FCC Inaction on Totality of Circumstances Test Riles MVPDs
MVPDs and allies were dismayed Thursday as Chairman Tom Wheeler said the FCC was wrapping up its look at possible changes to the totality of circumstances test in good-faith retransmission negotiations without making any rules changes. Multichannel video programming distributors had assumed the agency would end up making some meaningful rules changes. They were tentatively expected as soon as August's agenda, one cable industry lawyer told us, saying the decision came as complete surprise.
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"After years of solid evidence that small operators and the consumers they serve are harmed by the negotiating power of large broadcast cartels, it is stunning to see such disregard to their plight," American Cable Association President Matt Polka said. President Genny Morelli said ITTA is "outraged that ... Wheeler has decided to abandon efforts by smaller and new entrant MVPDs to obtain relief from dramatically escalating retransmission consent fees and increasingly anti-competitive negotiating tactics by large broadcasters." The American TV Alliance called the decision "a sad day for television viewers," especially what it sees as a growing number of blackouts and rising prices. But it said Wheeler "acknowledged that his announcement is not an official FCC action and merely reflects his personal belief about the issue ‘at this time.’ We think the FCC will come to realize the error of this belief -- especially if, as we fear, broadcasters continue to abuse the viewing public in the coming months. Retrans reform may not happen today, but it will happen.”
"Totality of circumstance is pretty broad," Wheeler said Thursday during the agency's July meeting. "If you begin to say, 'Let's look at this or this,' you begin narrowing it down." In a blog post Thursday announcing the decision not to act, Wheeler said more retrans rules "are not what we need at this point." "It is hard to get more inclusive than to review the 'totality of circumstances.' To start picking and choosing, in part, could limit future inquiries," he said.
While many MVPD parties brought up numerous negotiation practices in comments in docket 16-216, "none showed that those practices are the causes of the blackouts that occur," Wheeler said in the blog post, saying some practices also appear to be relatively rare. "What we need is not more rules, but for both sides in retransmission consent negotiations to take seriously their responsibility to consumers, who expect to watch their preferred broadcast programming without interruption and to receive the subscription TV service for which they pay," Wheeler said in the blog post.
In his blog, Wheeler said the FCC decision doesn't mean "Congress couldn't expand the scope" of FCC authority in retrans clashes. When asked whether Congress should make any changes to retrans rules, Wheeler said, "It's their decision whether they want to do something about it."
Commissioners Mike O'Rielly and Ajit Pai didn't comment Thursday, saying they hadn't read Wheeler's blog post. NCTA didn't comment.
"As Chairman Wheeler acknowledges, the vast majority of these negotiations are successfully concluded without incident or impasse," NAB said in a statement. "Broadcasters remain fully committed to reaching agreements with pay TV companies in good faith so that consumers can continue to receive our high-quality local content whether over the air or through a pay TV service."
The FCC decision is "a positive" for broadcasters and diversified owned-and-operated stations, Wells Fargo analyst Marci Ryvicker wrote investors. "While we understand the FCC is still going to watch retrans negotiations carefully, we do think today's statements remove some uncertainty."
The FCC decision coming "in the face of historic numbers of broadcast blackouts and clear signs of market failure and widespread consumer harm is stunning," ACA said, saying Wheeler is overlooking "the plight of millions of consumers served by MVPDs who have repeatedly been victimized by broadcasters' heavy-handed bargaining tactics, such as pulling signals prior to a marquee event like the Oscars or baseball's All-Star game. After years of solid evidence that small operators and the consumers they serve are harmed by the negotiating power of large broadcast cartels, it is stunning to see such disregard to their plight." ACA said negotiation abuses will "perpetuate and most likely escalate."