Broadcasting&Cable

The National Association of Broadcasters has taken aim at the Department of Justice comments supporting a Federal Communications Commission proposal to make some TV joint sales agreements attributable as ownership interests, as the FCC does in radio.

DOJ told the FCC that the commission should treat TV joint sales agreements (JSAs) as attributable ownership interests, and that shared sales agreements should be looked at on a case-by-case basis. The FCC has only proposed making JSAs of more than 15% of another station's ad sales attributable -- as do TV programming agreements for more than 15% of airtime. But DOJ said any JSA should be attributable.

In a submission to the FCC's various ownership dockets, NAB said DOJ's policy recommendation is based on both false and dated assumptions that broadcasting is the relevant antitrust market, rather than acknowledging competition from non-broadcast competitors like cable and other multichannel video programming distributors (MVPDs). The association argues that DOJ is trying to further its own antitrust interests at the expense of the public interest standard.

In response to a request for input from the Senate Commerce Committee on the reauthorization of the Satellite Television Extension and Localism Act (STELA), Dish and DirecTV filed a joint response with a laundry list of suggestions including permanent reauthorization.

STELA, the law that grants a blanket license to satellite operators to deliver distant network affiliated TV stations into local markets, and the only must-pass video legislation on the horizon, could be a vehicle for various video reforms. However, the cleaner the bill the more likely it will pass by the Dec 31 deadline.

A House draft of STELA already sports a few video reforms, though ones that broadcasters, cable ops and satellite companies appear to be able to live with. In their response to the Senate, Dish and DirecTV were clearly on the side of striking while the iron is hot, which means using STELA as a vehicle for major retransmission and other reforms. "It is time for Congress to act, and STELA reauthorization presents the perfect vehicle," they wrote.

Phil Verveer, senior counselor to Federal Communications Commission Chairman Tom Wheeler, said that he expects the FCC's first two spectrum auctions -- H block and AWS -- will raise most, if not all, of the money to fund FirstNet and other financial obligations under the statute.

At the Free State Foundation telecom conference in Washington, Verveer said: "We've had one auction, we're going to have another that is going to help meet the statutory requirements with respect to contributions. We're going to be very close or perhaps even have met them by the time the incentive auction takes place."

Chief among those obligations is the $7 billion that will be needed to fund FirstNet, the interoperable broadband communications network. Verveer told B&C/Multi after the panel that he thought the FCC would get close to covering those obligations with the first two auctions. The H block raised $1.564 billion, so the AWS auction, which is scheduled for the fall, will have to raise north of $5 billion. The incentive auction is slated for mid-2015, with rules of the road expected to be teed up in the spring, perhaps as early as the May public meeting. Verveer also told B&C/Multi that even more a priority in the auction than the dollars and cents was the ability get the spectrum out quickly to the marketplace.

Rebecca Arbogast, VP of global public policy for Comcast, framed the proposed Time Warner Cable merger as a no antitrust harm, no foul meld that would benefit TWC subscribers without reducing, and indeed increasing, competition.

She also calls it a recognition that the regional cable model is no longer working. At a Free State Foundation telecom conference in Washington on March 18, Arbogast said the deal reflects market realities.

"The simple fact is that times have changed, and so the regional model of cable footprints just isn't tenable any longer given that the companies we're competing against have national footprints and it's important to be able to have that scale, not just to expand the speed and get the deep video libraries, but also to do things that are kind of hidden behind the scenes."

She cited cybersecurity, for one. "You really need to have a base over which to spread that research and development."

On the subject of the deal increasing competition, she cited creating a stronger business services competitor to incumbents AT&T and Verizon. She said that element does not get a lot of attention from the advocacy groups, "but I think is incredibly important for economic growth and development and jobs."

Federal Communications Commissioner Mignon Clyburn is no guaranteed third vote for FCC Chairman Tom Wheeler's proposal to make joint sales agreements (JSAs) more than 15% attributable as ownership, at least as it is currently constituted.

Commissioner Clyburn's office would not comment, but according to sources familiar with conversations between Commissioner Clyburn and National Association of Broadcasters executives, she is looking for a way to balance cracking down on bad actors who use the rules to skirt ownership limits and fostering sharing agreements that can boost diversity, particularly in rural markets where joint ownership of stations is disallowed but the need for some financial help is often greatest.

Chairman Wheeler will definitely need her vote, since the two Republican commissioners have raised major objections to the plan. Commissioner Clyburn is said not to want to reward those bad actors, but is looking at a "different path" to achieving that end as she tries to balance competing, and legitimate, interests. Look for her to offer up her own variations on the theme before the scheduled vote March 31.

