Retransmission Consent, STELA Reauthorization, and the Future of Outdated ’92 Cable Act Soon to Take Center Stage on Capitol Hill

The storms that have been brewing in Washington, DC over the last several weeks have not been limited to just the weather. There are dozens of issues that elected officials are looking to take on in the coming months and with everything on the table. One issue in particular that will be taking center stage is retransmission consent.  This term may not seem familiar or important, but many Americans have felt the wrath of retransmission consent when there is a threatened blackout of a sporting event because of a breakdown in contract negotiations between a network and a cable or satellite provider.  Retransmission consent shows us why the video marketplace, like several other key areas in the market, is in dire need of an update when it comes to the rules and guidelines in the arena. The issue will be headed for hearing rooms on Capitol Hill very soon and it is important to understand why the update is needed in the first place.

The year 1992 was 24 years ago.  One of the more popular movies was The Mighty Ducks and Boyz II Men’s End Of The Road was a popular song.  That same year the Cable Act was passed.  The Cable Act of 1992 gave broadcasters an advantage in negotiations with monopoly cable providers, granting broadcasters the right to choose between guaranteed carriage or insisting that multichannel video programming distributors (cable and satellite providers) obtain and pay for a station’s consent to retransmit the station to local subscribers.  There is no doubt much has changed in movie and music taste in the more than two decades since.  Much has also changed in the cable industry.  In fact, cable television is just one of many options to have video content delivered. It is time for the Cable Act of 1992, which contains an inherit advantage for broadcasters due to rules that were put in place at a time when so much was different in the video marketplace than what exists today, to be updated to fit the standards and components of today’s technologies and market forces.

The Satellite Television Extension and Localism Act (STELA) was passed by both chambers of Congress in 2010 and renewed the blanket license allowing “satellite operators to deliver distant signals to subscribers who cannot get a viewable signal from their local affiliate.” The main goal being that satellite TV companies (i.e. Dish and DirecTV) can be allowed to retransmit to local market subscribers a network TV signal from outside the subscribers’ market. It has been more than three years now and two things are clear: First, STELA must be reauthorized by December of 2014; Second, the Energy and Commerce Committee has a real chance to include meaningful free market reforms to the retransmission consent process. Currently, the government guarantees broadcasters placement on cable’s basic tier – prime real estate on a cable provider’s system – and the cable operator has no choice in the matter. The government also prohibits cable providers from pulling the plug on a broadcaster’s signal during “sweeps” week, even though broadcasters can and frequently do pull the plug during popular events such as the World Series. These government-imposed rules pick winners and losers and prohibit negotiations from taking place in a true free market. Lifting these rules is only a first step toward the much broader free market reforms that are needed, but STELA represents a major opportunity to begin to undo the government’s thumb on the retransmission consent scales.

As technology has become more and more advanced for the last few decades, there remains little doubt that an overhaul is needed for the current rules in place in the Communications Act. The government shouldn’t be in the business of picking and choosing winners when it comes to any industry, and this includes the video marketplace.

TPA has been involved in coalition efforts and outlined our support for STELA reauthorization complete with free market video reforms, all under the banner of reforming the rules in the video marketplace that have kept it from being a truly free-market for all involved. TPA encourages everyone who cares about free markets and wants to see an update to the Cable Act to pay close attention to the action in Congress upcoming where the efforts to bring about true reform to the video marketplace will be on full display.