Fox wins on fees dispute, but Cablevision succeeds in one goal: getting lawmakers to notice
By most measures, Fox won its bitter battle with Cablevision on the fees it charges to retransmit programs. But even though Cablevision isn’t happy with the final terms of its contract, it succeeded in one goal: getting federal lawmakers to notice.
Senator John Kerry (D-Mass.) still thinks there needs to be a legislative fix. The Federal Communications Commission's chairman, Julius Genachowski agrees.
On Sunday, Kerry commended Cablevision and Fox for ending their two-week contract impasse that left 3 million Cablevision subscribers in New York and New Jersey without signals to watch the World Series and other programs on Fox stations.
But he said the long negotiations impasse showed just how bad the increasingly contentious battles between broadcasters and paid television distributors (cable and satellite services) have become. Broadcasters are asking for more money and communications laws, experts say, favor their position. That’s led to a record number of television blackouts this year as a result of contract disputes.
“What I know is that this system is broken, and I think we're all better off if we have a dialogue about systemic reform and modernizing the law rather than just jumping into the fray and getting involved in each conflict in isolation,” Kerry said in a statement.
Of course the passage of legislation reforms may be harder after the Nov. 2 election, if Republicans grab more seats, as expected.
B last Friday, Genachowski emphasized in a letter to Kerry that the agency's hands are tied and that an update to retransmission laws may be needed.
"I agree that it is time for Congress to revisit the current retransmission law and assess whether changes in the marketplace call for new tools to strike the appropriate balance of private negotiations and consumer protection," he wrote. "Such tools might include, for example, mandatory mediation and binding arbitration."
Cablevision and Fox wouldn’t disclose details of their agreement last Saturday, even though Cablevision had earlier said in press releases that Fox was demanding $150 million, more than double its previous contract.
And Cablevision blamed the FCC for staying on the sidelines during its contract negotiations. It said last Saturday that it ended up paying an “unfair price for multiple channels of its programming including many in which our customers have little or no interest,” according to a statement by Cablevision.
Sanford & Bernstein analyst Craig Moffett wrote in a recent report that broadcasters have better bargaining positions in such negotiations and Cablevision knew it going it. Afterall, its viewers won’t be angry with Fox for its blackout, but it may leave Cablevision for competitors. But knowing each negotiation was growing increasingly intense, Cablevision was aiming for regulatory reform and was “taking one for the team.”
Dozens of lawmakers called for reforms to communications laws so that the FCC could intervene directly into negotiations. Kerry introduced a draft bill that would keep broadcast signals operating during disputes and assign the Federal Communications Commission as a referee to determine if talks are fair and honest. Though after the Nov. 2 elections, such a bill could be harder to pass with a stronger makeup in the Senate and House by Republicans.
Aside from criticizing the companies last week, the FCC said that its hands were tied.
"Under the present system, the FCC has very few tools with which to protect consumers' interests," Genachowski said in his letter to Kerry. "Current law does not give the agency the tools necessary to prevent service disruptions."
The FCC suggested ways for Cablevision viewers to get Fox content from competitors.
“Telling consumers to switch providers is no solution with broadcasters using the same extortion tactics over and over again,” the American Television Alliance, a group representing cable companies, independent programmers and consumer groups, said in a statement.
Public advocacy group, Public Knowledge, criticized the FCC for its inaction. It argues that any legal questions about its authority to intervene in retransmission disputes is overshadowed by its role to protect consumers who are losing access to television programming during contract spats.
Public Knowledge spokesman Art Brodsky said that last March the FCC raised the idea reforming rules on its own role in such disputes but hasn’t followed up.
“Consumers shouldn’t have been held hostage while the discussions went on,” Brodsky said. “Kerry sets a timetable for getting things done.”
| November 1, 2010; 6:00 AM ET
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