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Summary:

Cablevision didn’t settle its retransmission dispute with Fox amicably, saying it would be paying an unfair price for stations its subscribers aren’t interested in. But in the wake of the two-week blackout, it might have gotten a small consolation prize: government intervention in retrans fights.

Tough

Cablevision didn’t settle its retransmission dispute with Fox amicably — in fact, based on the statement the cable provider issued after the companies agreed to a deal, you could probably assume that the companies are no longer on speaking terms. But in the wake of the two-week blackout of Fox channels in Cablevision households, it might have gotten a small consolation prize: government intervention in the current retransmission regime.

Government officials are currently discussing legislation that would help protect consumers from being held hostage in the type of retransmission standoffs that took place between Fox and Cablevision, with Sen. John Kerry (D-Mass.) banging the drum the loudest. Kerry is pushing a retransmission reform bill designed to keep negotiations from resulting in blackouts of broadcast programming. Saying that the current system is broken, Kerry wants the government to help redefine the way the negotiations take place.

Before the two parties struck a deal late last week, FCC Chairman Julius Genachowski sent a letter to Kerry, urging legislative action to change retransmission rules. The appeal came after the FCC asked Fox and Cablevision to show that they were both negotiating in good faith. However, since the commission has little actual power to act in such disputes, there wasn’t much it could do to force both sides to the table. Genachowski admitted as much in his letter, saying:

“Under the present system, the FCC has very few tools with which to protect consumers’ interests in the retransmission consent process. Congress granted the FCC limited ability to encourage agreement by ensuring that the parties negotiate in good faith… But current law does not give the agency the tools necessary to prevent service disruptions. Accordingly, I agree that it is time for Congress to revisit the current retransmission law and assess whether changes in the marketplace call for new tools to strike the appropriate balance of private negotiations and consumer protection. Such tools might include, for example, mandatory mediation and binding arbitration, which could prevent the kind of unfortunate stalemate that now exists between Cablevision and Fox.”

Broadcasters would without a doubt be strongly opposed to any legislation that included binding arbitration, essentially taking away their ability to withhold their signals during these disputes — the one piece of leverage that they have. Another possibility would be to decouple packages of programming that are tied together, enabling programmers and cable companies to negotiate deals on a channel-by-channel basis.

In its statement announcing the deal on Saturday, Cablevision basically told subscribers that it would be raising their cable bills due to the “unfair price” that it is now paying for Fox programming, including some channels in which its subscribers have “little or no interest.” Part of Cablevision’s fight has to do with the practice of conglomerates like News Corp. packaging ancillary cable programming with “must have” broadcast content, thereby driving up rates for the whole bundle.

While Cablevision continues to be unhappy with the deal it struck, government intervention might provide some solace to the cable firm. One could argue that government intervention is what Cablevision was after all along, since in public statements it consistently called for the FCC and legislators to step in. It’s unclear, however, how effective legislation would be or even if it could pass — after all, it’s not a hot-button issue that interests that many consumers, and many members of Congress have been too busy trying fighting for their jobs to worry about a few million cable subscribers not being able to watch the World Series.

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  1. How is this different from cable companies packaging all the channels in one package that customer’s must buy? No a la carte choosing of channels for the customer, monthly bill being higher. This isn’t even mentioning the forced extra cable box and hd charges.

    So I’m fine with government legislation in this, as long as they also force the cable companies to give the customers a choice too, not just the cable company.

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  2. I think that the difference is that the cable networks had to spend their own money in order to deliver content to consumers while the broadcasters were able to take advantage of limited public airwaves to build their empires. This advantage means that more people watch their programs, that they get more money from advertisers and that they can lock up the top content by spending that money. Without the public airwaves though, their shows would have a fraction of the viewship which would make it harder for them to lock up premium content and then use that premium content to convince cable customers to leave their cable provider unless they get paid subscriber fees on top of the ad revenue that they bring in.

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