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Cable Technology Feature Article

November 18, 2010

Cable TV Wants New Regulations on Programming to Avoid Disputes

By Ed Silverstein, TMCnet Contributor

Executives for two cable companies asked a U.S. Senate committee this week for new regulations that would give them a stronger position when negotiating with TV broadcasters over programming, the AP reports.

Thomas Rutledge, chief operating officer of Cablevision Systems (News - Alert) Corp., and Glenn Britt, chairman, president and CEO of Time Warner Cable Inc., told members of the Senate Commerce Committee that new regulations are needed after recent public clashes over the fees that cable companies pay broadcasters to transmit signals, the AP said.

Rutledge told Senators that consumers are the ones caught in the middle when broadcasters withdraw signals while the two sides negotiate, according to the AP.

A blaring example was during the fight between Cablevision and the News Corporation's Fox TV network, which led to some three million Cablevision subscribers in the New York metro area missing Fox programs for two weeks — including the first two games of the World Series — after Fox pulled its signal.

Before the third game of the World Series, Cablevision accepted terms it said were "unfair" for the sake of its subscribers, the AP reported, according to a story on TMCnet.

“Retransmission consent negotiations do not take place in a free market but rather under an umbrella of statutory provisions and FCC (News - Alert) rules that heavily favor the broadcaster over the cable operator or multi-channel video programming distributor (MVPD),” Rutledge added in his testimony, according to Senate documents. “It is a scheme based on a perception of the video marketplace that is 20 years out of date. As a result, consumers are increasingly faced with broadcast blackouts, threats of blackouts, and spiraling fee increases. This is because of outdated laws and regulations that literally put the government at the negotiating table. These laws reward brinksmanship and blackout threats with higher fees, undermining the very public interest that the law is intended to support.”

“The pay TV industry has become robustly competitive, while local broadcasters have retained their government-granted monopolies and other benefits that now distort carriage negotiations. Under these rules, pay TV providers are limited to dealing with only one broadcast supplier in a local market. This has allowed broadcasters to play multiple distributors off of each other and has encouraged broadcasters to take more extreme, disruptive positions rather than to seek compromise. Consumers, caught in the middle, are the ones getting hurt,” added Britt, according to Senate documents.

But Chase Carey, deputy chairman, president and COO of News Corporation said during his Senate testimony that, “The retransmission consent law is experiencing growing pains because broadcasters like Fox are, for the first time, seeking cash compensation for their content. But the good news is, the actual interruptions in service are few and far between, and this period of adjustment will be short-lived once distributors accept that they have to pay a fair price for the right to re-sell broadcast content just like they have to pay for all the other content they provide to their customers. Keeping the focus on consumer education and protection is the most effective and efficient way to help consumers weather this temporary and short-lived unrest.”

Several senators want to see improvements in the situation so consumers are not the ones who lose out.

“If you fail to fix this situation, we will fix it for you. But when we do, we will seek to do more than referee your corporate disputes. Because more than just retransmission consent ails our television markets. We need new catalysts for quality news and entertainment programming. We need slimmed down channel packages that better respect what we really want to watch. And we need to find ways to provide greater value for television viewers at a lower cost,” warns Senate Commerce Committee Chairman John D. (Jay) Rockefeller IV.

Ed Silverstein is a TMCnet contributor. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf