Debate Over Retrans Disputes Dominates Senate Judiciary STELA Hearing

"I will move forward with bipartisan legislation to reauthorize STELA,” said Committee Chairman Patrick Leahy, D-Vt., expressing a desire to work with the Senate Commerce Committee and House lawmakers. STELA must be reauthorized by year-end or it will expire, and the Judiciary and Commerce committees in both chambers have jurisdiction. The House Communications Subcommittee cleared a STELA draft from subcommittee Tuesday, but Senate lawmakers largely did not address that version of the legislation. Senate Commerce plans a STELA hearing Tuesday. Lobbyists have indicated Leahy seems to prefer a clean reauthorization. Leahy asked if Dish would oppose a STELA draft that did not revamp retrans negotiation rules, which Dish has strongly advocated for in both chambers.

"We believe that more must be done and can be done,” replied Dish Senior Counsel-Regulatory Affairs Alison Minea, citing data about the rising frequency and cost of retrans blackouts. “Consumers can’t wait. Blackouts need to be dealt with now.” STELA is “exactly the right opportunity” to revamp the rules, she said. The American Television Alliance, representing pay-TV interests, agreed and said in a statement issued following the hearing that “TV broadcasters continue to parrot the same distortions that illustrate they're living in a TV fantasy land and want to drag us all into it.”

Broadcasters have lobbied in both chambers for a reauthorization of STELA that does not change retrans rules. “Our concern is with the distant signal,” said Schurz Communications Senior Vice President-Broadcasting Marci Burdick, a board member of NAB and speaking on its behalf, saying “localism is undermined” when local television stations and their advertisers are not seen: “It diminishes our economics.” She said 90 percent of local broadcaster revenue comes from advertising, which is “extremely important” for broadcasters. “We absolutely disagree that a distant signal law should be made permanent,” Burdick said, though broadcasters would support a five-year STELA reauthorization.

Committee ranking member Chuck Grassley, R-Iowa, asked whether the Copyright Act’s Section 119 satellite compulsory copyright licensing provision, set to sunset with STELA expiration if not renewed, is still necessary. Section 119 and compulsory licensing overall is largely necessary, Minea said. There’s perhaps some room for “overhauling the entire system,” but the endeavor would be very complicated, she said: “We would definitely urge caution in looking at whether or not the statutory licensing should be eliminated.” Public Knowledge Senior Staff Attorney John Bergmayer said he would support ending compulsory licensing but it must be done “cautiously.” Burdick said it would be “exceptionally complex” to nix all copyright, and questioned whether, if Section 119 were to sunset, the disruption would be as large as some have estimated.

Sen. Orrin Hatch, R-Utah, questioned witnesses on retrans. “I'm trying to understand whether there’s a need for reform here or not,” Hatch told witnesses. Dish has “to fight like crazy to keep our costs down,” Minea said, citing programming costs and how it “hurts” when broadcasters ask for a 400 percent increase in retrans negotiations. “Eventually we have to pass on some of those costs to our subscribers.”

"When you start at zero, it’s pretty easy to get to 400 percent pretty darn quickly,” Burdick countered. “Blackouts are 100 percent the fault of the broadcasters,” Minea said. “We never, ever want to take the signal down.” Bergmayer said the disagreement concerns whether pulling a signal is a “legitimate negotiating tactic or not” and argued it’s not. Burdick defended retrans consent as “working” and said she lacks “a phalanx of attorneys” to help negotiate such deals in the way bigger multichannel video programming distributors do, arguing that arbitration would prolong such negotiations.

Grassley, noting the marketplace evolutions that have occurred, said in his opening statement that it “may be more productive to look into these issues within the context of a broader review of the nation’s communications laws and our effort to update those laws to bring them in line with the ever-transforming and vibrant communications marketplace.”

Sen. Al Franken, D-Minn., brought up the proposed deal for Comcast to acquire Time Warner Cable, the topic of a Senate Judiciary hearing April 9 at 10 a.m. in 226 Dirksen. “I strongly oppose this acquisition,” said Franken, warning of a cable industry becoming “even more powerful.” He emphasized the importance of consumer interests, both in considering that deal as well as STELA reauthorization. Sen. Amy Klobuchar, D-Minn., who chairs the committee’s Antitrust Subcommittee, said the deal would have a “profound impact on the competitive landscape” in the U.S.

If Comcast and Time Warner Cable unite, the company would control “at least one third of the broadband Internet market” and perhaps steer consumers away from content delivered by Amazon and Netflix in favor of its own content, Writers Guild of America, West Director-Research and Public Policy Ellen Stutzman told Franken in response to a question on the guild’s opposition of the deal. “The broadband Internet market is even less competitive than the cable market. … We just think this will limit choice. It will probably increase prices and it'll harm the content that consumers can see.” The deal “would be disastrous for programmers, for independent creators and for TV viewers,” Bermayer said. “It would raise prices. It would create a single gatekeeper for programming and broadband of almost unprecedented power, in addition to the vertical integration harms which just happened due to Comcast’s unfortunate acquisition of NBCUniversal.” Comcast has defended the deal as good for consumers and argued that the FCC and the Justice Department should approve it.