Eshoo bill triggers retransmission-consent showdown

Broadcasters may not be able to use the threat of blackouts to squeeze increased retransmission-consent fees from pay TV providers, if Rep. Anna Eshoo (D-Calif.) wins support for a bill released Monday.

Introduced one week after Time Warner Cable (NYSE: TWC) and CBS Corp. (NYSE: CBS) reached an agreement to end the 32-day blackout of CBS stations and Showtime Networks, the bill would give the FCC the power to grant "interim carriage" of a TV station during a dispute.

The 1992 Cable Act gives local broadcasters the option of negotiating retransmission-consent deals with operators or electing must-carry, which gives a station distribution without compensation. Eshoo's bill would require stations that elect retransmission consent to be carried on a tier separate from basic cable tiers containing must-carry stations and PEG (public, government, education) channels.

While retransmission-consent reform advocates at the American Cable Association and American Television Alliance cheered Eshoo's bill, it drew criticism from lobbyists at the National Association of Broadcasters. CEO Gordon Smith said the bill has a "pro-pay TV slant" and would "embolden pay-TV giants to continue to game the system rather than negotiate in the free market for programming most valuable to viewers." Smith also complained that the bill doesn't contain a provision that would force operators to compensate subscribers who lose programming during a blackout and doesn't address the practice of pay TV distributors charging early termination fees to subscribers who want to switch providers during a retrans blackout. 

ACA, which represents small and mid-sized cable operators, and the American Television Alliance, which is backed by Time Warner Cable, DirecTV (Nasdaq: DTV), Verizon (NYSE: VZ) and several other pay TV distributors and programmers, have been lobbying FCC and Congress to reform retransmission-consent rules.

"ACA agrees that the nation's top media regulator--the FCC--should have the authority to prevent TV signal blackouts as part of its mandate to protect the public interest, convenience and necessity. We also agree with Rep. Eshoo that consumers should not have to buy local TV stations that elect retransmission consent as part of their pay-TV package," ACA said in a statement from CEO Matt Polka.

Eshoo's bill will be a topic of debate on Wednesday, when the House Energy and Commerce Committee holds a hearing on "innovation versus regulation in the video marketplace." The witness list includes Dish Network (Nasdaq: DISH) EVP and General Counsel R. Stanton Dodge, Suddenlink Communications EVP David Rozzelle and CenturyLink (NYSE: CTL) midwest region VP of Regulatory and Legislative Affairs Jim Campbell.

For more:
- see Eshoo statement
- see American Television Alliance statement
- see ACA statement
- see NAB statement
- see CenturyLink statement

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