Late deal saves Super Bowl telecast

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Football fans who might have been left in the dark during the Super Bowl this Sunday were granted a reprieve when a last-minute deal temporarily ended a media standoff that had revived calls for regulators to intervene in TV programming disputes.

TV viewers in markets from Oregon to New York had been caught in what seems to be an annual deal-making ritual. The dispute had kept Fox programming off DirecTV’s system for weeks as the satellite-television provider and Northwest Broadcasting engaged in brinkmanship over payment for the broadcaster’s programming.

Cable and satellite companies that retransmit broadcasters’ signals to viewers say the threat of outages caused by the corporate stalemates are a result of flawed policy and are pushing the Federal Communications Commission to take action.

“We’ll continue to press for reform for retransmission consent, where 20-year-old statutes effectively tip the scales in the broadcasters’ favor,” Glenn Britt, Time Warner Cable chairman and CEO, said in a recent conference call with investors.

The dispute stems from retransmission-consent sections of the 1992 Cable Act that give broadcasters a choice: They can demand that a cable, satellite or phone company carry their program signals, or elect to negotiate a payment for consent to retransmit that signal. The law was designed to ensure that broadcasters were fairly compensated for their programs when cable operators had local monopolies in providing programming service to homes.

But the pricing negotiations sometimes end up in standoffs that yank programming away from TV viewers. Last year, consumers in some big markets were shut out of the baseball playoffs, a pair of World Series games and some NFL broadcasts, and they missed 14 minutes of the Academy Awards when broadcasters failed to reach agreements on price with cable and satellite companies. Lawmakers, including Sen. John Kerry (D-Mass.), threatened to intervene with legislation to require more transparency in the negotiating process. Kerry never introduced his bill, but the threat was enough to get the FCC to open an investigation into the issue.

Current disputes in towns such as Binghamton, N.Y., and Medford, Ore., lack the big-market fireworks of 2010, but proponents of a change in the law said the disagreements illustrate the need to revisit the issue.

“Until the FCC changes outdated rules that strongly favor broadcasters, consumers across the nation will be subject to blackouts and blackout threats,” said Mike Heimowitz, spokesman for the American Television Alliance, which includes major multichannel operators and many popular cable networks.

For years the law went unnoticed as cable companies were the primary providers of subscription programming. But as phone companies got into the TV game, and satellite providers began to beam local stations into the local markets, a growing marketplace for programming was created, and broadcasters began to demand cash.

“Programs like ‘Glee,’ ‘60 Minutes’ and the Super Bowl are expensive to produce, and it’s not unreasonable for broadcasters to want fair compensation for programming that pay-TV companies take and resell,” argued Dennis Wharton, spokesman for the National Association of Broadcasters. “We sympathize with viewers caught in the middle, but let’s not forget that pay-TV companies built their business on the backs of the most-watched programming in television.”

While broadcasters contend that the issue is overblown, there have been enough complaints and congressional attention that the FCC has decided to get involved. Bill Lake, the commission’s media bureau chief, said the FCC would launch a rule-making procedure, expected to come before the commission in March. Agency officials have not yet detailed the plans.

“We’ve done deals with eight station groups, large and small, representing 73 markets and 92 channels,” said Andrew Reinsdorf, DirecTV’s senior vice president of government affairs. “The problem we have is when we have a problem with an outlier, and they refuse to play ball, what recourse do we have? That’s the challenge under the current system.”

Cable operators have pushed the idea that the negotiations should go to arbitration when they reach an impasse. While the arbitrator decides the issue, the programming would continue to air.

Subscribers will leave a cable, satellite or other service “if they are deprived of must-have programming, which is the broadcast networks’, and this is a significant harm that baseball-style arbitration can remedy,” said cable lawyer Barbara Esbin, a former FCC staffer. “I think it’s considered more of a market-based solution than rate regulation.”

Broadcasters oppose that idea, arguing that the commission has no authority to force arbitration.

“The only thing the cable act gives the FCC authority to do is to say whether or not there has been a good-faith negotiation,” broadcast attorney Antoinette Bush said at a recent Technology Policy Institute conference.

But cable and other pay-TV providers said that the FCC needs to intervene. “It’s supposed to be a free market,” Heimowitz said. “The broadcasters are favored by all these outdated rules. Make it a free market. That’s all we’re asking.”

Broadcasters disagree. They also contend that customers have a number of options for programming.

“Consumers don’t have to be deprived of the Super Bowl. They can switch providers,” Bush said. “We have a competitive marketplace. Broadcast channels are available free over the air.”