Through the Murky Waters, a Look at Retransmission Consent: Free-Market Principles vs. Consumer Protection
By Jason Llorenz, HTTP Executive Director
June 9, 2011
Most consumers have no idea what retransmission consent is or what the complicated issues are surrounding the matter. That is until they find themselves facing a blackout during the World Series, Super Bowl, NBA Playoffs, the Emmys, Oscars or Grammys. This played out recently in markets such as New York City, where fans faced a cable blackout during last year’s World Series.
Essentially, retransmission consent is the option by television stations to sell the right to cable service providers to distribute broadcast programming over the cable networks, in lieu of “ must carry” license fees. The long-standing negotiations “process” between cable providers and television broadcasters has resulted in an acrimonious environment with a multitude of players. Those players include television advocates arguing for the broadcasters’ right to operate and negotiate freely according to their terms, cable networks who state that strong-arm negotiations harm cable’s ability to provide consumers with quality service, the FCC as regulator and reluctant referee, Congress and the courts who each have weighed in to varying degrees, and finally the consumers caught squarely in the middle.
Cable operators argue that it is the consumer who is ultimately faced with the choice between losing the ability to watch programming they already paid for through their cable bill or pay costly out-of-pocket fees and possibly higher monthly charges to switch service providers who may not be their first choice or carry the programming they want – which is a special possibility with Spanish-language and Latino-targeted media. While a current solution to stalemated negotiations is for consumers to be provided with notice of a possible blackout, cable operators vehemently state that this is not good enough, since consumers are left without cost protections when facing a service switch or blackout.
On the other hand, broadcast advocates state that the courts have ruled in their favor and they are well within their rights to be paid for rebroadcast of their signal. Broadcasters argue that retransmission consent fees can mean the difference between a winning and a losing financial statement. And while cable operators decry the broadcasters’ brinksmanship — waiting until blockbuster programming, such as sports championships and entertainment awards, to increase their negotiating leverage, television stations and their supporters hold that they are operating within the boundaries of a functioning, free market.
In the meantime, cable operators are petitioning the FCC to weigh in and are calling for mandatory arbitration during heated negotiations to prevent future service blackouts. The FCC for its part has issued a Notice of Proposed Rulemaking to review the matter but admitted that it “doesn’t have the authority to require broadcast television stations to provide their signals to pay TV providers or require binding arbitration.”
The fact remains that during recent negotiations, some cable operators have refused broadcasters’ proposals and either not carried the station or faced the possibility of a blackout. This has proven to be disruptive to consumers who have little knowledge of all that takes place behind closed doors. It is unclear what the final outcome will be from the FCC action but the hope is that the Commission will retool the retransmission consent process so that communities are not held in the lurch.
Jason Llorenz, Esq. is Executive Director of the Hispanic Technology and Telecommunications Partnership (HTTP).