Rockefeller, Thune Bet on Local Choice as Key STELA Reauthorization Provision

Senate Commerce Committee leaders plan to include the controversial Local Choice proposal directly in their five-year Satellite Television Extension and Localism Act reauthorization bill, their staffers told other members’ committee staff and industry officials Friday in two briefings. The legislation sets the stage for a full-throttle lobbying war between broadcasters and pay-TV companies leading up to STELA’s Dec. 31 expiration. Local Choice, which would overhaul retransmission consent rules to end TV blackouts, would take effect July 1, 2017, said a three-page section-by-section committee breakdown of the STELA reauthorization bill, called the Satellite Television Access and Viewer Rights Act (STAVRA).

A committee aide said Chairman Jay Rockefeller, D-W.Va., and ranking member John Thune, R-S.D., “presented to the Committee their bipartisan proposal for reauthorization of STELA.” They included Local Choice “to empower consumers by allowing them to choose the commercial broadcast content that they want to pay for as part of their pay-TV subscription, while ensuring that local broadcasters continue to receive full value for their content,” said the aide.

Rockefeller and Thune staff presented together Friday morning to more than 40 industry officials, mostly from companies, said a media lobbyist who attended. That briefing followed one given to other Commerce members’ staffers, he said. Local Choice is certainly the biggest, most dramatic piece to this STAVRA bill, he said, calling the other proposed overhauls thoughtful and modest and likely to attract backing.

The STAVRA legislative draft text is 39 pages long, according to a version circulated from leadership to Commerce staffers Friday. Several pages laid out the details of how Local Choice would work, specifying that TV broadcast stations would have to make an annual election of “whether to require the retransmission, within the station’s local market, by a cable operator or a satellite carrier of the designated primary digital signal and any designated qualified multicast signal broadcast” by May 1 of every year. The FCC would have to “promulgate such regulations as are necessary to implement” certain Local Choice provisions within 18 months of STAVRA’s enactment. The FCC also would have to judge “whether it is technically feasible for a cable operator that operates solely in analog to comply with the retransmission requirements” and if not “technically feasible,” the commission can waive compliance up through July 1, 2019. The draft also outlines a transition period, wherein TV stations would have to notify pay-TV companies of their annual elections within six months.

"NAB opposes this proposal because it eliminates the basic tier upon which millions rely for access to lifeline information,” CEO Gordon Smith said in a statement, saying NAB favors the clean Senate Judiciary STELA reauthorization. “It proposes a broadcast a la carte scheme that will lead to higher prices and less program diversity. Furthermore, STAVRA appears to confer unfettered and unprecedented authority for government intervention into private marketplace negotiations.”

Broadcasters have said Local Choice would devastate their business models and hurt the market. Lobbyists had debated until Thursday whether Local Choice would be part of STAVRA or a proposed amendment at the mark-up session, widely expected as Sept. 17. Rockefeller and Thune must have concluded, based on committee feedback since they circulated a two-page Local Choice proposal in August, the idea can work, said the media lobbyist. Commerce members do not seem to be coalescing around Local Choice yet but also respect Thune and Rockefeller and may not want to make waves, said a broadcast lobbyist. Commerce will still have to combine its bill with the Senate Judiciary STELA reauthorization bill, cleared this summer, and nothing will move on the Senate floor unless it’s unanimous consent, said the lobbyist.

NAB Questions

NAB officials pressed Commerce leadership staffers with questions during the industry briefing, said a media lobbyist. The NAB tone and questions signaled its Local Choice concerns, as opposed to other industry lobbyists whose questions centered on the technical processes and implementation, he said. Broadcast network lobbyists also expressed very serious concerns at the briefing, said an industry official. Committee staff indicated Local Choice’s July 2017 effective date may be fluid if the FCC finds companies encounter technical implementation problems, the media lobbyist said.

NCTA is “encouraged” by STAVRA, it said in a statement, saying STELA reauthorization “provides an appropriate vehicle for accomplishing limited but meaningful video reforms. NCTA’s membership varies in attitudes toward video overhaul. Comcast has lobbied for generally clean reauthorization, while others such as Time Warner Cable seek retransmission consent changes.

Practical Local Choice questions also dominated the joint Democratic and Republican Commerce staffers’ briefing, said a Senate Democratic staffer. Staffers received draft text of STAVRA Friday afternoon, which the staffer hoped would perhaps address 25 to 30 percent of the operational questions on Local Choice, he said, speaking before seeing the legislative text itself. The briefing for Capitol Hill staffers indicated the STAVRA text will flesh out some Local Choice details but that a lot will be left to the FCC, the staffer said. He wondered about STAVRA’s inclusion of both Local Choice and other provisions tweaking retrans rules. How do those overhauls really coincide, the staffer wondered. Many Commerce members have reserved judgment until able to parse the full text, he said.

