American regulators should adopt rules forbidding TV blackouts, according to a cable lobbying group -- but broadcasters rejected the call, which would eliminate their leverage in contract disputes.
CBS blackout on Time Warner Cable systems in New York, L.A. and Dallas, now in its 21st day, is only the latest and highest-profile spat that illustrates a chronic problem with the current retransmission-consent system, American Cable Assn. prexy Matt Polka wrote in a letter Thursday to the Federal Communications Commission.
"Without action by policymakers to change the laws governing these negotiations there will undoubtedly be many more blackouts," Polka said in the letter to FCC interim chairman Mignon Clyburn.
As a remedy, the ACA proposed that the FCC adopt a rule mandating that broadcasters and pay TV operators continue to offer a broadcast station's signal to consumers after an existing retrans-consent agreement expires, while the terms of a new agreement are worked out. A cable or satellite operator would pay rates under the previous contract, with a retroactive "true-up" once a new deal is signed.
SEE ALSO: Why the FCC Is Not Taking Action to End the CBS Blackout on Time Warner Cable
Such a measure would focus "on the narrow need to ensure consumers have continued access to broadcast stations while parties continue to negotiate," said Polka, whose group reps small cable operators.
The FCC declined to comment on ACA's letter.
Broadcasters say the FCC doesn't have the authority to make such rules under the 1992 Cable Act -- and they oppose any expansion of the agency's powers in this area.
According to a CBS rep, for such change to happen Congress would need to pass legislation to give the FCC "this type of oversight." The FCC itself has said it does not believe it has the authority to "adopt either interim carriage mechanisms or mandatory binding dispute resolution procedures."
But ACA argued that the commission has the latitude to "govern the exercise" of retransmission consent rights, and that "plainly includes the power to adopt whatever remedial measures may be necessary to protect the public from harm, including dispute resolution procedures and interim carriage requirements," Polka said.
SEE ALSO: Time Warner Cable Subscribers Sue Over CBS, Showtime Blackout
Broadcasters assert that the current retrans system works, with the threat of a blackout a powerful bargaining chip they need to successfully negotiate deals. They also point to the deal announced Thursday between the Eye and Verizon Communications, which according to CBS CEO Les Moonves has almost exactly the same terms as the one extended to Time Warner Cable.
Dennis Wharton, exec VP of communications for National Assn. of Broadcasters, said the ACA's proposal would "inject government mandates into private business negotiations."
"As today's successfully concluded free market Verizon FIOS/CBS carriage deal suggests, there is tremendous incentive for both broadcasters and pay TV providers to reach retransmission consent agreements," he said. "It is our hope that the FCC resists this cynical campaign to deny local broadcasters fair market value for our most-watched programming."
In other countries, regulatory bodies do have rules forbidding blackouts. The Canadian Radio-television and Telecommunications Commission, for example, recently implemented a "standstill" rule -- mandating that TV signals must continue to be carried during a dispute, according to Chris Edwards, VP corporate and regulatory affairs for the Canadian Cable Systems Alliance trade group. The CRTC also requires all industry participants including broadcast networks to submit to its dispute-resolution processes.
U.S. television broadcasters have a public obligation to provide free, over-the-air television in the spectrum the government granted them rights to. But under current framework, they are free to demand any payment and terms from a pay TV provider as long as they're deemed to be negotiating in "good faith."
The number of TV blackouts in the U.S. has been on the rise, as broadcasters seek bigger payments from cable, satellite and telco operators. In 2012, 91 retransmission-consent disputes resulted in blackouts, up 78% from the prior year, according to industry figures.
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