April 2011

AT&T, T-Mobile file merger application at Dept of Justice

On April 8, AT&T filed its application for an antitrust review of its proposed acquisition of T-Mobile at the Justice Department. The company said it aims for April 21 to file its applications for a public interest regulatory review at the Federal Communications Commission.

Experts say the reviews could take one year to 18 months. The merger appears to be a clear horizontal deal that initially looks hard to pass. Justice has approved Google’s purchase of ITA and Comcast’s joint venture with NBC Universal, but those were so-called vertical mergers without significant overlapping businesses. A source at the FCC said the merger will be an uphill battle for AT&T. But James Cicconi, AT&T’s executive vice president of external affairs, is arguing that the deal will still leave plenty of competition and that a market-by-market analysis performed by Justice will prove it.

Freelancer to file class-action suit against HuffPost and AOL over compensation

A freelance writer who successfully sued newspapers and magazines for copyright infringement filed a class-action lawsuit against the Huffington Post and AOL on that seeks compensation for hundreds of unpaid contributors to the online publication.

Jonathan Tasini is the lead plaintiff in the suit against the news site, which AOL bought for $315 million in February. His suit, which he filed in a New York court, seeks $105 million in damages in behalf of bloggers and other Huffington Post writers who submitted work for which they weren't paid. Since its founding by liberal activist and author Arianna Huffington in 2005, Huffington Post has grown into one of the most successful and heavily visited news and information sites on the Internet. But its practice of soliciting commentaries and other articles, some from celebrity authors such as Alec Baldwin, without paying for them has irritated some writers. Tasini, in an interview, said HuffPost was engaging in breach of contract with its contributors because of an “implied promise” of compensation. “Some people were given some promises about future payments,” he said, declining to provide specifics.

Commissioner Clyburn on watch for market failure in retransmission negotiations

Federal Communications Commission member Mignon Clyburn told the American Cable Association that she is on the lookout for market failure when it comes to retransmission consent negotiations.

These negotiations set the fees pay-TV providers must pay to broadcasters to play their content. Fee disputes can lead to TV blackouts. Commissioner Clyburn said: "I fully understand the intent of the retrans rules, and that market forces should be allowed to work. But I am on the lookout for the consumers in this country, and if the market isn't working, we need to consider taking appropriate steps. We'll carefully look through the comments and replies that come in as a result of questions we asked last month, and I'll continue to work with your D.C. team on your concerns. While I can't stop all of you all from working with NASA to build a time machine set back to 1992 so you can improve the retrans language before the Cable Act passes, I hope you'll trust me to keep your interests in mind as we move forward."

Rep Stearns calls for overhaul of ‘byzantine’ FCC processes

Rep Cliff Stearns (R-FL) called for major reforms at the Federal Communications Commission, saying the agency is ruled by "Byzantine regulatory processes" and is in dire need of an overhaul to increase transparency and streamline interactions with industry.

"Secrecy breeds both inefficiency and distrust," he said. "The FCC already has both." Rep Stearns said FCC processes haven't kept pace with technological change and stand to hamper innovation. He said the public comment period on FCC proposals should come after proposals are released so stakeholders can be better informed about what they are commenting on. The FCC’s comment periods now come before proposals are unveiled to the public. He also called on the FCC to address the backlog in licensing requests. The FCC is "widely expected to change its mind between decision and regulation," Rep Stearns said. He endorsed legislation from Communications subcommittee ranking member Anna Eshoo (D-CA) that would allow two commissioners to meet privately, subject to certain disclosure rules. Such meetings are not barred for transparency reasons.

FCC Grants Sale of ACME Stations, Denies TWC Petitions

The Federal Communications Commission has approved the sale of two ACME stations in Wisconsin and Ohio to LIN and to an owner whose station is being run by LIN.

The FCC April 8 approved the sale of CW affiliates WCWF(DT) Green Bay-Appleton (WI) and WBDT(DT) Dayton (OH) to LIN. The first to LIN under a failing station waiver -- LIN has already been operating it under a shared services agreement -- and the second to WBDT Television, LLC, which LIN has also been running under a shared services agreement and where LIN already own WDTN. TWC had argued, in part, that the deals should not go through because the resulting duopoly and combination of ownership and management would give LIN too much leverage in retrans agreements, since LIN had signaled it planned to combine retrans negotiations for the paired stations. In addition, WCWF and WBDT had previously been must-carry stations. The FCC concluded that WCWF had met the FCC definition of failing station, and that bargaining collectively for the station's retrans payments did not violate FCC rules. It also concluded that the WBDT sale broke no FCC rules, and that TWC's claims of potential harm from the combined negotiation as speculative. "Despite its claims to the contrary, it is apparent that TWC's real concern is its desire for reformation of the must-carry and retransmission consent process."

