Republicans dip toes in TV reg reform waters
Just when it seemed that Republicans might take the plunge in reforming outdated retransmission consent laws, it sounds like they found the water colder than expected and have settled on just a few tweaks around the edges in a bill reauthorizing STELA, the Satellite Television Extension and Localism Act. This all played out rather quickly and to the surprise of many, as House Communications and Technology Subcommittee Chairman Greg Walden , R-Ore., had previously signaled that he’d pursue a “clean” STELA reauthorization without changes to retrans.
You might remember some of my previous writing on an effort by Rep. Steve Scalise, R-La., to dismantle our archaic television regulatory structure piece by piece. His excellent Next Generation Television Marketplace Act would have repealed entirely retrans and related preferences while also eliminating compulsory licensing and ownership restrictions for broadcasters. This bill, in my view, takes the right approach of substantially reforming the ill-fitting rules that impact both sides of television negotiations: content and service provider. By getting rid of most of the relevant regulations that distort the market, the Scalise bill would have freed carriage negotiations of government meddling, thus turning them into truly private negotiations between private entities.
The most obvious vehicle to which such reform would be attached is STELA, the satellite TV law that’s coming up for reauthorization this year. And while full-scale retrans and licensing reform didn’t make it in, early reports did indicate that a few significant related changes would be made, most notable among them elimination of the rule forcing service providers to carry stations that elect retransmission consent on the so-called “basic tier” of programming that all subscribers must buy.
As recently as Monday, the word was that this provision was in the STELA draft, but what a difference a few days of concerted lobbying and expensive PR can make! Word today is that the basic tier provision is no longer in the draft after broadcasters cried foul. What is still in, however, as best we know is elimination of a regulation preventing service providers from blacking out signals during the “sweeps” period where ratings are measured. In addition, a provision of the draft will allow service providers to negotiate retransmission agreements jointly with certain stations.
These changes would be significant because the current regulations artificially reduce a service provider’s bargaining power. The retransmission consent regime ensures that Uncle Sam is a central player in these negotiations and the other rules that help govern the process essentially place government’s thumb on the scale between the two parties. The basic tier and “must carry” rules reduce their ability to choose which content to distribute, or not, and how that content is structured for customers. The sweeps rule prevents them from dropping a signal for fully one-third of the year, while broadcasters are allowed to pull theirs whenever they choose (like, say, right before the World Series). “Network non-duplication” rules prevent them from cutting deals with broadcasters outside their local area.
The result of this meddling is likely making service more expensive and less efficient for consumers, as some negotiations lead to blackouts or exceptionally high retransmission fees. That’s why it’s encouraging to hear House leaders begin talking about reforms that would repeal outdated rules in service of getting us closer to the kind of free market negotiations that should reign in television service (and just about everywhere else). Though they’ve scaled back their ambitions somewhat, this is at least a worthwhile start to address a known issue on a relevant bill that’s moving through Congress this year. I would very much like to keep peeling the onion of misguided regulations to get to the center, but you’ve got to start somewhere and the crusty brown stuff on the outside seems as good a place as any.
