FCC’s Wheeler Proves To Be No Cable Shill

When Tom Wheeler took the reins at the FCC, the thought was that he would side with the cable operators he used to represent. Well, Wheeler didn't on retrans, opting not to put in place regulations that would have hobbled broadcasters' ability to negotiate for fees. Yes, Wheeler was chief spokesman for cable in the 1980s, but he has proven to be no cable guy.

When it became clear in 2013 that Tom Wheeler would be President Obama’s choice to run the FCC, broadcasters quaked. They remembered him from his days as head of the principal cable lobby, then known simply as the National Cable Television Association.

Surely, they assumed, he would side with the MVPDs in their never-ending battles with broadcasters over FCC regulations. Once a cable guy; always a cable guy.

Well, Wheeler got a chance to help out his old cable buddies and stick it to broadcasters when Congress asked the FCC in 2014 to look at retransmission consent negotiations and see if they needed to be regulated to insure that parties were behaving well and to reduce the chances of TV stations going dark on MVPD systems.

The MVPDs gave him a long list of things he could do to bring “balance” to the negotiations that included an anti-bundling provision, a stand still requirement, a ban on online blocking, mandatory mediation and elimination of the network non-dupe and syndex rules.

To varying degrees, the regs would have harmed broadcasters’ ability to negotiate for their fair share of the $46.1 billion the MVPDs dole out for programming each year.

In the end, Wheeler declined to adopt any of them and to shut down the FCC review. In so doing, he preserved broadcasters’ ability to win significant increases in retrans payments for at least the next several years. That is no small matter, given that those increases represent most of the revenue and cash flow growth built into broadcast business projections.


Wheeler announced his intentions last week in a blog post.

“What we need is not more rules, but for both sides in retransmission consent negotiations to take seriously their responsibility to consumers, who expect to watch their preferred broadcast programming without interruption and to receive the subscription TV service for which they pay,” Wheeler wrote. “This isn’t pie in the sky. Many broadcasters and MVPDs take that responsibility seriously and conclude hundreds of retransmission consent deals without interruption. And this process is entirely invisible to their viewers — as it should be.”

It was a sweeping win for broadcasters. Even as I called on Wheeler to end the proceeding in this space a few weeks ago, I thought for sure that the FCC would impose something to placate the MVPDs in some small fashion. He chose to do nothing.

Instead, he simply reassured the MVPDs that the FCC would keep an eye on retrans dealmaking and, when necessary, step in to pressure parties to settle as it is currently doing in the Dish-Tribune dispute. Fair enough, as long as the pressure is applied evenhandedly.

The NAB deserves ample credit for snuffing out to this threat to a critical broadcast revenue stream, but it had the big advantage in the fight.

Comcast, the largest and most politically powerful cable operator, was sidelined, having promised to do no harm to retrans as a condition of the FCC’s approving its merger with NBCU in 2011. Comcast, of course, was also disinclined to get involved because that merger made it the owner of NBC and its stations and a major beneficiary of retrans.

Comcast, in turn, kept the National Cable & Telecommunications Association (Wheeler’s old trade group with a new name) out of play.

So the MVPDs’ fight was left to a hodgepodge of companies, notably Dish and Time Warner Cable (now subsumed into Charter) and the American Cable Association.

The ACA, representing small cable operators, was game, working the FCC incessantly, if those ex parte notices are to be believed, and keeping the issue alive in the media. But it lacked the necessary political clout.

ACA declared itself “shocked and appalled” immediately after Wheeler’s blog item appeared, but ACA President Matt Polka had signaled at a conference in New York last month that winning meaningful relief was a long shot.

The anti-retrans forces also set up one of those bogus consumer groups called the American Television Alliance to pound away at the idea that retrans was causing broadcast blackouts. It proved largely ineffective.

It was always an uphill battle at the FCC. The MVPDs had tried to get Congress to regulate retrans, but failed. Their consolation prize was the language ordering the FCC to take a look.

News that the retrans regulation cloud had passed over did not immediately boost TV station groups stocks, which have been depressed and could use the lift. But it could be beneficial in the long term.

Wells Fargo analyst Marci Ryvicker called the news a positive. “While we understand the FCC is still going to watch retrans negotiations carefully, we do think [Wheeler’s] statements remove some uncertainty for these stocks.”

It will be interesting see what happens to the pace of retrans blackouts. Broadcasters have maintained that Dish and some of the anti-retrans firebrands have taken hard lines in negotiations to force blackouts that would get the attention of policymakers.

