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Ovation Decries 'Palace Intrigue' of FCC Set-Top Process

Independent programmers Ovation and Hispanic-owned Vme TV want FCC Chairman Tom Wheeler to put out the set-top box proposal for comment in a Further Notice of Proposed Rulemaking so they can see just what the FCC is proposing, and allow for a few weeks of comment.

Wheeler has lifted the sunshine prohibitions on contacting FCC officials about the proposal, but not the changes currently being hashed out by the commissioners on the item. Wheeler pulled it from the agenda for last month's public meeting, citing changes and giving the commissioners more time to vet them, but has declined to publish the text (it is considered a working product until finalized), or to put out his latest proposal for public comment.

Without seeing the details of the new proposal, Vme TV senior VP Victor Cerda told reporters Monday, Oct. 17, it has been like "negotiating with a mime."

Cerda and executives from arts channel, Ovation, was on a conference call arranged by the Future of TV Coalition -- they are members -- to talk about their ongoing problems with the proposal, chief among them that they are not sure what is in it.

What they are sure of, however, is that if it includes the FCC having any role in reviewing their contracts with distributors, that is a big problem.

Wheeler moved from an original set-top based approach to making MVPD content available to third-party navigation devices as a way to promote set-top competition, but after major blowback from virtually all quarters, including top Hill Dems, he pivoted to a more app-based approach.

But when that also drew flak, and clearly did not have the votes of even all the Democrats, the item was pulled from the Sept. 29 public meeting agenda, put on circulation for a vote, but in an unusual move, preserving the sunshine rule prohibitions on contacting FCC decisionmakers about the item. After complaints about that, including from Vme TV and many others, that sunshine rule prohibition was lifted.

But what staffers could say was limited, which prompted Cerda's comment about talking to a mime. "We actually sit there and present it and hope from their body language and their questions we can glean some idea of what is being worked into the rule." He said he had worked with Homeland Security issues and in government and he had not seen that kind of secrecy in other contexts where he thought it was more defensible. "Here, dealing with a cable box and television, and this kind of's just bizarre."

The NCTA: The Internet & Television Association had pushed an app-based proposal--Vme-TV helped with that effort, Cerda said--but the chairman's variation, and its subsequent tweaking--was not what the ISPs or Vme, or Ovation, had in mind due to the FCC's role in contracts.

But their baseline pitch was mostly about transparency. Whatever the FCC is proposing, they want to see it and figure out how it impacts them.

It is hard to manage through uncertainty, said Ovation general counsel Robert Rader, even harder for independents than larger programmers.

Both Cerda and Ovation EVP of distribution John Malkin said that the FCC chairman's "trust me" approach to the item did not cut it.

Part of Wheeler's goal with the set-top proposal, he has said, is making it easier to find independent programmers in a unified search of online and traditional fare. 

Malkins says Ovation knows well the challenge of getting noticed as an independent, a fight they fight every day. He also says they are fine with an app-based approach. But he says the FCC proposal appears to be a threat to Ovation's business model.

But if Wheeler's mantra is competition, competition, competitions, Ovation and company's is "transparency, transparency, transparency."

Malkin said he was "surprised and alarmed at the decision not to share the information about a proposal that has changed markedly, and one that could impact the industry as a whole.

Among the "huge" issues Malkin said they remained in the dark about included: 1) whether the FCC was looking to create a compulsory license--Wheeler says no, MVPDs and studios say it sure looks like it; 2) how would contractual protections from being dropped or repositioned convey, of they would carry over at all; 3) what happens to their advertising; and what does the search model look like and will sites with pirated content be searchable alongside Ovation's acquired or original, licensed, content.

Rader said that if contractual protections were not secure, those hard-won elements would go for naught, and that he was concerned by the FCC's "rush and secrecy." Getting in a plug for Ovation’s new series, Versailles, about palace intrigue in the court of Louis the Fourteenth, Malkin said he saw parallels with how the FCC was handling the set-top item. Wheeler has said there has been plenty of time to comment on the various issues in play.