National Association of Broadcasters President Gordon Smith and Rick Kaplan, NAB auction point man and former chief of staff to Federal Communications Commissioner Mignon Clyburn, tag teamed a meeting with Commissioner Clyburn to argue that drawing a bright line rule against TV joint sales agreements (JSAs) or limiting joint retransmission negotiations were arbitrary and capricious, constituted wielding a sledgehammer where a scalpel is needed (in the case of JSAs) and was manifestly unfair.

They argued the FCC has not studied the impact of the JSA move on localism and diversity, instead making "sweeping generalizations" about JSAs that make the proposal arbitrary and capricious -- which would also make the move a violation of the Administrative Procedures Act. And throwing FCC Chairman Tom Wheeler's focus on case-by-case determinations, they said that rather than punish the whole industry, the FCC could simply address "purported" bad actors on a case-by-case basis.

As for limiting joint retrans negotiations, NAB said that would be picking winners and losers, since cable ops can jointly negotiate.

Matthew Berry, chief of staff to Federal Communications Commission member Ajit Pai, says the FCC should think long and hard about whether "flyspecking network management practices" is good for consumers.

Chief of Staff Berry talked about the FCC's third attempt to regulate Internet network management practices.

The FCC is currently coming up with new anti-discrimination and anti-blocking rules per a court remand. He said that rather than take inspiration from the proverb, "when at first you don't succeed, try, try again," the FCC should take its cue from a quote attributed to WC Fields: "When at first you don't succeed, try, try again. And then quit. There's no use being a damn fool about it." Berry says the private sector has "overwhelmingly respected Internet freedom, and the reason why is simple: It’s what consumers want."

In a speech at the National Press Club, Jon Sallet, the acting general counsel at the Federal Communications Commission, outlined what he said is FCC Chairman Tom Wheeler's approach to weighing allegations that some television station license transfers are anticompetitive.

"I am aware of the reputation that some attribute to the FCC, that the answer is always 'yes' and the path to 'yes' is bargaining with the agency. It is hard to imagine that such a view can be squared with the manner in which the commission assiduously applied the law to the facts of the proposed AT&T/T-Mobile transaction," which was not approved.

He said that if "for any reason" the FCC concludes that a deal does not service the public interest, or it has a substantial question of fact about whether it does, those deals need to be designated for an administrative hearing. Sallet extolled the virtues of transaction conditions not only to remedy perceived future harms that would be tough for the Department of Justice to get at, but to make policy as well.

Previewing a likely square-off with TiVo in the March 12 Satellite Television Extension and Localism Act (STELA) hearing, National Cable & Telecommunications Association president Michael Powell plans to tell the House Communications Subcommittee that it likes the STELA draft issued by the Republican leadership, and in particular the provisions on getting rid of the Federal Communications Commission's set-top integration ban, which he calls an outdated legal requirement that handicaps cable operators, and limiting coordinated retransmission negotiations.

He says the requirement that cable operators, "and cable operators alone" include a separate decryption component -- a CableCARD -- adds extra cost, sucks up extra energy, and provides "no added benefit to cable customers with leased set-top boxes." He says the integration ban imposes needless extra cost and is not necessary to promote competition in retail device availability.

“Retail competition in navigation devices is a worthy goal, but it is now clear that this goal is best supported by embracing the innovations already occurring in today’s retail marketplace and not by clinging to an outdated and costly FCC rule,” says Powell. As to prohibiting coordinated retransmission negotiations among two or more independently owned stations in a market, which the bill would do unless cable ops agreed to it, Powell said NCTA was all for it. "If multiple broadcast stations in a local market are not co-owned, then they should not be allowed to act as if they are co-owned in retransmission consent negotiations through a sharing arrangement."

[March 11]

Free Press is advising the House Communications Subcommittee to drop a provision in a Satellite Television Extension and Localism Act (STELA) draft that would prevent the Federal Communications Commission from making immediate changes to TV station joint sales agreements (JSAs) and another that would remove the FCC ban on integrated set-top boxes.

In testimony for the March 12 subcommittee hearing on STELA, Free Press Policy Director Matt Wood says Congress should extend the blanket distant signal license. He also says the provision that would prevent coordinated retransmission negotiations could theoretically reduce some anticompetitive harms, too, though are short of changes needed, but would fail to address "other harms to competition, localism and viewpoint diversity that such agreements cause." Free Press says the draft primarily needs to scrap provisions that would not allow the FCC to make joint sales agreements attributable as ownership interests until it had completed its 2010 quadrennial ownership rule review--its current plan is to do JSAs first; and scrapping the ban on integrated set-tops, which has required cable operators to use CableCard security devices in their boxes, as well as support those in retail boxes. Either of those provisions, if they remained in the bill, "would decrease competition, localism and diversity in local broadcasting, maintain high barriers for small businesses and new entry, and slow the pace of competition and innovation in the market for set-top boxes and other video devices," said Wood.

[March 11]