FCC on Sidelines in Cablevision-Fox; No Retrans Rulemaking Ready

The commission doesn’t appear poised to act soon on this impasse or on the general subject of its handling of retransmission spats, as sought by many cable, direct broadcast satellite and telco-TV providers including Cablevision, FCC officials said Wednesday. On Cablevision-Fox, the officials said the regulator has no complaint before it from either side that alleges lack of good-faith negotiations over carriage of WNYW New York and WTXF Philadelphia, which air Fox network programming, and MyNetworkTV affiliate WWOR Secaucus, N.J. Without such a complaint, there’s no ready-made vehicle for the commission to act.

The agency also doesn’t seem set to issue a rulemaking notice that would advance the petition filed in March by Cablevision, Dish Network, DirecTV, Time Warner Cable, Verizon and others, FCC officials said. No notice on what obligations broadcasters and pay-TV providers have to tell customers about impending disputes appears to be ready to be publicized either, they said. Genachowski said last week he'd like industry to give more notice in such situations, an endeavor the agency was working on (CD Oct 15 p2). A Media Bureau spokeswoman declined to comment.

Executives at Cablevision and Fox continue communicating with the FCC at least daily about the impasse, agency officials said. The companies are giving Genachowski’s office and those of the other commissioners and Media Bureau staffers status updates, the officials said. It seems that the Cablevision-Fox blackout may continue for a while, one official said. Another impending blackout on Oct. 31 if Fox and Dish can’t reach a new retransmission deal hasn’t been the subject of communication between those two companies and commissioners’ offices, FCC officials said. Representatives of Cablevision, Dish and Fox had no comment.

For Copps, retransmission often “has degenerated into a fight between huge monied interests to see who can milk who the most -- and consumers are left holding an empty pail,” he said in a written statement Wednesday afternoon. “The FCC’s role has been limited” partly by statute that “generally confines our role to encouraging ‘good faith’ negotiations,” and that law has been “interpreted … very cautiously,” he added. “But the FCC is a consumer protection agency and, if the Fox-Cablevision dispute proves anything, it is that consumers are clearly not being protected. I believe the Commission should take a very serious look at whether ‘good faith’ negotiations are indeed occurring.” If that’s not happening, the commission “should move promptly to protect consumers,” Copps said.

This “old media debate” is also about new media, too, Copps said. “For a broadcaster to pull programming from the Internet for a cable company’s subscribers, as apparently happened here, directly threatens the open Internet. This was yet another instance revealing how vulnerable the Internet is to discrimination and gate-keeper control absent clear rules of the road.” For about 16 hours Saturday, the first day of the Fox TV-station blackout, the network wouldn’t let its online video be accessed by any broadband subscribers using a Cablevision IP address.

"The broadcast industry supports Fox’s position” on linear retransmission, said Chairman Brian Brady of the Fox affiliates group. “We think that broadcasters need to be paid the value of what they're delivering to the cable systems. I think that at the end of the day it’s a contract dispute” in which “the government shouldn’t really be involved,” he added. “All we're asking for is fair value for what we deliver to them,” said Brady, CEO of Northwest Broadcasting, owner of several Fox affiliates. “This will be resolved at some point in time."

That point may not come soon, some said. “Despite this increased pressure from government officials, we would not be surprised if the blackout continued due in part to questions about the FCC’s legal authority to either impose a quick fix or permanently revise the current retransmission consent rules,” analyst Paul Gallant of Washington Research Group wrote to investors. “Continuation of the blackout likely favors News Corp. and hurts Cablevision.” Any attempt by the commission to require Fox to restore signals to Cablevision has “a better-than-even chance of being reversed in court,” Gallant wrote. “It would also set a precedent of intervention that the FCC probably wishes to avoid.” Should the agency revise retransmission rules for all, “that too would face a tough court fight,” he predicted.

Cablevision Competitors Benefit

Verizon’s FiOS pay-TV service had increased activity at its call centers and shopping mall kiosks in the New York area and has reallocated staff to the region to help meet demand, a spokesman said. “We had a busy weekend, we had a busy early part of the week, we're having a busy day and we're looking at a busy rest of the week.” Verizon sometimes can start service in the region within several days of a request, he said. FiOS is in a carriage dispute with Cablevision and former corporate sibling Madison Square Garden and has asked the FCC to order carriage of MSG’s HD regional sports networks. Lacking the HD RSNs has hurt FiOS in the region but doesn’t seem to be stopping subscribers from leaving Cablevision this week, the spokesman said. “They don’t want to be shut out of the World Series and football games on Sundays."

Other distributors have seen less of a lift or wouldn’t say how the dispute has affected their operations. “We typically don’t see an automatic jump in subscribers” during disputes like this, a DirecTV spokesman said. “Usually these things take a while to filter through the system.” Dish declined to discuss the effects on its subscriber count of a separate dispute with Fox over carriage of Fox’s RSNs.

Critics of Comcast’s proposed purchase of control of NBC Universal highlighted to the FCC how the Fox-Cablevision dispute implicates the commission’s merger review. That Fox restricted Cablevision’s access to its programming on Hulu, the video website it owns with other broadcasters, “seems to belie Comcast’s claim that a combined Comcast-NBCU … could not ‘cause Hulu to refuse to deal with third parties,” attorneys for Dish, DirecTV and the American Cable Association wrote Genachowski. It shows how important access to online content has become and illustrates why conditions are needed to ensure that Comcast-NBC Universal’s online programming remains available to all pay-TV viewers on a fair, nondiscriminatory basis, they said.

Free Press also asked the FCC to contemplate how future retransmission consent disputes would play out for a combined Comcast-NBC Universal. Pulling NBC stations’ signals would become “a business opportunity,” because it can lure new subscribers to Comcast by withholding that broadcast network’s signals from rivals, the group said. It opposes the Comcast-NBC Universal deal.

Sports schedules and luck may take some pressure off Cablevision this week, said an industry executive and a professor of sports economics. With the Yankees facing tough odds for reaching the World Series, the New York Jets having the week off in the NFL and the Giants playing on ESPN Monday night instead of on Fox, New York-area sports fans who subscribe to Cablevision will be missing less programming this week, they said. This weekend, Fox’s New York and Philadelphia stations are both showing the Philadelphia Eagles game, a Fox spokesman said. “Big sporting events are traditionally big pressure points, and the way things are looking there won’t be another one until Halloween, when Green Bay plays the Jets on Fox,” said Frank Hawkins, a partner at Scalar Media and a former lawyer for the NFL. Professor Andrew Zimbalist of Smith College predicted “there will be less pressure this coming weekend."

Fox’s carriage of the World Series next week will put pressure back on Cablevision, but not as much as it would have if the Yankees were a lock to represent the American League in the series, Hawkins said. They trailed the Texas Rangers three games to one Wednesday, and the Rangers had a chance to advance after our deadline. “The World Series is a bit of a pressure point, but the World Series draws lower ratings than an ordinary Monday night football game,” Hawkins said. Putting highly valued local sports programming on channels that aren’t being carried is a traditional tactic of cable networks seeking to gain expanded carriage, Hawkins said. “ESPN successfully used that in fights for distribution of ESPN2 and ESPNU,” he said. “This is a different sort of carriage fight in that it’s a broadcast station, but it’s still the same tactics.”