negotiationA small cable company that also owns several television stations in small and mid-sized markets is asking the FCC to create new guidelines for “good faith” retransmission consent negotiations. The guidelines would give the FCC greater power to step in when those negotiations reach an impasse.

The company – Block Communications – made its request in a petition for rulemaking filed with the FCC this week. Block says it has been forced to accept unreasonable retransmission consent terms in its role as a cable company and in its role as a broadcaster.  Those rules require cable companies to carry local broadcast content.

“Since Congress adopted the retransmission consent regime in 1992, near-nationwide TV station groups and [cable company groups] have emerged that did not exist when Congress defined the retransmission consent market,” wrote Block in its petition. “These broadcasters and [cable company groups] are able to use their immense scale to force smaller local negotiating partners to accept rates that are out of line with what a healthy market would produce. The only way to solve this problem is by adopting additional objective criteria by which good faith negotiations may be judged.”

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Proposal details
According to the good faith bargaining standards that Block proposes, the FCC would referee bargaining dispute by looking at audience ratings of TV stations in the area and the prevailing rates for retransmission consent decrees. The rules would apply when:

  • A cable company serves fewer than 400,000 customers and the TV station group owns or operates at least 25 TV stations that elect retransmission consent, or
  • An cable company has more than 1.5 million subscribers and a broadcast group owns or operates five or fewer stations.

Block in its petition accuses some large broadcast station groups of buying poorly performing stations specifically to gain retransmission fees that are inappropriately high.

“If the cable operator resists, they pull the station’s signal and wait for customer complaints to force the operator to comply with the broadcaster’s demands,” wrote Block in the petition.

Block argues that “Since the broadcaster owns dozens of stations in markets across the country, it can spread the costs of a blackout over its entire operation. But in an affected market, every cable customer suffers. They suffer the signal outage while it lasts; then they suffer rate increases when the cable operator accepts the best deal it can negotiate.” A similar dynamic occurs when a small broadcaster negotiates with a large cable company group, Block says.

Block cited data from the American Television Alliance showing that 84% of blackouts since March 2010 occurred outside the top 30 markets.

Retransmission fees are on the rise
Block could see considerable support for its petition, considering that retransmission fees have been climbing steeply in recent years.

Legislators already have attempted to tackle blackout problems through a proposed bill that would prohibit blackouts during content negotiations.

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