MVPDs, Broadcasters Entrenched in Totality of Circumstances Fight

Broadcaster arguments that banning online blocking of content is akin to forcing broadcasters to "publicly perform [their] copyrighted content online" are misleading because the proposals involve not letting broadcasters leverage content already online "in unfair ways designed to influence the retransmission consent negotiation process," said the Networks for Competition and Choice Coalition (NCCC) and the Open Technology Institute at New America in joint comments posted Friday. "Blocking users of a single MVPD’s Internet service from accessing content which the programmer has already made available online is nothing more than an attempt to harm customers and create the false appearance that content that is freely offered online to all Internet users is somehow connected with retransmission consent negotiations." NCCC includes Incompas, ITTA, NTCA and Public Knowledge.

NCTA's comments focused solely on online blocking, saying Open Internet rules don't allow cable operators to do likewise to Internet content, meaning such an action should be considered a violation of good-faith negotiating duties. And copyright protections -- raised by numerous broadcasters -- "would not extend to misusing such rights in a manner that would otherwise be deemed to violate their statutory duty to negotiate in good faith," it said.

Broadcasters' main argument continues to be that the market in fact works and the FCC lacks statutory authority to change the good-faith rules. "The totality of the circumstances test is working as Congress intended, the retransmission consent market is healthy and thriving, and consumers are benefiting," Forum Communications said in a filing Thursday. "To be sure, the terms, rates, and distribution methods have changed over time; but then again, what has not changed with time? It should come as no surprise that the cost of obtaining quality network, syndicated, and sports programming that viewers want to watch is steadily increasing." Congress "does not 'hide elephants in mouseholes,'" Media General said in its filing, referencing the 2001 Supreme Court decision in Whitman v. American Trucking Associations. The Satellite Television Extension and Localism Reauthoritzation's "simple command [to review the totality of circumstances test] in no way altered the agency's authority or mandated changes or other final action."

There has been a rise in broadcasters taking such steps as threatening to withhold retransmission consent leading up to and/or during marquee events, preventing the import of out-of-market signals and charging for subscribers who receive service via an off-air antenna, said Dish Director-Local Programming Melisa Ordonez in a declaration submitted by Dish. Time Warner Cable said in its filing that claims it and other MVPDs that gin up retrans disputes in order to get government intervention ignore the economic harm MVPDs feel in blackouts, pointing to 300,000 subscribers it said it lost in 2013 due to disputes with CBS and Journal Communications. "It would be wholly irrational as a business matter for TWC to invite such disputes merely to prove a point in a regulatory filing," it said.

Broadcasters also shot back at some MVPD proposals. Meredith in its reply said making it bad faith to deny an extension request "would be the government forcing a television station to grant consent. No matter how MVPDs try to spin it, a forced extension is forced consent." It also cited the value of such deadlines in getting negotiators to come to an agreement: "As a matter of policy, Duke Ellington might as well have been talking about MVPDs when he said 'Without a deadline, baby, I wouldn't do nothing.'" Joint comments from the ABC, CBS, FBC and NBC television affiliates associations said MVPD arguments for a prohibition on online blocking assume broadcasters are obligated to make content available online to anyone and everyone -- a presumption they called "unfounded." The affiliates also said a variety of MVPD proposals add up to rate regulation through, for example, language dealing in price discrimination among MVPDs in a single market. "If the Commission is concerned about consumer welfare generally and the prices consumers pay for subscription television in particular, it should address those issues by regulating retail pay TV prices, not by regulating one (small) input into wholesale prices," they said.

Cablevision said even if the FCC doesn't embrace its specific arguments against forced bundling and tying practices and tier-placement requirements and penetration minimums, it should eliminate the good-faith presumption altogether and craft its own set of rules on retrans matters. "The Commission’s blanket presumptions that broadcaster actions such as tying are in good faith, and its rules that make it difficult to bring complaints, make it effectively impossible for the Commission to carry out its duty to police broadcaster practices that limit consumer choice, raise consumer costs, and lead to blackouts," it said in its filing posted Friday.

Verizon suggested a variety of practices to be considered abrogation of the duty to negotiate in good faith: bundling broadcast programming with other programming without offering the broadcast station signal as stand-alone, extending blackouts beyond an MVPD’s video subscribers to its Internet subscribers, and "running one-sided scare advertisements to an MVPD’s subscribers about potential retransmission consent disputes." In its filing, it also backed ending the syndicated exclusivity and adoption of a "standstill requirement," which would allow MVPDs to carry the broadcast signal after the contract expires but while the parties continue to negotiate in good faith.

Given the diametrically opposed MVPD/broadcaster cases, the commissioners will likely turn to their "communications worldview[s]," Hoffman told us. "Some of them skew toward broadcasters, and some of them skew toward cable. It is well known where [Chairman Tom Wheeler] comes down, as the former head of NCTA, but the rest of the Commission is less partisan," he said. "I also think it is safe to say that each Commissioner has an intrinsic or gut level view of where he/she wants to be on any given issue -- especially the big contentious ones. The ex parte meetings and filings can give contour and dimension, but I do not believe they influence the initial decision to come down in a particular place on the issue."