FCC’s Wheeler Proves To Be No Cable Shill

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.