Broadcast Retransmission Negotiations and Free Markets

In recent years, rising broadcast retransmission fees have been the source of increasing friction between broadcasters and multichannel video programming distributors (MVPDs) negotiating over rights to retransmit broadcast signals. Just witness this past weekend's loss of Fox TV's network television programs by Cablevision's subscribers in New York, Philadelphia, and the surrounding areas. Not surprisingly, in light of the increasing number of blackouts and threatened blackouts of network television programming by broadcasters, there is now an important debate emerging concerning whether the FCC should adopt a set of negotiation and dispute resolution rules to address "must-carry" and retransmission consent rights.

There is a fundamental issue, however, that needs to be addressed before considering whether, or what kind, of new rules should be adopted governing the negotiations between the broadcasters and the multichannel video distributors. This is the issue concerning whether, as the broadcasters often claim, the government ought to take a completely "hands off" policy towards the negotiations because they take place in a "free market" context, or whether, instead, there are conditions that exist that make the context of the bargaining a rather "un-free" market. Current negotiations occur in the context of a federal law and regulation overlay that mixes elements of private bargaining with forced-access and protectionist elements. This creates artificial constraints that make the negotiations anything but a free market situation. Indeed, the statutory and regulatory constraints have the effect of conferring certain advantages that may work to the negotiating advantage of broadcasters and against cable and satellite operators.