Issue
In response to growing complaints about poor cable service and high rates, Congress passed the 1992 Cable Act, which intended to curb excessive cable rate increases that far outpaced inflation, while promoting competition in the video marketplace. This act also recognized the right of local television broadcasters to negotiate with cable in a free market for use of their signals, known as retransmission consent.
Prior to this law, cable operators used broadcast signals without stations’ consent and resold the signals, making millions. Now local stations may negotiate with cable, satellite and telecommunications companies for the value of the broadcast signal. Terms can include cash payments, barter (such as channel placement on the cable system) and advertising on the station. Retransmission consent compensation is increasingly critical to local TV stations’ ability to provide local news, community and emergency information, as well as top-quality entertainment programming for viewers.
History
For years, profit-driven pay-TV companies have attracted subscribers using broadcast programming. By far, broadcast TV content is the most in demand; broadcast program ratings are significantly higher than programming offered by pay-TV channels. In fact, during the 2011-12 television season, broadcast programming dominated the primetime program rankings, accounting for 96 of the top 100 programs. But recently, some pay-TV providers have been urging legislators and regulators to change the retransmission consent system, simply because they don’t want to compensate broadcasters for their signals.
The recent calls from powerful pay-TV companies for government intervention – such as the right to continue carrying broadcasters’ signals without a negotiated agreement, or mandatory arbitration upon a pay-TV provider’s request – do not reform or improve the current system. The current process provides incentives for both parties to come to mutually beneficial arrangements, which is why negotiations are completed with no service interruptions more than 99 percent of the time.
In 2011, the Federal Communications Commission (FCC) initiated a rulemaking to review the rules governing retransmission consent negotiations. The FCC requested comment on ways to improve the current good faith negotiation and consumer notice requirements, and also asked for comment on its network non-duplication and syndicated exclusivity rules. Notably, the FCC concluded that it lacked the authority to impose proposals such as mandatory arbitration and forced carriage. NAB filed extensive comments and economic studies in support of broadcasters’ position. To date, the FCC has taken no action.
In 2012, Rep. Steve Scalise (LA-01) and then-Sen. Jim DeMint (SC) introduced legislation that would remove fundamental TV carriage laws that are important to local broadcasters. Eliminating these provisions would significantly impact viewers and impede the ability of local TV stations to serve their local communities. Ultimately, this legislation was not enacted.
NAB Position
Broadcasters oppose legislation that would upend the retransmission consent system, which benefits viewers, local TV stations and pay-TV operators. These negotiations are fair and market-driven, and there is no need to change the process that Congress established and has worked well for two decades. Eliminating broadcasters’ ability to negotiate for the value of broadcast signals would mean less choice for viewers and fewer dollars for stations to dedicate to local news, public affairs programming, coverage of emergency weather events and community activities.
Action Needed
Congress and the FCC should allow broadcasters and pay-TV operators to continue to conduct private, market driven negotiations for retransmission consent and avoid tilting the scales in favor of either party. Government intervention would only disrupt a marketplace that has resulted in more programming choices and services for local television viewers.
