FCC to seek bigger role in cable, satellite disputes

Tired of the rising frequency of public disputes between programming networks and local cable operators and satellite broadcasters that leave consumers in the lurch, the FCC said it would propose new rules that would give it more clout to play referee.

Over the last year, there have been several high-profile spats between big media companies over fees charged for programming. In one notable instance, News Corp.'s Fox pulled the signal of its New York City TV station from Cablevision Systems Corp. for about 15 days, leaving local customers scrambling to find alternatives to watch Fox’s recent post-season baseball coverage while the two sides battled over a new contract.

Fox and Cablevision eventually reached a deal, but the nastiness of the battle and others over so-called retransmission consent fees led lawmakers to put heat on both the industry and the Federal Communications Commission to take steps to ensure that consumers don’t get caught in the middle of corporate standoffs.

“As the African saying goes, when the elephants fight, it is the grass that suffers,” said William Lake, chief of the FCC’s Media Bureau, in remarks Wednesday to the Media Institute, a Washington think tank.


Crafting rules will be difficult. The broadcast industry is vehemently opposed to any government intervention on what it considers to be business negotiations. While the rhetoric between broadcasters and cable and satellite operators has grown heated lately and been attended by reams of publicity, actual service disruptions are still rare.

With broadcasters facing shriking audiences, rising programming costs and increased competition, winning fees from cable and satellite operators has become crucial. At the same time, cable and satellite operators fear that if they are forced to pass along rising costs then consumers will “cut the cord” to their provider and make do with watching TV via the Internet and Netflix.

“The cash demands of broadcasters are rising faster than the distributors’ willingness to pay, and the result has been a growing number of cliffhanger negotiations — and some that have fallen off the cliff,” Lake said.

The FCC’s goal, Lake said, will be to reduce the number of “failed deals and dropped signals.”

One way to do that, Lake suggested, would be to toughen its guidelines on good faith negotiations and perhaps create a litmus test that both companies would have to pass before a signal could be pulled.

The idea of the FCC getting further involved was dismissed by the broadcasting industry’s top lobbyist.

“Injecting Washington into private business negotiations that have a 99% success rate only serves to embolden pay TV companies,” said Gordon Smith, chief executive of the National Assn. of Broadcasters.

Sen. John Kerry (D-Mass.), chairman of the Senate Commerce Subcommittee on Communications, Technology and the Internet, who has been outspoken on the issue of yanking local TV signals during contract renewal negotiations, said the FCC’s actions mean he won’t try to introduce legislation aimed at limiting the power of programmers to pull their signals during negotiations.


“Today’s announcement recognizes that when disputes end in lost signals and dark television screens, no one wins,” he said.