That argument can be now be tested. Knowing that they are getting no help from the FCC, the MVPDs may be more amenable to cutting deals. That would lead to fewer blackouts.

We’ll also have to watch subscriber fees, which are rising too fast. Something has got to give, I understand that. But what gives shouldn’t be the most prized and watched programming on any cable or satellite system — the broadcast channels.

If the MVPDs need to shave programming costs, they are going to have to do it by dumping marginal cable networks or putting them on tiers where only people who watch them have to pay for them.

So, let this be a lesson in making snap judgments about people because of a couple of lines in their bio. Yes, Wheeler was chief spokesman for the cable industry in the 1980s, but he has proven to be no cable guy. Far from it.

He ran afoul of cable interests on net neutrality and then with his proposal to permit third-party set-top boxes. Now, he has done it again on retrans.

One wonders how long it will be before they expel him from the Cable Hall of Fame.

Comments (21)

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Wagner Pereira says:

July 22, 2016 at 6:02 pm

As ACA picked up the ball, they showed they are not doing their job as a “Chamber of Commerce” as claimed on their IRS Non-Profit filings, but instead are really a Lobbying Organization (such as the NAB and the NCTA). False Statements to the IRS is a very bad thing. One wonders will they get a Hillary pass? We also saw how effective the ACA is (Thank Goodness).

Don Thompson says:

July 23, 2016 at 9:47 am

One day, 310 million American TV viewers indentured to @nabtweets and the TV #cashcasters, owing to the folly of government-imposed retransmission consent, will receive justice …. Please Follow Me On Twitter: @TedatACA

    Ellen Samrock says:

    July 23, 2016 at 11:49 am

    Ted, your tin-eared rant on broadcasters is really getting tiresome and the more you spout the ACA manifesto creed, the less convincing it sounds. If you really want to get off on someone, start with Disney and the other cable nets that are truly gouging MVPDs. Broadcasters, with their relatively low retrans fees, should be your best friends.

    Veronica Serrano Padilla says:

    July 23, 2016 at 1:50 pm

    I’m afraid I’m going to have to agree here… Ted and the ACA really don’t have much to whine about. Pretend, for a moment, that there was no such FCC rule like Retransmission Consent. Broadcasters would be just like any cable channel out there, negotiating for what fees they can get. Cable / satellite would still find broadcast content to be a very important aspect of their lineup, and as such, would pay for it. Network programming is among the highest watched programming and cable / satellite know such programming has to be a part of their offering. Ted complains about “government-imposed retransmission consent” – but even without it, how would the interaction between broadcasters and MVPDs be any different? Broadcasters have highly sought after content, MVPDs are distributors of content. The free market works it out.

    Veronica Serrano Padilla says:

    July 23, 2016 at 1:53 pm

    By the way, Ted and the ACA would have a very valid argument if they want to complain about Must Carry rules. It would be hard to argue that Must Carry rules are not burdensome government intrusion.

Don Thompson says:

July 23, 2016 at 7:06 pm

Never has the price of “free TV” been so high.
In a free market, any cable operator would be able to negotiate carriage with any TV station in the U.S. In fact, ACA supports granting local TV stations free access to viewers. Seems to work for “CBS (Almost) All Access” on the Internet. But TV station owners don’t want that because, as we all know, true competition for retransmission consent would drive prices down. Why is the U.S. carved into 210 local TV markets (DMAs)? The colonization of the broadcast TV market into exclusivity zones akin to 19th Century British treaty ports in China makes no sense when cable, satellite TV and the Internet are technologies at war with the artificial scarcity regime that TV station owners insist Congress and the FCC need to protect. Retransmission consent or must carry: Heads @nabtweets wins; tails, ACA loses ……..I’m @TedatACA and I approve this message.

    Wagner Pereira says:

    July 23, 2016 at 8:38 pm

    American Cable Ass. Ted. I have reviewed the ACA’s IRS filings as well as ACA’s Mission Statement and the Organization’s Primary Exempt Purpose from Form 990. Unlike the NCTA or NAB which admit they are lobbying organizations, the ACA claims their Cause Area NTEE Code of S41 – Promotion of Business, a classification usually reserved for Chamber of Commerce type Non-profits. Please explain how your constant spam and inciting posts in a Forum aimed at Broadcasters (though most that read your posts are neither Broadcasters or in the Cable Industry) falls into the ACA’s Primary Mission Statements and Primary Exempt Purposes which allows the ACA it’s tax exempt. As an ACA Officer making $151k+ a year, it appears that this type of actions means the ACA is not doing what it claims to the IRS and should be stripped of its Tax Exempt status, making it a Taxable Organization. Furthermore, can you point to any Chamber of Commerce who goes to other Industries and Cities trying to incite them? Would love to hear your justification. Otherwise, the US Government should certainly be taxing the ACA accordingly. Your actions as to the ACA’s purpose speak louder than your IRS documents. And, does the IRS still award 10% – 25% as an award of total amount collected from tax cheats to those that turn them in?

