retransmission consent

Some may downplay FCC Chairman Tom Wheeler’s plans to eliminate the network non-dupe and syndicated exclusivity rules, but that would be a mistake. The move means that cable and satellite operators have likely won the first battle in their campaign to rewrite the retrans rules and undermine broadcasters’ ability to negotiate for higher fees.

The FCC chairman proposes to eliminate the network non-dupe and syndicated exclusivity rules and to launch a review of the “good faith” provision of the retrans rules —  moves that could weaken broadcasters’ leverage in retrans negotiations.

For the first time in a long time, cable and satellite TV companies think that retransmission consent reform is possible and they’re pushing the FCC as hard as they can to get it. The fight is really a simple one, but the stakes are high. Just follow the money. Broadcasters get billions from pay TV distributors to distribute their signals. It’s a growing pot of revenue that is growing at a healthy clip, expected to hit $10.3 billion by 2021, up from $6.3 billion this year.

If the explosion in cable cord-cutting and on-demand video has turned the steady television business into the Wild West, next month may be high noon at the FCC. The FCC has until Sept. 4 to kick off a critical review of its retransmission consent rules.

Media General ended its retransmission consent standoff with Mediacom late yesterday with an agreement that returned Media General stations to Mediacom systems in 14 markets. “We are pleased that Mediacom recognized the essential value of our top-rated programming, including local news, weather, sports, entertainment and other unique content, ” Media General said in a statement. “We regret the temporary disruption in service.”

Yesterday’s U.S. district court ruling that online video distributors are entitled to the compulsory license is not the “shocker” some were calling it. It has no immediate effect and there is a lot of litigation to go before anything is settled. What’s more, even if the courts grant FilmOn and other OVDs the license, they will still have to go to broadcasters for retransmission consent..The FCC is going to see to that.

When the retransmission consent issue heats up in Washington, there is almost always a political poster child. This time, it’s the fee dispute between Media General and Mediacom Communications, that resulted in a blackout Tuesday of TV stations in 14 markets. The standoff comes just as the FCC prepares to open up a congressionally mandated proceeding to review what negotiating in “good faith” means.

Broadcasters warned the FCC that retransmission consent reform advocates are “manufacturing” disputes to “spur the government to regulate more heavily.” Meeting with FCC officials last week, executives from the NAB argued that nearly all retransmission consent agreements are signed without any interruption to consumers’ service.

SNL Kagan researchers and broadcasters at the SNL Kagan conference in New York agreed that retrans revenue — projected at $6.3 billion this year and $7.2 billion next year — will continue to grow at least through 2021.

NAB President Gordon Smith spells out the advantages of adopting the new next-generation TV transmission standard, but says his group must represent the wishes of “a majority our members.” And those members are divided. Talking to the New York State Broadcasters Association, Smith also addresses the spectrum auction and repack as well as efforts by cable and satellite to get retrans reform.

The broadcaster asks the FCC for ’emeregency” relief, claiming the satellite provider is not negotiating in good faith over a new distribution contract.

This week’s FCC ruling that municipalities can no longer regulate the rates of local cable systems could have harmful consequences for broadcasters. It seems that under a certain interpretation, systems  would be able to move broadcast channels out of basic cable tiers that have the nice attribute of reaching 100% of subscribers, a potent weapon come retrans negotiating time. And that wasn’t the first piece of broadcasters’ retrans clout that the Wheeler FCC whittled away. What’s next?

As president of the NAB, Gordon Smith can’t solve all the ails facing TV broadcasters, but he seems determined to do what he can to provide adequate repacking reimbursement for broadcasters who don’t participate in the incentive auction, advance the next-gen broadcast standard and defend broadcasters’ retrans rights on two fronts (in Congress and at the FCC).

Through TV Everywhere, CBS All Access and OTT services like Sony’s PlayStation Vue, the O&Os and affiliates are finally making the leap to broadband distribution. But the affiliates are still not entirely happy with the state of affairs because their streaming dreams are totally subject to the networks. Affiliates ability to dictate some terms may depend on an FCC proposal to regulate online video distributors.

The trade group says the FCC should impose the same basic regulations on online video distributors as they do on MVPDs. Among other things, that would include retrans and must-carry obligations.

With no new retransmission consent deal in place by deadline, Cox Communications subscribers today lost Gray Television’s WOWT Omaha, Neb. (NBC); KAKE Wichita, Kan. (ABC); and WIBW Topeka, Kan. (CBS).

It took three extensions before they could get it done, but the station group and satellite carrier now have a retrans deal covering 60 Nexstar stations in 46 markets. Terms were not disclosed.

A close look at FCC Chairman Tom Wheeler’s proposal to make online video distributors [OVDs] the regulatory and legal equal of cable and satellite with all the same rights and obligations means such services, including Aereo, would be subject to retransmission consent. This is a big deal and broadcasters at all levels will need to be fully engaged in the rulemaking to make sure it doesn’t go bad.

Broadcast lobbyists have been successful in knocking out two of the provisions from Senate legislation designed to hobble broadcasters’ ability to negotiate for retrans payments. And as the legislation is reconciled with the companion House bill and moves toward final passage, it’s unlikely to get worse for broadcasters and could become better.

Mediacom Communications announced  this morning that it has struck a new retransmission consent deal with LIN Media. No terms were disclosed. A 2011 standoff in retrans negotiations between the companies resulted in a six-week blackout. So far this year, Mediacomm has also renewed retrans agreements with ABC and Fox.

