Cable TV Executives to Press Toward Retrans Reform Following Wheeler Remarks

Some cable-TV executives aren’t discouraged by FCC Chairman Tom Wheeler’s comments that the commission has looked repeatedly into its authority on intervening in retransmission consent disputes. Wheeler made the comments in response to a question last week at CES in Las Vegas (CD Jan 10 p17), where he said he welcomed any new legal points of view. Cable executives whose companies engage in retrans negotiations pointed to the open proceeding that reconsiders retrans rules and efforts in Congress toward the reauthorization of the Satellite Television Extension and Localism Act (STELA) as indicators that the issue on retrans isn’t closed.

Mediacom will continue in its attempt to convince the FCC that the commission has the authority to intervene and seek legislative solutions, said Thomas Larsen, vice president-legal and public affairs. Wheeler has been on the job a short time, and “his staff has to be given a little bit of time to review the filings and materials that have been submitted and go from there,” said Larsen. “We've made a pretty strong case in the past that the commission does have the authority” to get involved, he said. “If the general counsel or other legal adviser on his staff would take the time to look at those arguments,” those arguments “would suggest that the commission does have the authority to intervene,” said the cable lawyer.

NAB is pleased that Wheeler “seems to be acknowledging that the FCC has no authority to change a congressional statute that allows broadcasters to periodically negotiate carriage rights to our most-watched programming,” an NAB spokesman said in a statement. He pointed to a Guggenheim Partners research note indicating Wheeler’s comments are a positive for broadcasters. Wheeler said the agency remains open to new legal arguments that it hasn’t already heard, “but we question whether that is likely, given that the pay TV companies presumably have already put forth their best legal analysis for FCC authority to intervene during blackouts,” said analyst Paul Gallant. The FCC had no comment.

Wheeler’s comments don’t change anything, said cable consultant Steve Effros. The commission has clearly been reluctant to put itself in a position of being an arbiter on retrans, he said. “The chairman indicated that it’s not likely to change,” he said. “I think that the cable industry is pretty much aware that, unless the entire structure is changed, there’s not likely to be much relief."

Wheeler is leaving the door open, said Robert Gessner, Massillon Cable TV president. It shows that he has an open mind and is willing to consider new evidence, he said: “The issue is not closed.” The comments aren’t a victory for broadcasters because Wheeler didn’t say that the FCC will look at the issue, “but he also didn’t foreclose further discussion and investigation,” Gessner said. “It’s still an open question.” Entities involved in the issue except the broadcasters “have consistently and regularly stated that they believe the FCC does have authority,” he said. “It only stands for the FCC to accept that authority.”

The cable executives said they plan to have more interaction with the FCC on reviewing retrans. The American Cable Association briefed Wheeler’s office recently on the agency’s authority to act, said ACA President Matt Polka. While the FCC historically has said it doesn’t have this authority, “we're making efforts to show them the authority exists,” he said. “We'll continue to urge the FCC to act as quickly as possible.”

In recent months, the debate has become more focused, Gessner said. The ACA and other retrans overhaul supporters have made significant showings about the effects of coordinated negotiations among TV stations and the impact that they have on consumers, he said. “There are still swirling issues of interim carriage during retransmission consent blackouts, and the STELA reauthorization and whether that should have retransmission consent factored into it.” The rulemaking docket on retransmission consent reform is still open, “so obviously there’s still something there to consider,” he added.

Any change to the retrans model will likely be packaged as part of larger legislation, Effros said. “I don’t think retransmission consent by itself is going to be subject to a legislative change all on its own.” The next time it’s seriously looked at is going to be “when the entire Telecommunications Act is looked at,” he said. “If the broadcasters suddenly need Congress to do something about copyright, like with the Aereo situation, maybe there’s a quid pro quo with regard to retransmission consent. … It’s certainly not going to be something that the FCC does.”