PBS Testing Mobile DTV For Emergency Alert Overhaul

PBS will start testing a mobile DTV-based emergency alert system later this year, the noncom service announced in Las Vegas, calling it "the first major overhaul of the nation's aging Emergency Alert System (EAS) since the Cold War." The alerts could be delivered to "cell phones, tablets, laptops and netbooks, as well as in-car navigation systems." PBS said it will work with FEMA, the FCC, and other agencies in creating the pilot project. Broadcasters have been arguing that they need to keep their spectrum options open when it comes to new services like mobile DTV.

Gordon Smith: Free TV Doesn't Mean For Cable

At the National Association of Broadcasters convention in Las Vegas, NAB Chairman Gordon Smith took aim at cable operators in defense of retransmission payments.

He called their channels "cable stations," and said they get paid for their content, and should get paid. But so should broadcasters, he said, drawing the parallel. "Stations deserve the right to negotiate for compensation of their programming. And we know that the system works, because thousands of agreements have been successfully negotiated over the years, with a success rate of over 99 percent." "Some pay-TV companies, however, want to pay nothing or only a pittance for local stations' signals - even though local content and network programming offered by broadcasters are the ones viewers watch most." Smith said that when he is talking about free TV, he means free to viewers, "not to multi-billion dollar corporations that sell subscriptions on the backs of our content."

Smith To FCC: Voluntary Does Not Mean Forced Repacking

At the National Association of Broadcasters convention in Las Vegas, NAB Chairman Gordon Smith said broadcasters are in the battle of their lives against forces of "new media" painting them as stuck in the Howdy Doody era, and government overreaching for the next broadband app.

He said that forcibly repacking stations was not his idea of a voluntary spectrum reclamation plan. Broadcasters have embraced the digital future, he said, suggesting that they now faced a concerted effort to squeeze the life out of a service that is forward-thinking and ready to be a partner in the broadband future. He said the $15 billion broadcasters spent transitioning from analog to digital -- and giving up 25% of spectrum in the process--was in order to remain relevant in a digital age, but now less than two years later, wireless companies want another 40%. "Hey, we already gave at the office," he said.

FCC's Genachowski at NAB Show 2011

Speaking at the National Association of Broadcasters' annual convention, Federal Communications Commission Chairman Julius Genachowski focused on how much technology is changing the broadcasting industry and our economy; how these changes require that we update our communications and spectrum policies; and how one of the most important tools the FCC needs is the ability to conduct voluntary incentive auctions -- an incentive-based mechanism to use market forces to free up new spectrum to meet rapidly growing consumer demand and fuel our economy. He stressed that incentive auctions will be voluntary, but also said, "voluntary can't mean undermining the potential effectiveness of an auction by giving every broadcaster a new and unprecedented right to keep their exact channel location. This would not only be unprecedented, it would give any one broadcaster veto power over the success of the auction -- and be neither good policy for the country, nor fair to the other participants."

Cable’s Real Challenge Is Not Cord Cutters, But ‘Cord Nevers’

There’s still some debate over whether or not pay TV subscribers will begin canceling their cable subscriptions, and choosing to fill their entertainment hours with online video instead. But the real challenge for such providers might not be retaining existing cable subscribers who already have jobs and families, but convincing college students and young adults living with their parents to become cable subscribers when they get their first jobs and move in to their first homes.

Thanks to an aggressive connected-device strategy from over-the-top video providers like Netflix and Hulu, a new generation of young people has grown up with access to content on demand and on multiple devices. This is similar to the debate that played out during the early 2000s, as a generation of college students increasingly turned to wireless mobile services, eschewing landline connections that their parents relied on. The question is whether cable, satellite and IPTV operators will be more successful in converting the younger generation to pay TV subscribers than telcos were in driving interest in fixed-line phone services.

Benton

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