Cable, Satellite Execs Spar with Broadcasters on Retransmission Consent

WASHINGTON, February 25, 2009 – House Judiciary Committee chairman John Conyers, D-Mich., said  it is important that Congress pass a bill preserving satellite viewers’ access to broadcast television. But new technology could make other compulsory licenses for broadcast programming  obsolete.

Speaking at a hearing on copyright issues in 21st century video programming Wednesday, Conyers noted that competition in video programming has improved since compulsory licensing was enacted in the 1970s. “Some of the same rationale we likely agreed on are not as relevant now,” he said.

While the hearing focused on satellite television, the raised by the looming lapse of retransmission consent involve several other sections of the Copyright Act.  Conyers is working with Raking Member Lamar Smith, R-Texas, Rep. James Sensenbrenner, R-Wisc., and Communications subcommittee chairman Rick Boucher, D-Va to form a special task force between the House Energy and Commerce and Judiciary committees.

Both committees have jurisdiction over the Satellite Home Viewing Extension and Reauthorization Act — which would renew sections of the copyright act that allows satellite television providers to license local broadcast signals for viewing by subscribers. The license was created by statute in 1988, and renewed in 1994, but set to expire at year’s end. “We are looking at ideas…all over the map…to turn around and pull together,” Conyers said.

The long lead time before the license expires provides ample time to learn about all the issues facing lawmakers in reforming retransmission, said Ranking Member Lamar Smith, R-Texas., Smith said the primary goal will be ensuring that all Americans can receive local television signals. That goal is “something we can probably all agree on, for better or for worse,” Smith said.  “Consumers want to have “more – rather than fewer – options for determining, how, when, and what programs to watch.”

DirecTV’s senior vice president Bob Gabriell isaid Congress should revise the licensing system to make it “simpler, and to protect consumer access to network programming,” Gabrielli said lawmakers should place a premium on solving the “short markets” problem – markets where not all broadcast networks are available – by modernizing the license system to allow consumers in those markets to have network programming beamed in by “distant signals.”

Gabrielli complained that the burden of serving local programming to all consumers required 80 percent of satellite capacity – a far greater percentage of resources than cable television providers must devote. In addition, the current system gives broadcasters unequal bargaining power in negotiating retransmission content agreements, he said. While competition has increased the number of options available to consumers, broadcasters now use that competition to force bidding wars among cable, satellite and telephone companies that provide video service. The average retransmission fee has risen by a factor of 300 percent, he said.

But broadcasters aren’t putting that money towards producing the local program required by their licenses, Gabrielli observed. Many broadcasters produce less and less local news, and some have replaced local programs with infomercials, he said. Broadcasters should be paid “fair and reasonable compensation” for programming, he said. “But it does not serve the American public if broadcasters have the unfettered ability to raise rates without any obligation to provide local content.”

The separate compulsory license for cable television should remain untouched, NCTA CEO Kyle McSlarrow told the committee. McSlarrow acknowledged the license statute as being “understandably complex,” but he said those asking for changes in that portion of the statute – including the U.S. Copyright Office — “have not met the burden of establishing that those changes would benefit, rather than harm, the television viewing public.” But retransmission consent has become a “source of considerable uncertainty,” McSlarrow said.

Retransmission consent is “at odds with the intent of the compulsory license regime” because it allows broadcasters to withhold signals from consumers if their demands for increasingly higher payments are not met. Congress should consider retransmission consent to be “deeply intertwined with copyright policy considerations,” and review the two subjects “in tandem” with a consumer-focused approach, McSlarrow suggested.

National Association of Broadcasters president David Rehr opined that reforming retransmission consent would deprive broadcasters of the revenue needed to produce local programming. Localism is a “core value” of broadcasters, Rehr said.

But if retransmission fees are lost, and satellite and cable providers can bring in signals from other markets, stations will lose out doubly as localized advertising revenues drop and threaten the free broadcast television model they depend on.

“It is critical…that Congress preserves broadcasters’ long standing ability to bargain for exclusive rights…within their local markets,” Rehr said. No matter what changes are made to the laws, the “core principle of localism” should be maintained.