Our No. 1 issue at the American Cable Association is reform of retransmission consent. That could change, especially if either Congress or the Federal Communications Commission decide to enforce pro-consumer policies that truly serve the public interest and eliminate the regulatory preferences that broadcasters have been exploiting for far too long. The broken and costly "retrans" regime affects all ACA operator members and their customers in profound ways, justifying the time and expense in pursuing a reform agenda.
The ACA is chiefly responsible for placing retrans reform high on the telecommunications policy agenda. When we started talking about this issue a decade ago, we were just a voice in the wilderness. But as more and more pay-TV providers began to suffer the same economic harm that we did, they started supporting the ACA's reform agenda. Public interest groups that began to notice the connection between retrans fees and higher retail cable rates were not far behind. SNL Kagan estimates that retrans fees will soar to $3.6 billion by 2017, twice what consumers are paying today for "free TV."
In March, the FCC finally opened a rulemaking on a range of retransmission consent issues, launching the most important review of its TV carriage rules in almost two decades. This in itself was an important victory for the ACA because it gave us yet another opportunity to demonstrate the many ways TV stations abuse outdated rules to gouge pay-TV providers, especially independent cable operators that lack the leverage to resist broadcasters' "blackmail or blackout" tactics, perfected by News Corp., the Walt Disney Co. and lesser-known copycats with less notoriety.
The FCC should conclude the rulemaking in time for newly adopted policies to govern the next round of retransmission consent talks that begin in October. These "negotiations" – which are really nothing more than crass take-it-or-leave-it offers from TV stations – have the potential to produce massive signal blackouts, affecting millions of consumers, because they involve the renewal of thousands of carriage contracts between ACA members and local broadcasters.
From the ACA's perspective, the FCC's mission is clear. It must confront broadcaster price fixing by banning independently owned TV stations in the same market from engaging in collusive, coordinated retrans bargaining. Forcing TV stations in the same market to bargain on their own is crucial because we know that ACA members pay appreciably less for retransmission consent when they negotiate with one station at a time as opposed to two, and that the harm is compounded when the two stations are affiliates of ABC, NBC, CBS and Fox.
The FCC also must stop all TV stations and the Big Four networks from using retrans as a weapon to prevent ACA members from carrying distant network signals that they have a legal right to provide under clearly defined FCC rules that go back decades. The expansion of mandated arbitration to all retrans agreements and interim signal carriage requirements while disputes are being resolved are also essential reforms.
We're keeping a close eye on the TV station transaction market and protesting problematic deals. For example, we've asked the FCC to block or condition the sale of the ABC affiliate in Topeka, Kan., to a company with a track record of jointly negotiating retrans in other markets. If that deal is approved unchanged, the ABC station's new owner will likely join forces with the existing NBC-Fox duopoly in Topeka to cash in – big time – by controlling pay-TV providers' access to three of the local Big Four stations. The ACA has 10 member companies that serve about 30,000 households combined within Topeka's 17-county boundary.
ACA members should know that sooner or later, real change is coming to the retrans market. The ACA deserves a lot of credit for such a dramatic shift in the political climate. The resources that have been devoted to the retrans fight are paying dividends, representing a real return on all of the great support ACA members have given to an organization pledged to be their voice in the corridors of power in Washington, D.C.
ACA members know that the retrans battle represents an issue that is rewarding the ACA for taking an early and principled stand on a pocketbook issue like television programming fees. The consensus today is that retrans reform is an inevitable necessity. Not surprisingly, TV station owners are the only ones saying retrans reform is a waste of time. In the end, the ACA will prevail as a result of its unwavering commitment to making serious, credible and substantive arguments on behalf of its members and their customers.