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Cablevision: FreeRetrans Market Means No Must-Buy, Syndex or Free Spectrum

COO Tom Rutledge plans to tell legislators Wednesday 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)."

That is
according to a copy of his prepared testimony for a Senate
Communications Subcommittee hearing Nov. 17 on the retransmission
consent regime.

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."

argues that the rules shield broadcasters from the consequences of their
pricing, since subs have to buy the product regardless of that price.

He also
points to what cable operators see as the inequity of government rules
that prohibit cable operators from pulling TV station signals during
sweeps periods when ad rates are set, but allow broadcasters
to pull signals before big events like the World Series. Cablevision
lost access to Fox signals in Philadelphia and New York last month
during part of the World Series.

In his
testimony for the hearing, News Corp. President Chase Carey calls for a
marketplace free of government intervention. Rutledge says he agrees.
"We welcome calls to allow a free market, free of
this heavy government intervention, to flourish in the broadcast, cable
and satellite space," he says. "This would mean eliminating free
spectrum and special privileges for broadcast, rolling back
retransmission consent and must carry, permitting broadcasters
to compete, free of rules on 'syndicated exclusivity,' 'network
non-duplication,' and 'must buy.' Eliminating these laws would allow a
free market to exist, where programming content, distributors and
consumers can choose among options without the weight of
government intervention."

Unlike the
testimony of News Corp. President Chase Carey, Rutledge does not even
mention the recent retrans fight between them, instead talking generally
about the need to reform the system and offering
up the following fixes after conceding that getting rid of the regime
is a "longer-term goal."

In the short
term, he said, the FCC should require all broadcast negotiations be
stand-alone, meaning not tied to carriage of other networks. He said
that would prevent a "historic abuse" in which
"broadcasters have sought carriage of their affiliated programming
networks, increasing the cost of expanded basic service, displacing
independent programmers and exacting enormous compensation from cable
operators." He also wants the government to require
that carriage terms be disclosed and not allow broadcasters to charge
different prices to different multichannel video providers. The American
Cable Association has notably pushed for that condition, arguing its
members suffer from discriminatory pricing. ACA
teamed with Cablevision, Time Warner Cable and others to petition the
FCC to reform retrans.

The Senate
hearing was called by Subcommittee Chairman John Kerry (D-Mass.), who
has drafted legislation that would allow for FCC-mandated arbitration
and standstill agreements to keep TV stations
on cable systems during retrans impasses. FCC Chairman
Julius Genachowski has not endorsed the bill, but he has endorsed
Kerry's call for congressional review of the process.

Both Kerry
and Genachowski point to the impact of blackouts on consumers as a key
reason for reviewing the negotiations and the FCC's power over them.