NAB Challenges Pay TV Retrans Proposals

Proposals by the pay TV industry that would restrict television broadcasters’ ability to fairly negotiate retransmission consent fall outside the FCC’s limited legal authority and would provide no benefit to consumers, said the NAB in reply comments submitted today. Only by quickly closing its proceeding examining the “totality of circumstances” of what constitutes “good faith” retransmission consent negotiations will the FCC help viewers, NAB said in its filing.

The NAB said the FCC’s record makes clear that the current totality of circumstances test is sufficient to encourage fair negotiations between broadcasters and pay TV providers over retransmission consent. Only a small handful of good faith negotiation complaints have ever been filed, NAB said, and no broadcaster has ever been found to have violated good faith, the comments added. The FCC’s proceeding, however, has encouraged pay TV providers to advocate for government intervention in the free market in order to tilt the negotiating table in their favor, the comments added.

“The goal of pay TV providers is not to promote consumer welfare – which, given their past track record, is hardly surprising,” said the filing. “Rather, for multichannel video programming distributors this proceeding is solely about encouraging government intervention in the marketplace…. Nothing more, nothing less. Indeed, while thousands of deals are completed, the handful of disputes that arise are gleefully trumpeted by pay TV advocates like the American Television Alliance, which takes great pleasure in the political ammunition created each and every time one of its members allows an agreement to expire.”

Adopting some or all of pay TV’s retrans proposals would simply create greater financial and competitive advantage for an already highly consolidated pay TV industry, NAB argued. Consumers would stand to gain nothing from a weakened retransmission consent regime, and could even face more abuse from their pay TV providers.

“The commission should not be under any illusion that changes to its good faith negotiating standard will lower consumer prices, lead to more reasonable equipment charges or reduce sky-high early termination fees,” said NAB in its comments. “If anything, the pay TV industry’s ability to dictate the terms of service with their customers will be strengthened by FCC intervention increasing MVPDs’ marketplace leverage. MVPDs also cannot show how their proposals (the legal ones, at least) will promote the FCC’s stated goal of benefitting consumers by reducing the already small number of service disruptions caused by negotiating impasses.”

Pay TV conglomerates’ proposal that the FCC mandate the interim carriage of broadcasters’ signal, especially for “marque events,” during retrans impasses is simply unlawful, NAB said. The commission has found on multiple occasions that it cannot lawfully force broadcasters to supply their signal to pay TV providers. Copyright law also disallows the FCC from prohibiting broadcasters from restricting their content on the Internet.

“It is also unlawful for the commission to require broadcasters to make their content available online,” said the NAB filing. “Federal copyright law gives broadcasters the right to control whether, how and when their content is distributed. Nothing supports the view that the FCC can supersede copyright law to require broadcasters to publicly perform their copyrighted material online.”

Pay TV providers’ proposal to prevent broadcasters — and only broadcasters — from bundling programming would also fly in the face of established antitrust precedent, the filing said, adding that both the Department of Justice and the court system have found that bundling is often pro-competitive.

“In many instances in the video programming market, bundling has led to greater efficiencies, increased diversity and innovations in content,” said NAB. “Blanket rules prohibiting the practice for broadcasters beyond antitrust requirements will skew the market not only to favor MVPDs, but also cable programmers, who will still be free to bundle content as they see fit. Government policies undermining the competitiveness of consumers’ free video option in favor of increasingly expensive pay options will not serve the public interest.”

Pay TV providers’ wish list of changes to retransmission consent represent nothing more than a concerted attempt to weaken broadcasters’ ability to negotiate fair carriage of their over-the-air signal, the filing continued. The FCC, it said, should close its proceeding that has encouraged pay TV conglomerates to manufacture a retransmission consent “crisis” and preserve a system that works for cable and satellite providers, broadcasters and, most importantly, consumers.