Smith To FCC: Stay Out Of Retrans

With the start of retransmission consent/must-carry election season, NAB President Gordon Smith today warned FCC Chairman Julius Genachowski that the FCC should resist becoming involved in disputes between broadcasters and cable and satellite operators over terms of retrans deals.

“Even indications of government intervention in these private, market-based negotiations can impede their progress and slow their completion,” Smith writes in an open letter to Genachowski. “The mere prospect of government intervention introduces uncertainty and distorts incentives in ways that disrupt the bargaining process and only make it more difficult to reach fair and equitable agreements.”

The Cable Act of 1992, which granted broadcasters the right to ask compensation from cable and satellite operators that carry their signals, stipulates that the broadcasters much choose between negotiating for retrans compensation or demanding FCC-enforced carriage without compensation (must carry) every three years.

Smith’s concern about FCC “intervention” is valid. The agency has an open rulemaking to amend the rules governing retrans negotiations in a way that could give one party more or less leverage.

In his letter, Smith reassures Genachowski that broadcasters are committed to reaching “fair and timely” retrans agreements with operators and that disruptions of service in which broadcaster refused to allow operators to continue carrying their signals are the rare exception rather than the rule.

“[T]hree bases guide our members’ approach to retransmission consent: 1) our desire to serve local audiences; 2) our need to negotiate for fair compensation that support quality programming; and 3) our belief that retransmission consent negotiations should remain private and market-based.”

So far, Genachowski has shown no interest in intervening in those “private” negotiations and the pending rulemaking acknowledges that there is a limit to the FCC’s authority to govern the negotiations.