The FCC set-top box integration ban rule would expire two years after STAVRA’s enactment, “without affecting the agency’s underlying statutory authority to promote the competitive availability of set-top boxes in Section 629 of the Communications Act,” the committee proposal said. NCTA has prioritized killing the integration ban and succeeded at including a similar provision in the House legislation, just as TiVo has loudly opposed the provision (CD Aug 25 p8). The STAVRA language would also make the FCC form a working group “to bring key stakeholders together to work on developing non-burdensome, uniform, technology- and platform-neutral standards for downloadable security for set-top boxes,” the proposal said.

"TiVo has still not seen the final legislative language” but “we certainly don’t like what we've heard,” General Counsel Matt Zinn told us in a statement. He slammed “efforts to eviscerate the integration ban” as inappropriate for STELA reauthorization. “The Committee is right to focus on the importance of a successor solution to CableCARD more in tune with today’s IP-based video marketplace, but what we have seen so far falls short of what is needed to ensure that such a solution is adopted and that consumers enjoy the benefits of device competition.”

STAVRA Details

STAVRA will have three titles. The first outlines a five-year reauthorization and would modify the rules on orphan counties to create parity for cable and satellite companies. The third title simply calls for the FCC to take appropriate steps where necessary within 270 days of STAVRA’s enactment. No titles addressed the online video distributor issues that Rockefeller has indicated he may include.

STAVRA’s Video Marketplace Reforms second title includes Local Choice and several tweaks to retrans rules and other changes, some following similar path as the House STELA reauthorization bill, approved in July. “Independently-owned broadcast stations (including independently-owned stations in different markets) would be barred from jointly negotiating retransmission consent agreements,” the committee proposal said. “Local stations could not use retransmission consent agreements to limit the ability of a cable or satellite pay TV company from carrying other TV signals they are authorized to carry under the Communications Act, such as significantly viewed TV signals or signals added to a TV market through the market modification process.”

The FCC would be able to request information from a broadcaster and pay-TV company if a blackout happens when a retrans deal expires, the document said. The FCC would also have to hold a rulemaking “to consider specific revisions to its ‘good faith’ rules,” it said, to “determine whether certain practices (like the blocking of online video content) are a violation of good faith, and how best to update its ’totality of the circumstances’ test to encourage both broadcasters and MVPDs to reach a retransmission consent agreement in a timely manner.” The FCC would also have to “begin including in its yearly cable rates report information on the overall amounts cable companies pay in retransmission consent in their local markets,” a transparency provision said. A streamlining provision would make the FCC streamline its effective competition petition filing process for cable operators with fewer than 50,000 subscribers.

The American Television Alliance (ATVA), representing pay-TV companies from the American Cable Association to DirecTV to Time Warner Cable, praised STAVRA, as did ACA President Matt Polka. It “will bring relief to TV viewers who have suffered from skyrocketing fees and blackouts, including the millions of DIRECTV subscribers across the country who are currently being blacked out by Raycom,” ATVA said. (See separate report below in this issue.) ATVA said Local Choice “would end these blackouts once and for all.” It has widely advertised in favor of Local Choice (CD Aug 27 p7).

TVFreedom, a broadcaster coalition including NAB, ripped into Local Choice all last week in blog posts and in a Friday letter to ACA’s Polka. “ACA’s flip flop on à la carte is worthy of an Olympic gymnastics medal,” the TVFreedom spokesman told Polka, citing what he said were ACA’s contradictory past statements about a la carte models (http://bit.ly/1pxTMAt). “Is ACA against full à la carte, or for it?” ACA defended itself as “a leader in calling for more consumer choice going back many years” and “is certain that the last thing TVFreedom wants to talk about is the pro-consumer, free-market provisions in the Rockefeller-Thune Local Choice proposal, which would eliminate blackouts and gatekeepers while letting cable customers decide how much to pay for ‘free TV,'” ACA’s spokesman told us in response. The TVFreedom spokesman told us in a statement “little justification exists for Congressional haste to pass such legislation by year’s end,” speaking of Local Choice and its “negative impact on competition -- as well as America’s television viewers and local TV stations.” He called STAVRA “nothing more than a pay-TV giveaway.”

Commerce staff had solicited feedback from staffers at the Friday briefing, the Democratic staffer said. He expects several amendments at the Sept. 17 markup -- many centered on Local Choice -- and a fluid, open markup process. That’s not uncommon for Commerce, one broadcast lobbyist said, also lamenting its problematic messiness. (jhendel@warren-news.com)