Review of Broadcast Rules Likely to Face MVPD Concerns About Leverage
As the FCC looks at revising or doing away with its dual network and local TV rules, MVPDs told us they're likely to object along familiar lines about broadcaster consolidation tipping the balance of power in retransmission consent negotiations. FCC commissioners unanimously approved a 2022 quadrennial review NPRM in September that asks whether the local TV and dual network rules remain necessary (see 2509300062).
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“Mega-broadcasters are already abusing their market power and squeezing smaller cable systems and their subscribers for every cent," ACA Connects President Grant Spellmeyer said in an emailed statement. "They’ve increased retransmission fees 2,000 percent since 2011, resulting in more expensive bills for customers. The FCC should not give major broadcasters any more leverage to reach deeper into people’s pocketbooks.”
John Bergmayer, Public Knowledge's legal director, told us that broadcast leverage and content costs will likely figure significantly into MVPDs' arguments. Those same issues have been part of the proceeding on the national TV-ownership cap (see 2508050051), he noted, adding that the FCC changing the national cap would be "legally really shaky," as the agency lacks the authority to do so.
Bergmayer said his group generally agrees with cable on the likelihood of rising content costs, especially as more content is available online. Public Knowledge's focus on media concentration has been more about the diversity of voices and the susceptibility of consolidated broadcast groups to government pressure, especially when those organizations need merger approval.
A lawyer with MVPD expertise told us the legal authority arguments that have come up with the national ownership cap won't be raised in the quadrennial review proceeding. But even if the FCC changed its dual network and local TV rules, individual broadcast transactions would still have to be justified before the agency, he said. A deal must be shown to be in the public interest, even in light of rising costs to MVPDs for that broadcast content, the lawyer said. He noted that history shows that the larger a broadcaster gets, the more MVPDs pay in retransmission rates when dealing with that broadcaster.
The lawyer said the FCC could also hear arguments about broadcaster consolidation hurting diversity and local news. The broadcast industry's common claim that consolidation is necessary to save local broadcasting and news doesn't jibe with its assertions to Wall Street that its business is robust and that local news differentiates it from competitors.
NCTA and the American TV Alliance didn't comment. But in its FCC filing in August on the national ownership cap, ATVA warned that more consolidation would result in consumers "paying even more for signals that are otherwise free over the air," thanks to broadcasters' added leverage in retransmission consent negotiations. NCTA echoed that view, arguing that raising or axing the national ownership cap "would put upward pressure on retransmission consent fees to the detriment of the public and MVPDs."
In the NPRM, the FCC seeks feedback on a number of issues, including whether its local TV ownership limits are still appropriate. It also asks whether the limit of two stations per Nielsen designated market area should be kept, modified or eliminated, but the agency itself doesn't float any tentative conclusions. The same goes for the dual network rule, with the NPRM seeking comment on what rule changes are warranted and why, but not offering any tentative conclusions.