Revisionist History, Cable Goodies and Still Nothing for Consumers

On Tuesday, Federal Communications Commission (FCC) Chairman Tom Wheeler’s Media Bureau chief, Bill Lake, took to the blogosphere in an attempt to reverse the palpable lack of enthusiasm for the Chairman’s plan to eliminate the broadcast TV exclusivity rules. Unfortunately, Mr. Lake’s written defense of the Chairman’s proposal is fatally flawed and obscures the larger questions surrounding the Chairman’s recent efforts.

There are many reasons why Chairman Wheeler’s self-generated push to eliminate the Commission’s network and syndicated exclusivity rules is misguided. As the National Association of Broadcasters (NAB) has detailed in numerous filings, the exclusivity rules enhance localism without granting new substantive rights. They also create a significant marketplace efficiency by preventing protracted and expensive litigation over private marketplace deals. They are part of a larger comprehensive system developed and reworked by Congress over the last several decades and serve as an important deterrent against cable operator mischief of the sort that industry typically reserves for its customers.

Since the Chairman first circulated his proposal in August, broadcasters across the country have reminded the FCC that Congress already has in place a carefully constructed framework that includes exclusivity protections at its core. As Mr. Lake acknowledges for the first time, Congress, the White House and the FCC forged an agreement among stakeholders in 1971 that would lead to cable’s compulsory license, content owners’ compensation and broadcasters’ bargained-for exclusivity protection at the FCC. Notably, the cable industry received a hefty government subsidy in the copyright deal, as the government and not the market continues to set the rates cable companies pay for the underlying content they re-sell to consumers.

Mr. Lake argues that despite this agreement, subsequent events nullify the need for the FCC to uphold the part of the system that promotes local broadcast TV service. Specifically, Mr. Lake asserts that because Congress instituted the retransmission consent regime in 1992, there is no longer a need for the FCC to preserve local exclusivity. The thinking goes that broadcasters need not worry about the importation of distant signals because retransmission consent makes it more difficult for cable companies to obtain the rights to import signals from third-party stations.

This argument, however, is not only inaccurate, but also completely misses the point. When enacting the retransmission consent regime in 1992, Congress stated expressly:

[T]he Committee has relied on the protections which are afforded local stations by the FCC’s network non-duplication and syndicated exclusivity rules. Amendments or deletions of these rules in a manner which would allow distant stations to be submitted on cable systems for carriage or local stations carrying the same programming would, in the Committee’s view, be inconsistent with the regulatory structure [adopted in the 1992 Cable Act].

Contrary to Mr. Lake’s central claim, Congress was well aware of the importance of the exclusivity rules when it granted retransmission consent rights to broadcasters. The “major piece[] of the intervening history” (i.e., the 1992 Cable Act) that Mr. Lake identifies in his blog itself recognized that exclusivity is part and parcel of the copyright/retransmission consent framework. It is awfully difficult to claim that an intervening event fundamentally altered an initial deal when the authors of that event stated that they were incorporating all of the elements of the original agreement.

But even if those pages of intervening history were lost, one could simply look to the satellite reauthorization bill Congress passed just last year to see how hollow Mr. Lake’s claim rings. In reauthorizing the satellite distant signal license, Congress yet again preserved local exclusivity for satellite viewers. Therefore, even if somehow one could claim that Congress didn’t understand the potential impact of retransmission consent on exclusivity in 1992, no one can plausibly claim that Congress was so blind as to miss the implications of local exclusivity in 2014. And does Mr. Lake seriously think that Congress meant to create a mechanism for broadcasters to enforce their exclusivity rights against satellite, but not against their cable competitors?

Moreover, missing in all of this historical rewriting is that neither the Chairman nor Mr. Lake even attempt to suggest that consumers may benefit from the Chairman’s proposal or that eliminating the rules will alleviate some burden that the Commission currently faces. Their central premise is simply that the rules are “old” and “unnecessary.”

As NAB has highlighted elsewhere, if age were the measure of a regulation’s validity, why is the Chairman wasting his time with the relatively recent exclusivity rules, when the World War II-era media ownership rules are comparatively low-hanging fruit? The beauty of the Commission’s oversight of the ownership rules is that, unlike the exclusivity rules, Congress actually requires the FCC to review them every four years to see if they are still operating in the public interest. This raises the question of why consideration of the exclusivity rules has vaulted ahead of a meaningful review of the ownership rules, which have been subject to an ongoing proceeding since 2009 with no end in sight.

It can be a tough pill to swallow to pull back a proposal one has made to his or her colleagues. In this case, however, it appears that no one but the Chairman and Mr. Lake believe that eliminating the exclusivity rules is a good idea, or even, at best, should be a Commission priority. Even the American Cable Association (ACA) only supports the change insofar as it leads to the Commission outlawing exclusive broadcaster arrangements altogether. With history and common sense as a guide, it’s time to shelve this proposal and move on to more important matters that preserve localism, competition and diversity for the benefit of consumers.