If it’s retransmission consent gold you seek, make sure you understand your rights and the FCC regs governing negotiations.
After 14 years on the books, retransmission consent is sure grabbing headlines now.
Last week, Belo and Cox announced a down-to-the-deadline agreement covering 1.4 million cable subscribers, and nine unnamed operators agreed to pay CBS cash for consent—a long-standing cable taboo.
Last month Sinclair and Mediacom reached an agreement, apparently involving cash, that restored 24 stations to 700,000 Mediacom subscribers. The deal was reached only after the FCC denied Mediacom’s request to compel Sinclair’s interim consent in January.
In the last few days CBS, LIN TV and other broadcasters have been vocal about their intent to seek cash from the largest cable operators when current retrans agreements expire.
Retrans consent also plays an important role in the run-up to the Feb. 17, 2009, DTV transition. Between now and then, stations broadcasting in analog and digital—now all but a few—can get must carry only for their analog signal. The companion digital signal can be carried only through a retrans agreement.
Also under current law, stations that go all-digital on or before the transition date can get must carry for their main digital signal, but not for multicast subchannels. They need retransmission consent.
Against this backdrop, here is a snapshot of FCC rules on retrans negotiations and agreements. Like good wine, the rules have gained complexity and appreciation with age. The two main ones are the retrans rule and the good faith rule.
The retrans rule (Section 76.64)—In the 1992 Cable Act, Congress created a new property right for broadcasters in their TV signal with regard to cable and other multichannel video program distributors (MVPDs) including satellite and now telephone companies.
The rule implements that right by prohibiting MVPDs from retransmitting commercial TV broadcast signals without the express written authority of the originating station unless the station has elected must carry.
For the first time in the long history of broadcasting and cable, the rule required operators to get stations’ permission before carrying their signals.
For must carry, FCC rules dictate the terms of carriage and require no written agreement. Payment for must carry, or for must carry channel position, is prohibited.
In contrast, under retrans almost everything—including who pays what kind of compensation to whom—is negotiable, and a written agreement is required.
Under the rule, written retrans agreements:
- May not be exclusive (i.e., the station may not limit its carriage to one MVPD, and the operator may not agree to exclude other TV signals).
- Must specify the extent of consent granted (i.e., for the entire signal or any portion of it). This applies to analog and digital signals.
The retrans rule requires stations to choose between retrans and must carry every three years. Current elections were made by Oct. 1, 2005, and apply to calendar years 2006-2008. The next election is Oct. 1, 2008, and covers 2009-11.
New TV stations, and stations that go all-digital and return their analog spectrum, must make their initial election during the period from 60 days before to 30 days after the start of new or digital-only broadcasting. Those elections take effect 90 days after being made.
The term of agreements—when they expire—is negotiable, and can be longer or shorter than the three-year election periods. That is one reason why some retrans agreements are expiring now, in the middle of an election cycle, and creating headlines.
Another reason is that sometimes operators and stations cannot agree on details in the three months between the October elections and the start of the three years they cover (Jan. 1, 2006). As a result, existing agreements are extended, often more than once, by mutual consent while negotiations continue.
Extensions should be written and signed. Both operator and station have incentives to avoid gaps in consent. During them, carriage by the operator is prohibited.
In some instances now, such as the recent Sinclair/Mediacom dispute, the broadcaster may decide to allow consent to expire to hasten negotiations.
The good faith rule (Section 76.65)—This rule requires both sides to negotiate in good faith. (Incredibly, when Congress first required the rule in 2000, the obligation fell only on TV stations. Not until August 2005 was good faith applied to MVPDs as the “reciprocal bargaining obligation.”)
How can a rule define good faith? In the case of retrans, in two ways: by specific standards (a list of “don’ts”) or by the context (“totality of the circumstances”).
Either party violates good faith by refusing to negotiate retrans, name a representative with authority to bind the negotiator, meet at reasonable times and locations, put forth more than one unilateral proposal or sign a written agreement containing the parties’ full understanding.
Other violations are failing to answer, including reasons for rejection of a proposal by the other side, and agreeing that either negotiating party will not have a retrans agreement with another TV station or MVPD, which also violates the retrans rule.
In addition, a station or operator can try to show that the other party failed to deal in good faith based on the totality of the circumstances surrounding the negotiations.
Enforcement of the good faith rule is complaint driven. An unhappy party must file a complaint within one year of the alleged violation, of the signing of the agreement or of notifying the alleged violator of the intent to complain.
A separate FCC rule, modeled on the above rules, applies to DBS. For telco MVPDs like AT&T and Verizon, the FCC has not ruled on their regulatory status, but they carry stations under retrans agreements.
The rules are the framework for retrans negotiations. What happens within that framework is making news. For business and legal reasons, all TV companies should follow retrans developments and focus on carriage strategy surrounding the digital transition date.
This columns on TV law and regulation by Michael D. Berg, a veteran Washington, D.C. communications lawyer and the principal in the Law Office of Michael D. Berg, appears monthly. He is also the co-author of FCC Lobbying: A Handbook of Insider Tips and Practical Advice. He can be reached at [email protected] or 202-298-2539.
Note: This article provides general guidance only and is not a substitute for individualized legal advice for particular situations.