Looming Blackouts Continue To Drive Retrans Debate
The retransmission agreement dispute between Tribune and DirecTV keeps the debate going about whether the FCC or Congress should get involved when there’s a threat of a blackout, some broadcast and cable analysts and attorneys said. The contract, which was to have expired Saturday before midnight, covered retransmission of 23 TV stations and cable network WGN America (CD March 28 p17). The two sides had no update late last week, after Tribune warned its viewers they might lose access to stations affiliated with the CW and Fox networks.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The involvement of the New York and Los Angeles markets placed the stakes higher than normal, said analyst Craig Moffett of Bernstein. “This isn’t a run-of-the mill retransmission dispute.” Those markets matter “because they are respectively the homes of the entertainment and advertising industries so they'll always have an outside importance to media companies,” he said. Disputes over retrans deals “always come down to a calculus of who can cause who the most pain,” he said: For broadcasters, “it’s felt immediately in lost adverting revenue.” For the distributor, “it’s a potential loss of customers and the pain is more lasting” because customers may never come back, he said.
Blackouts are very rare, said broadcast lawyer Scott Flick of Pillsbury Winthrop. “When they do happen, they tend to be very short because both parties have a strong incentive to reach a deal.” But outcomes vary from case to case, he added. Usually there’s a deal before there’s a blackout because of the competitive factor, said Garvey Schubert’s Bruce Beckner, who has represented cable operators on retrans deals. He said the distributor “doesn’t want to risk losing customers who could go to a competing distributor."
The threat of blackouts will continue increasing, said a spokesman for the American TV Alliance, which includes DirecTV. The broadcast industry has the advantage over pay-TV companies, he said: The companies may reach an agreement, “but it’s like a stick-up. … The broadcasters have the upper hand in these negotiations” and they're pulling viewers into it. “Deals get done, but how fair are the rules?” The FCC hasn’t adopted a retrans order, and Chairman Julius Genachowski said an increased number of blackouts would lead to more scrutiny from the agency and the number of blackouts was kept low last year (CD March 15 p6). For the agency, retrans agreements have been a “nettlesome problem given the limited statutory authority to do anything about it,” Beckner said. “It doesn’t have the legal power to bring the two sides together to make a deal for them.” Broadcasters say retrans works and changes aren’t needed and might favor pay-TV companies over stations. With a dozen blackouts this year and some looming, “it’s not getting any better,” the ATVA spokesman said of retrans: The situation won’t change “until Congress or the FCC makes changes to the outdated rules.”
Opinions vary on whether the FCC and Congress have demonstrated an interest in getting involved. “It doesn’t seem like there’s any particular appetite in Washington to get involved in retransmission disputes right now,” Moffett said. It’s a complicated messy issue and “it’s not clear what anybody could or would do to resolve the issue.” The commission has been hesitant to step into these disputes, Flick said. “It’s likely the FCC will do what it can to encourage them to reach a resolution, but beyond that they wouldn’t step in.”