Regulation Killed the Video Star: Toward a Freer Market in Broadcast Television (2015)

TABLE OF CONTENTS I. INTRODUCTION II. BACKGROUND A. The Birth of Cable Television B. Statutory Copyright License for Broadcast Signal Retransmission C. Cable Act of 1992: Congress Establishes Retransmission Consent D. Similar Rules Govern Satellite Carriers III. MVPDS AND BROADCASTERS GO HEAD-TO-HEAD IN WASHINGTON A. Mandatory Carriage Requirement B. Network Non-Duplication and Syndication Exclusivity Rules C. How Broadcasters 'Earn Their Retransmission Consent Rights IV. GOVERNING A PRO-COMPETITIVE, PRO-CONSUMER VIDEO MARKETPLACE A. The Case for a Level Playing Field in Video B. If Retransmission Consent Isn't Broken, Why Fix It? C. Simple Rules for Retransmission Consent: The Next Generation Television Marketplace Act V. CONCLUSION I. INTRODUCTION On August 2, 2013, over three million American subscribers to Time Warner Cable lost access to CBS due to a business dispute between CBS Corporation and Time Warner Cable (TWC). (1) This disruption, also referred to as a persisted until the companies reached a deal on September 2, 2013--just three days before the National Football League kicked off its 2013 season. (2) During the month-long blackout, TWC subscribers in eight major markets, including New York City and Los Angeles, could not receive their local CBS affiliate's signal through their cable provider. (3) Frustrated by the standoff, thousands of TWC subscribers flocked to Verizon's competing television service, FiOS. (4) TWC lost 306,000 net subscribers during the third quarter of 2013, marking a record quarterly loss for the company. (5) This blackout is just one of several recent high-profile disputes in which a cable or satellite provider failed to reach an agreement with a broadcaster about how much to pay to redistribute its signal. (6) From 2006 to 2014, these payments from television providers to broadcasters, known as fees, increased from $215 million (7) to $4.9 billion (8)--or over twenty percent of broadcast television stations' aggregate revenue. (9) Since 2001, retransmission disputes have caused over 100 blackouts, including seventy-three between 2010 and 2013.10 Given that the typical American adult spends thirty-eight hours each week watching live and time-shifted television, (11) viewers consider the loss of a popular channel quite disruptive. (12) Americans' frustration with blackouts has drawn considerable attention in Washington, D.C. In recent years, congressional committees have held numerous hearings on television blackouts and surrounding issues. (13) Several members of Congress have introduced bills aimed at alleviating or preventing blackouts. (14) The Federal Communications Commission (FCC), the nation's primary telecommunications regulator, is also following the issue. (15) In August 2013, for instance, then-FCC Acting Chairwoman Mignon Clybum publicly expressed her disappointment with the TWC-CBS retransmission dispute. (16) Lawmakers and regulators are focused on the statutory and regulatory provisions that govern how pay-television providers (17) retransmit broadcast television signals to their subscribers. (18) In Washington, the battle lines are drawn: on one side are broadcast networks and their affiliate stations; on the other side are multichannel video programming distributors (MVPDs)--an umbrella term that encompasses distributors of video programming through cable, fiber-optic lines, and direct broadcast satellite (DBS) companies. (19) Most broadcasters affiliated with a major network are largely content with the existing rules, (20) under which a commercial broadcaster may, if it so elects, demand payment from an MVPD in consideration for permission to retransmit the station's signal. (21) If, after negotiating in good faith, (22) a broadcaster and an MVPD cannot agree on retransmission terms, the MVPD must cease retransmitting that station's signal--lest it incur a potentially severe FCC fine. …