Retransmission Consent ) MB Docket No
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Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) Amendment of the Commission’s Rules ) Related to Retransmission Consent ) MB Docket No. 10-71 ) ) ) ) COMMENTS OF THE NATIONAL ASSOCIATION OF BROADCASTERS NATIONAL ASSOCIATION OF BROADCASTERS Jane E. Mago Jerianne Timmerman Erin Dozier Scott Goodwin 1771 N Street, NW Washington, D.C. 20036 (202) 429-5430 Sharon Warden Theresa Ottina NAB Research May 27, 2011 Table of Contents I. The Current Market-Based Retransmission Consent System Is an Effective, Efficient and Fair System that Benefits Consumers ............................................................3 II. Limited Revisions to the Retransmission Consent Rules Would Enhance Consumers’ Ability and Freedom to Make Informed Decisions and Would Facilitate Transparency and Carriage-Related Communications .........................................9 A. The FCC Should Extend the Consumer Notice Requirement to All MVPDs ..................................................................................................................10 B. The FCC Should Ensure that Early Termination Fees Do Not Inhibit Consumers’ Ability to Cancel MVPD Service or Switch Providers in the Event of an Impasse in Retransmission Consent Negotiations ..............................13 C. Requiring MVPDs to Submit Current Data on Their Ownership, Operations, and Geographic Coverage Would Facilitate Carriage-Related Communications ....................................................................................................15 III. The Commission Correctly Concluded that It Lacks Statutory Authority to Mandate Interim Carriage During Negotiations or to Require Mandatory Arbitration to Resolve Retransmission Consent Disputes .................................................17 A. Mandatory Interim Carriage Contravenes Statutory Authority, Congressional Intent and Past FCC Decisions.......................................................17 B. The FCC Lacks Authority to Mandate Binding Arbitration ..................................19 IV. Many of the Proposed Per Se Violations Are Unnecessary, Inconsistent with Law, or Harmful to the Public Interest, and Would Not Improve the Retransmission Consent Process .................................................................................................................22 A. There Is No Legal or Public Policy Basis to Prohibit Joint Negotiations by Non-Commonly Owned Broadcasters ...................................................................23 1. Legislative History Demonstrates that Congress Never Intended to Prohibit Joint Negotiations and the FCC Has Correctly Acknowledged Such Intent ........................................................................24 2. MVPDs Have Failed to Show that Joint Negotiations Are Against the Public Interest or Would Improve the Retransmission Consent Process .......................................................................................................25 3. Joint Negotiations Increase Efficiencies, Level the Retransmission Consent Negotiation Playing Field, and Serve the Public Interest ............27 4. There Is No Need for the FCC to Adopt a Rule Permitting Small MVPDs to Jointly Negotiate Because Nothing Prohibits Them from Doing So............................................................................................33 B. The Commission’s Proposal Relating to Bona Fide Proposals on Key Issues Is Implicit in the Current Good Faith Standard and Cannot Be Implemented in a Manner Consistent with the FCC’s Statutory Authority ...........33 C. The Commission Should Not Require Negotiating Parties to Submit to Non-Binding Mediation, Which Is Costly and Would Interject Significant Delays into the Retransmission Consent Process ..................................................35 i 1. Government Mandated Mediation Would Exceed the Commission’s Authority ............................................................................35 2. Non-Binding Mediation Would Lead to Unnecessary Delays and High Costs ..................................................................................................36 D. Short-Term Retransmission Consent Agreements Are Not Commonly Used and Thus It Is Not Necessary to Amend Existing Rules to Make the Use of Such Agreements a Per Se Violation ..........................................................39 V. Placing Regulatory Constraints on the Fees, Terms and Conditions of Retransmission Consent Agreements Is Contrary to Law and Public Policy ....................41 A. Retransmission Consent Fees and Disputes Do Not Drive the Rates Consumers Pay for MVPD Services ......................................................................41 B. Congress Did Not Intend for the Commission to Consider Market-Driven Variances in Retransmission Consent Fees Paid by MVPDs Operating in the Same Markets ...................................................................................................47 C. The Retransmission Consent Fees Paid by Small MVPDs Are Not Materially Higher than the Fees Paid by Larger MVPDs and Represent Great Value for Small MVPDs ..............................................................................49 D. Congress Specifically Intended to Permit Broadcasters to Negotiate for Various Forms of Compensation in Exchange for Carriage of their Signals and the Commission Should Not Adopt Rules that Contravene this Legislative Directive ..............................................................................................51 VI. Elimination of the Network Non-Duplication and Syndicated Exclusivity Rules Will Not Improve the Retransmission Consent Process But Will Harm Localism ...........55 A. The History of the Network Non-Duplication and Syndicated Exclusivity Rules Demonstrates that These Rules Are Necessary to Promote Localism and for the Effective Operation of the Video Programming and Retransmission Consent Marketplace ....................................................................56 B. Eliminating the Network Non-Duplication and Syndicated Exclusivity Rules Would Hurt Localism ...................................................................................58 C. Repeal of the Non-Duplication and Syndicated Exclusivity Rules Would Result In an Unfair Competitive Advantage to MVPDs ........................................60 VII. It Is Unnecessary to Provide Special Consideration to Good Faith Violations During the License Renewal Process and To Do So Would Be Inequitable and Contrary to the Public Interest ...........................................................................................62 VIII. Conclusion .........................................................................................................................64 ii Executive Summary In these comments, the National Association of Broadcasters (“NAB”) urges the Commission to resist requests to micromanage the negotiation of thousands of complex retransmission agreements among broadcast stations and multichannel video programming distributors (“MVPDs”). Substantial or numerous changes in the Federal Communications Commission’s existing retransmission consent rules are not warranted, and in fact would be harmful because they could skew or alter the existing retransmission consent system that presently is functioning very effectively. Accordingly, NAB encourages the Commission to recognize (as it has historically) that the current process provides demonstrated economic efficiencies and public benefits and has fulfilled Congress’ intention in creating it. Since its establishment by Congress in 1992, the retransmission consent regime has proven to be an economically efficient and effective vehicle that allows broadcasters and MVPDs to negotiate the terms under which MVPDs can deliver broadcast signals to their subscribers. The process has benefited consumers as well as MVPDs and broadcasters by making unique and diverse programming, including local news, weather, emergency information and sports, available to viewers in diverse markets throughout the country. As NAB has shown on numerous occasions, it is extremely rare for retransmission consent negotiations to result in disruptions to consumers’ viewing. A new study confirms that, since January 2006, these few interruptions in service have affected, on average, only about one- one hundredth of one percent (0.01%) of annual total television viewing hours. And, of course, whenever a broadcast signal is not available on a particular MVPD for any reason, broadcasters’ signals are available for free, over-the air. NAB agrees with the FCC’s long-held position that it has limited authority to involve itself in retransmission consent negotiations, and that it does not have authority to require either interim carriage or compulsory binding arbitration. In recognition of this limited authority and the competitive nature of the retransmission consent marketplace, the Commission should not make significant changes to its current rules governing retransmission consent, including its good faith negotiation standard. To the extent that the Commission believes some changes are needed, it should focus on ensuring that consumers have the ability and freedom to make informed decisions about how to access programming. NAB supports expansion of the FCC’s notice requirements to non-cable MVPDs to ensure consumers have sufficient information to make educated decisions in the very rare instances when they may be impacted by a negotiating impasse. The Commission