FCC Ponders Ways to Avoid Cable Blackouts
Seeking to end the brinksmanship that left many cable television customers in the Northeast without access to the first two games of the World Series this year, the Federal Communications Commission will consider changes to the rules governing negotiations between cable providers and broadcast networks, an agency official said Wednesday.
The official, William T.Lake, the chief of the FCC’s media bureau, said in a speech that the commission would propose new rules aimed at preventing broadcast stations from removing their signals from cable companies if the parties were unable to agree on retransmission fees.
By law, the FCC cannot force the parties into binding arbitration or act to prevent a service disruption.
But the commission is charged with ensuring that the parties negotiate in good faith.
Mr.Lake said that the agency would consider new definitions of what constitutes good faith.
The aim would be to “help to guide the negotiating parties and reduce the number of failed deals and dropped signals,” he said.
Some consumer advocates welcomed the FCC’s announcement.
“These disputes between broadcasters and cable operators are becoming more frequent and increasingly bitter, and consumers are more than ever becoming innocent victims of those disputes,” said Gigi B.Sohn, president and co-founder of Public Knowledge, a nonprofit group.
Disputes of this type have grown partly because of an ever-expanding array of alternatives to broadcast television.
As the audience for broadcast networks has declined, the entertainment divisions of ABC, NBC, CBS and Fox have found it increasingly hard to keep profits flowing.
General Electric is the parent company of NBC and CNBC.
The networks have long looked enviously at the dual revenue streams of cable channels like ESPN.
The channels receive payment from cable companies like Time Warner for the right to carry their programming and sell advertising during that programming.
A few years ago, the broadcast networks began to beat the drum that they, too, wanted payments from cable companies for carriage rights.
They backed up their demands by pointing out that broadcasters reached far larger audiences than any of the cable channels — meaning that if a cable company did not carry a broadcast network, it would have legions of unhappy subscribers.
With greater frequency, the disputes have come down to a deadline that involves a premier television event.
Last January, a negotiation between Time Warner Cable and the News Corporation, the parent of the Fox Broadcasting network, was resolved just in time for broadcast of the Sugar Bowl.
In March, a tussle between Cablevision and Walt Disney, which owns ABC, was resolved 14 minutes into the telecast of the Oscars.
The two-week blackout in October of Fox, which interrupted coverage of the World Series for Cablevision subscribers, was the longest such blackout of a broadcast channel, drawing numerous calls for the FCC to intercede.
Julius Genachowski, the FCC chairman, said in an October letter to Senator John F.Kerry of Massachusetts, the chairman of the subcommittee that oversees the commission, that he believed it was “time for Congress to revisit the current retransmission law,” and possibly give the commission better tools to deal with the disputes.
But given the difficulty of Congress’s enacting legislation, combined with the expiration of some retransmission contracts near the end of the year, the commission decided to alert cable companies and broadcasters that it did not want the current trend to continue.
Mr.Lake said the commission still would prefer that Congress act.
But Mr.Kerry used the announcement as a reason to say there was no further need for Congress to act.
“Our committee has been plugging away at this issue for the better part of a year, and there is broad agreement that there’s got to be a better answer than to again and again have consumers become collateral damage in the contract collisions between major corporate entities,” Mr.Kerry said in a statement Wednesday.
“With the FCC taking action and their experts focused on a solution, there’s no need to introduce legislation at this time.” Mr.Lake said in his speech Wednesday that the FCC would consider whether some of its rules “interfere with market negotiations” by giving one side an unfair advantage.
A rule that could be reconsidered is one that now forbids cable companies from importing the signal of a network affiliate from across the country if the local affiliate failed to provide its signal.
That rule arguably gives an advantage to the broadcaster.
Another rule requires cable companies to carry the broadcast channels in their basic tier channel lineup, perhaps giving broadcasters an advantage over non-broadcast channels.
Mr.Lake also said the commission might identify additional practices that would be treated effectively as violations of duty to bargain in good faith.
That might include a broadcast network’s arrangements with its affiliates that reserves the network’s right to approve or disapprove a retransmission contract.
The commission also may reconsider its notice requirements, which require cable companies — but not broadcasters or noncable distributors like satellite companies — to give customers 30 days notice of a possible interruption in service.