The Senate Communications Subcommittee last week began its vaunted review of the Cable Act of 1992 with few fireworks and essentially the same divide over deregulation between those ready to gut the Act—including Sen. James DeMint (R-S.C.)—and those seeking to get the government more involved in resolving retransmission disputes, such as Sen. John Kerry (D-Mass.).
The hearing played out more like the beginning of a conversation—as one senator astutely noted—than of a fight over the hot topic of retrans. There was almost no talk about the impact of over-the-top video, or the fate of program access or carriage rules.
Broadcast witnesses talked of a system that worked, of getting paid for valuable content, and warned of the dire consequences of deep-sixing retrans. Cable operators told the Senate the system was broken, broadcasters were colluding to drive up prices and Congress should step in to help viewers.
With only a handful of days until Congress exits on its August recess, and not much time after that until almost everybody heads home to try to get re-elected, there was a marked lack of urgency to the hearing last week on a topic that had seemed primed for sparks aplenty. Broadcast and cable industry sources suggested the hearing was primarily a courtesy to DeMint, but one source added that he expected the issue would get “many more opportunities” for Hill vetting, just not in this Congress.
Cable operators on the panel got to make their points, however, including newly elected American Cable Association chair Colleen Abdoulah, CEO of cable provider WOW!
For his part, CBS chief retrans negotiator Martin Franks characterized the cable and satellite operators pushing for Cable Act reforms as an “unholy alliance” of distributors who were supposed to be competitors but had banded together to deprive broadcasters of the compensation they so clearly merit.
Franks took issue with Abdoulah’s claim of lacking leverage in negotiations. He initially pointed out to the subcommittee that CBS has done close to 100 retrans negotiations in the past six years without incident, including with Abdoulah’s company as well as with the other cable exec seeking congressional revamping of the Cable Act, Melinda Witmer of Time Warner Cable.
National Association of Broadcasters president and former senator Gordon Smith told the panel— including some of his onetime colleagues—that broadcasters were still not getting compensated fairly for their content.
Witmer posited that the top problem with the issue was “skyrocketing programming costs.” She said TWC paid almost 60% of its programming costs, about $2 billion, to broadcast station owners. A TWC exec clarified after the hearing that Witmer was factoring in the costs of the company’s co-owned cable channels, including ones launched as part of retrans deals. Witmer entered a chart in the record to illustrate her point.
Kerry put the hearing in perspective when he pointed out the remaining gulf between both sides of the issue. There’s the DeMint approach of sweeping away retrans and copyright licenses and basic-tier must-buy and media ownership, and the belief of those who, like Kerry, would oppose such a move for, among other reasons, a desire to preserve local broadcasting— which Kerry called an important goal of the 1992 Act.
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