Wheeler: FCC Won't Change Retrans Negotiations Test

FCC chairman Tom Wheeler says the FCC will conclude its congressionally-mandated review of the "totality of circumstances" test for good faith retransmission consent negotiations without adding any new and specific categories of de facto bad faith.

Cable operators had hoped to add blackouts, blocking of Internet content, forced bundling and more as evidences of bad faith, so that is a victory for broadcasters, who argued the retrans system is working and did not need tweaking.

"Based on the staff’s careful review of the record, it is clear that more rules in this area are not what we need at this point," Wheeler blogged Thursday. "It is hard to get more inclusive than to review the 'totality of circumstances.' To start picking and choosing, in part, could limit future inquiries.  So, today I announce that we will not proceed at this time to adopt additional rules governing good faith negotiations for retransmission consent."

Related: Moonves to Wheeler: Close Retrans Proceeding

The chairman said that did not mean the commission was turning a "blind eye" to retrans disputes. "Nor does it mean that Congress couldn’t expand the scope of the Commission’s authority in this space," he said. " What this decision does mean is that 'totality of circumstances; is pretty broad and ought not to be constrained."

Wheeler said that when impasses happen he is still prepared "to use the authority Congress has conferred on the Commission to help to bring negotiations to a conclusion."

Wheeler signaled the FCC has been active in the Dish-Tribune Media impasse and is ready to step in if necessary. "When the parties failed to reach an agreement or to extend their prior deal pending further negotiations, consumers began to suffer what is becoming an extensive blackout, I summoned both parties to Washington to negotiate in coordination with Commission staff. When that step failed to produce an agreement or an extension, the Media Bureau issued comprehensive information requests to both parties to enable FCC staff to determine whether they were meeting their duty to negotiate in good faith; we are reviewing their responses as I write. If that review reveals a dereliction of duty on the part of one or both parties, I will not hesitate to recommend appropriate Commission action."

"NAB appreciates the significant work undertaken by Chairman Wheeler and the FCC staff to conduct an exhaustive review of the retransmission consent process, and applauds its conclusion that no new rules are needed," said National Association of Broadcasters spokesman Dennis Wharton. "As Chairman Wheeler acknowledges, the vast majority of these negotiations are successfully concluded without incident or impasse. Broadcasters remain fully committed to reaching agreements with pay TV companies in good faith so that consumers can continue to receive our high-quality local content whether over the air or through a pay TV service."

Groups representing smaller and midsized communications companies who had argued program bundling, blackouts and withholding online content should all be considered bad faith on the part of broadcasters, were not pleased.  

"ACA is shocked and appalled that FCC Chairman Tom Wheeler, who has placed such urgency in reducing consumer confusion in the marketplace, has decided to leave unchanged the retransmission consent regime that a bipartisan Congress asked the agency to review in the Satellite Television Extension and Localism Act Reauthorization Act of 2014 (STELAR)," said American Cable Association President Matt Polka. "To do so in the face of historic numbers of broadcast blackouts and clear signs of market failure and widespread consumer harm is stunning. The Chairman's decision ignores the plight of millions of consumers served by MVPDs who have repeatedly been victimized by broadcasters' heavy-handed bargaining tactics, such as pulling signals prior to a marquee event like the Oscars or baseball's All-Star game.

"In the end, the Chairman's decision will serve no purpose other than to perpetuate and most likely escalate negotiating schemes that will result in consumer harm on a colossal scale by ignoring tangible evidence that the retransmission consent regime is broken, outdated, and contributing to the skyrocketing increase in retransmission consent payments and a record number of TV-station initiated signal blackouts."

"ITTA is outraged that FCC Chairman Wheeler has decided to abandon efforts by smaller and new entrant MVPDs to obtain relief from dramatically escalating retransmission consent fees and increasingly anti-competitive negotiating tactics by large broadcasters," said Gary Morelli, president of ITTA--The Voice of Mid-Size Communications Companies. "Failing to act on Congress’s directive to address the harm to consumers under the current retransmission consent regime will reduce competition by smaller and new entrant MVPDs. When faced with unreasonably high retransmission fees or other discriminatory practices by broadcasters, smaller and new entrant video providers – unlike Comcast and other large vertically-integrated MVPDs – do not have the resources to undertake the dispute resolution processes pointed to by the Chairman as the ‘answer’ to anti-competitive broadcaster conduct."

“Today is a sad day for television viewers," said Trent Duffy, spoeksman for the American Television Alliance, comprising cable operators and others pushing for retrans reform. "In light of record and growing broadcaster blackouts and skyrocketing prices, Congress asked the Commission to review its 'good faith negotiation' rules.  We and others submitted extensive evidence that the existing rules no longer serve to protect consumers, and that new, stronger rules are needed.  Despite all this, however, the Chairman announced today that he believes new rules are unnecessary.

“However, the Chairman himself has acknowledged that his announcement is not an official FCC action and merely reflects his personal belief about the issue ‘at this time.’ We think the FCC will come to realize the error of this belief—especially if, as we fear, broadcasters continue to abuse the viewing public in the coming months. Retrans reform may not happen today, but it will happen.”

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.