    Veronica Serrano Padilla says:

    July 25, 2016 at 1:16 pm

    Ted, I respect what you’re saying – heck, I formerly worked for cable and now have a cable TV channel… but let’s go to our pretend world again. Pretend that FCC network non duplication rule doesn’t exist. What will happen? Will CBS allow its affiliate in tiny market 210 (Glendale, Montana) to provide CBS programming to any number of MVPDs throughout the country because they’ll likely charge less?? No, at least not for long. CBS will hear a lot of screaming from, say, its New York City affiliate because the cable company is no longer paying them for CBS network programming. And since CBS, and other networks, get reverse compensation, CBS won’t be getting as much money either. The free market will kick in, CBS will set out (if it hasn’t already) specific legal contractual rights to where its affiliates can distribute their programming. So CBS’s Glendale, Montana affiliate will only be able to legally allow MPVDs within their DMA (or perhaps in portions of significantly viewed neighboring DMAs) to carry their signal. Same for CBS’s New York City affiliate. Minus the FCC’s rules, the networks and affiliates will do all in their power to keep the status quo. So it seems to me that bickering over all this is pretty useless… but, hey, you know much more about TV than me… and are a much better golfer.

    Veronica Serrano Padilla says:

    July 25, 2016 at 1:42 pm

    @Insider: I imagine the IRS has much bigger fish to fry, investigating Donald Trump for tax fraud, for example. Anyways, you, being the anonymous coward you are, wouldn’t have the stones to turn in Ted and the ACA for fear of being identified. (And by the way, you’re assuming – quite wrongly – that a tax-exempt organizations can not be legally involved in lobbying).

    Cameron Miller says:

    July 25, 2016 at 2:30 pm

    @Insider: Stop calling Ted Hearn “American Cable Ass. Ted.” and leave him alone!

    Wagner Pereira says:

    July 25, 2016 at 6:42 pm

    If you had a clue, you would already know the station in Glendale Montana cannot provide CBS programming outside it’s DMA as per its Affiliation Contract with CBS. Clueless.

    Wagner Pereira says:

    July 25, 2016 at 6:46 pm

    Wow…you really are clueless. As I stated, the NAB and NCTA are tax-exempt and use the IRS Subcode showing Lobbying as their main endeavour, so of course a Tax-Exempt can can Lobby. However, you cannot claim your tax exempt work is one thing and do another, as the ACA is. Truly Clueless.

    Keith ONeal says:

    July 25, 2016 at 9:48 pm

    @RIDGELINE TV ~ WCBS in New York City is a CBS Owned and Operated station. It is NOT an affiliate. Get your facts straight!

    Veronica Serrano Padilla says:

    July 26, 2016 at 10:36 am

    @Insider: If you had any reading comprehension you would have seen that I wrote that it likely already didn’t have that right. You don’t seem to follow along very well. Here’s a hint, read an entire post and think (I know that’s hard for you) before smarting off.

    Veronica Serrano Padilla says:

    July 26, 2016 at 10:37 am

    @FlashFlood: You do understand what a hypothetical argument is, right? Thought you were smarter than Insider… guess not…

    Veronica Serrano Padilla says:

    July 26, 2016 at 10:42 am

    @Insider: You are incorrect about tax-exempt being able to lobby, as long as that is not their main focus. One would have to suppose that ACA does much more than lobbying. Here’s info straight from the IRS:

    Wagner Pereira says:

    July 27, 2016 at 2:19 pm

    So you are inferring that ACA is a Charity? Interesting.

    Wagner Pereira says:

    July 27, 2016 at 2:30 pm

    @Flashfool. Just because WCBS is an O&O, it still is an affiliate….just one that’s not in danger of losing its affiliation. CBS owns another station in NYC which is not the CW Affiliate. Likewise stations in Tampa, Seattle etc that is not the CBS Affiliate.

    Wagner Pereira says:

    July 27, 2016 at 2:30 pm