewing of two World Series baseball games, leaving many viewers frustrated and angry.

A similar dispute between Cablevision and ABC last February caused viewers in the New York area to also lose 15 minutes of service during the Oscar's.

Other high-profile standoffs have occurred between Time Warner Cable and Fox, Mediacom Communications and Sinclair Broadcast Group, and Time Warner Cable and Sinclair Broadcast Group. And a new showdown is brewing between Dish Network and Lin TV Corp.

Many top cable providers -- Cablevision, Time Warner, DirecTV, Dish Network and Verizon Communications -- last year filed a petition with the FCC seeking new rules that would give them more power when negotiating with broadcast companies.

The petition argues that the current "retransmission consent" rules are tipped in favor of TV broadcasters because having the ability to pull popular programming gives broadcasters an advantage over cable providers.

They are asking for the FCC to prohibit broadcasters from interrupting signals during negotiations and to mandate binding arbitration during disputes.

The FCC asserts that it has no authority under the current law to be involved on the level that cable companies are petitioning for. But it said it does want to examine the existing rules to determine if there are other ways to prevent disruptions and to ensure that negotiations between parties are kept in good faith.

The FCC will also look into ways to make it easier for pay TV providers to bring in broadcast programming from other cities when it fails to reach binding agreements with local broadcasters. The approach would significantly undermine the leverage broadcast companies have in bargaining. In Time Warner's latest mash-up with Sinclair, which was successfully settled last month, that approach was brought to the table by the cable giant.

The FCC will also probe whether broadcast networks should be involved in negotiations originally intended to be between local cable companies and local broadcast affiliates. Broadcast networks such as ABC, NBC and CBS have been receiving profits from retransmission fees collected by their affiliates. That has led TV stations to demand larger cash payments from pay TV providers, taking negotiating power away from them.

Also, in the review, the FCC would look at ways to ensure that consumers have adequate notice -- giving them time to find another cable service -- before a deadlock results in broadcast disruptions.

American Cable Association president, Matt Polka, told The Associated Press that he was pleased that the FCC would examine its retransmission consent rules. He argues that the existing rules, established in 1992, have not kept up with today's market.

But Dennis Wharton, executive vice president of communications for the National Association of Broadcasters, insists the FCC should not get involved, thus leaving the current system intact because the government should not be involved in "private, free-market negotiations."

If pay-TV providers believe the government will step in, Wharton added, they will have even less incentive to negotiate in good faith. Such issues could lead to even more service disruptions for consumers.


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