Cable Operators Claim Current Rules Favor Broadcasters

According to testimony to be delivered Nov 17 at a Senate subcommittee hearing, cable operators will hammer the point that current federal laws advantage broadcasters in programming carriage negotiations.

Under the Cable Act, broadcasters can insist that cable operators include their programming under a "must carry" provision, or they can choose to negotiate a price for an operator's right to retransmit their signal. Historically, broadcasters elected "must carry," but in recent years, networks have increasingly opted to negotiate a price for their signal. Unstable ad revenue and ownership of premium content--such as the popular Fox shows "Glee" and "American Idol"--have made carriage-fee negotiations a more attractive option for broadcasters.

Cable firms will take issue with the local monopolies granted to broadcasters that prevent cable operators from negotiating with more than one broadcast channel in a given market. Such exclusive rights were given to broadcasters to protect local programming that may not be commercially viable in a free market.

Cablevision COO Tom Rutledge plans to tell legislators that FCC action to "fix or scrap" the retransmission consent regime is imperative, arguing that the negotiations are not free market deals but are conducted "under an umbrella of statutory provisions and FCC rules that heavily favor the broadcaster over the cable operator or multi-channel video programming distributor (MVPD)."

Rutledge counts the ways in which cable operators see the government's thumb on the scale in favor of broadcasters. For one, he says, the government has given broadcasters a local monopoly by not allowing cable operators to import "must-have programming" from affiliates outside their market. Then there are the must-carry rules, or as cable sees it, must-buy rules, since "government rules require that every one of our subscribers buy and pay for the broadcast channels as part of any cable service -- even if the subscriber doesn't want them and no matter how much money the broadcaster charges us to carry their signal."

Time Warner Cable (TWC) Chairman Glenn Britt plans to tell members of the subcommittee that, despite support for TWC's petition at the commission for retrans reforms and, in the fact of the "continued occurrence of disruption," the FCC "has failed to act."