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Broadcasters have won a big FCC victory in their retrans battle with cable operators. When FCC chairman Tom Wheeler announced last week in a blog post that the FCC was closing its inquiry into its definition of good faith retransmission consent negotiations without taking any action at all, broadcasters breathed a big sigh of relief, and cable operators cried foul—and probably a few unprintables.
Broadcasters and cable operators have been in a pitched battle over the issue since Congress directed the FCC to look into whether it should update the factors in its “totality of circumstances” test for what constitutes good faith—or alternately bad faith—negotiations.
There was an understandable fear among broadcasters that the Commission could decide to make retrans blackouts de facto bad faith, or prevent bundling of TV stations and cable nets in those negotiations, or mandate arbitration, or any number of things cable operators had argued for adding to the list.
The belief among broadcasters was that adding new, specific prohibitions would weaken their negotiating positions and tinker with a system that was working. Cable operators said the system was broken and skewed toward the other side.
Wheeler suggested he held with the broadcasters’ view of the marketplace, though it may also have been that he lacked the votes for retrans reform, said one veteran D.C. lobbyist on the broadcast side.
“Though commenters complained about a variety of negotiating practices, none showed that those practices are the causes of the blackouts that occur,” Wheeler said in closing the review. “Further, a number of the practices complained of were said to have been engaged in by a single negotiating party or in a small number of negotiations and do not appear to be gaining currency in the marketplace.”
Adonis Hoffman, chairman of Business in the Public Interest, and former chief of staff to Democratic commissioner Mignon Clyburn, suggested Wheeler was turning to battles he could win.
“When the chairman looked at the calendar, I think he realized that a potentially bloody battle on retrans was not in his—or the public—interest,” he said. “There would be several congressionial leaders who would have been adverse to another rulemaking on the subject.”
Wheeler has a full docket with the FCC’s just-announced game plan for freeing up 5G spectrum, his push for broadband privacy rules and the set-top box plan stemming from yet another congressional mandate related to the STELAR satellite compulsory license renewal.
Wheeler signaled that the current “totality of circumstances” test for negotiations is better left as a general catch-all.
“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. It is hard to get more inclusive than to review the ‘totality of circumstances,’” Wheeler said. “To start picking and choosing, in part, could limit future inquiries.”
The chairman’s take on retrans mirrors his support for a general conduct standard in the Open Internet order. Rather than come up with a lot of new bright-line prohibitions, totality of circumstances leaves the FCC free to step in, or not, depending on what all those circumstances are.
For instance, at the same time Wheeler was closing the book on that retrans review, the FCC was stepping into the ongoing retrans fight between Dish and Tribune.
Wheeler said the FCC has issued “comprehensive” data requests to both sides so it can figure out whether they are negotiating in good faith. “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,” he said.
And like the FCC’s review of zero rating plans under the net neutrality rules’ general conduct standard, Wheeler does not have to wait for a complaint.
“The Commission can investigate a potential good faith violation on its own and take enforcement action when a party fails to fulfill its statutory obligations.”
But that was pretty much lipstick on a pig for the cable operators who have been arguing that new rules against program bundling and joint negotiations and blackouts are exactly what the process needs.
“Today is a sad day for television viewers,” American Television Alliance spokesman Trent Duffy said following Wheeler’s decision. ATVA has been carrying the flag for cable ops in the retrans fight.
Wheeler’s office was not commenting, but it’s a pretty clear signal this is it for revamping the FCC’s approach to retrans negotiations under this chairman.