The Senate is expected to vote on its version of the so-called STELA legislation allowing satellite providers to bring in broadcast signals from other markets later this year. The House bill, among other things, adds a provision to prohibit unaffiliated TV stations in one market from jointly negotiating retransmission fees with pay-TV providers.

The FCC yesterday issued a $2.25 million fine to a set of companies that operated a system that retransmitted TV signals to households in large housing units in the Houston area. The system had paid retransmission consent fees to the TV stations, then stopped doing so, claiming that it was changing so as to operate as a Master Antenna Television System (MATV).

FCC Chairman Tom Wheeler tells Congress that broadcasters’ blocking pay TV subs access to online content during retrans negotiations concerns him. Wheeler did not tell lawmakers during the hearing what retrans blackouts had specifically raised his concerns, or what in particular he planned to do about it.

Pay TV industry lobbyists are continuing  to urge lawmakers to add provisions to the STELA legislations that would substantially reduce broadcasters’ retrans negotiating leverage. But the real threat on retrans looms at the FCC. The chairman there “is demonstrably hostile to the terrestrial broadcast system,” says one leading broadcast attorney.

Gray Television, whose affiliation agreement with CBS expires by year end, looks likely to be a significant contributor in getting CBS to its stated target of $1 billion in retrans and reverse comp revenue by 2017. Sources say the network wants Gray to pay up to 90 cents per month per TV household in comp. And that’s just the beginning. “CBS may target Gray, but they will go after everybody else in very short order,” says a source familiar with the players.

Media General and Dish Network announced Saturday that they have reached an agreement for carriage of Media General’s television stations in 17 markets. Terms of the agreement were not disclosed.

Gigi Sohn, the founder of public interest group Public Knowledge, has argued that the FCC can require interim carriage of broadcast signals to avoid blackouts during retransmission consent negotiating impasses. However, some industry observers say that in her new position as FCC Chairman Tom Wheeler’s special counsel for external affairs, she may change her tune on some key issues now that she is officially representing the FCC. Says one: “She has to think about whether a court will uphold an action, and in the past she has shown an ability to be pragmatic.”

A new, long-term retransmission consent agreement restores five Journal stations to Time Warner Cable subscribers in four markets — Milwaukee, Green Bay, Omaha and Palm Springs.Financial terms were not disclosed, but the stations retain their original channel positions and TV Everywhere rights.

My big takeaway from this week’s congressional hearings on the state of retransmission consent is that broadcasters’ opposition is making progress, at least in convincing Congress that a problem exists. Judging by lawmakers’ comments, I would say there is growing concern about the blackouts that periodically deprive constituents of their favorite broadcast TV shows.

But no clear consensus emerged during a House judiciary subcommittee hearing on what should be done about the blackouts. “Our constituents aren’t shy about telling us to do something about problems in the marketplace that deprive them of their favorite shows,” said Rep. Howard Coble (R-N.C.), chairman of the House judiciary subcommittee.

Porter Novelli’s Brian Frederick: “The NAB’s charges [that the vast majority of retrans blackouts involve DirecTV, Dish Network and Time Warner Cable] are ludicrous, as anyone with even a basic understanding of how business works can attest. There is nothing more frustrating for TV consumers than blackouts so it’s absurd to think that pay TV distributors would intentionally upset their customers and risk losing them. As long as distributors are prohibited from importing a distant network signal and broadcasters can drop signals on cable and satellite, broadcasters can demand whatever they want for a local signal, knowing that most viewers primarily just care about network programming anyway.”

Among testimony set to be delivered on Tuesday at a House hearing on retransmission consent is a proposal to allow cable and satellite providers to offer distant network signals during negotiations to avoid blackouts. And a new bill introduced Monday by Rep. Anna Eshoo would give the FCC authority to “grant interim carriage of a television broadcast station during a retransmission consent negotiation.”

The CBS-TWC settlement makes all broadcasters  winners, assuming they can continue to ward off government intervention. The deal demonstrates the continued attractiveness of broadcasting programming and (particularly sports) and its puts upward pressure on all retrans fees.

Retrans is no longer a nice, ancillary revenue stream; it is vital. Without it, local television is essentially a low-growth or no-growth business. What’s more, government could step in at any time to undermine stations’ retrans rights. And that’s why every station — not just the ones embroiled in the fight of the moment with cable and satellite operators — must stand united.

Although many areas of the law struggle to keep up with technology, copyright law changes can be exceptionally slow. In 2013, it seems particularly anachronistic to allow Aereo-like unauthorized and unpaid use of broadcast signals based on a metaphysical distinction between “public” and “private unique” performances, when potentially hundreds of millions of unauthorized, unpaid viewings of the identical broadcaster-originated programs could occur. 

CBS and Time Warner Cable are still engaged in “very difficult negotiations” over how much TWC will pay CBS-owned stations per subscriber, CBS CEO Leslie Moonves told TV critics at TCA Summer TV Press Tour today. “The deadline is 5 p.m. ET today — I hope we don’t go dark.”

If a new contract is not signed by midnight, June 30, Dish customers will lose access to the Myrtle Beach, S.C., CBS affiliate.

Consumers should get to choose which broadcast networks they want to pay to receive, a senior DirecTV executive told Congress today. In testimony to a House Energy and Commerce subcommittee on communications and technology, DirecTV EVP Mike Palkovic said new rules are needed for broadcasters such as CBS, NBC, ABC and Fox when it comes to negotiating distribution contracts with pay TV distributors.

The current round of station consolidation has produced six more Big Four affiliate duopolies and one Big Four triopoly (Syracuse, N.Y.) that give broadcasters undue leverage in retrans negotiations with cable operators and ultimately drive up cable subscriber fees, says the American Cable Association.