Blame Government Rules for TV Blackouts

Last week, two hundred thousand Bostonians were nearly apoplectic over the threat of a TV blackout that could have caused them to miss their beloved Patriots playing in this year’s Super Bowl. A deal reached between DirecTV and Sunbeam Television, which owns the local broadcasting affiliate carrying the game, means it will go on. However, consumers directing their anger at content and cable providers are often unaware that most of the fault lies with government retransmission rules.

TV blackouts are unfortunately nothing new, the occasional result of negotiations between broadcasters and content providers, and the cable, satellite, and telcos that carry their signal (known as multichannel video programming distributors or MVPDs). Yet, negotiations between broadcasters and MVPDs are guided by a complex, onerous, and antiquated set of regulations that not only restrict these companies from entering into agreements in a free market, but can often cause negotiation breakdown.

For example, the so-called “sports blackout” rule prevents MVPDs from carrying a game if it’s not broadcasted on local television. Non-duplication and syndicated exclusivity rules force MVPDs to carry the content from a local station, instead of importing the same program from elsewhere should negotiations break down. “Must carry” rules actually allow content creators to force cable companies to carry their programming. On the other side of the coin, the compulsory licensing regime has MVPDs pay government-set royalties for content copyright licenses, so that they don’t have to negotiate with each copyright holder. The list of rules goes on, and taken together they are used by government and companies on both sides to leverage power in negotiations.

The Next Generation Television Marketplace Act (PDF), introduced late last year by Rep. Steve Scalise (R-La.) and Sen. Jim DeMint (R-S.C.) would tackle much of the problem with the current retransmission consent and compulsory copyright regime. The bill repeals many of the rules that guide broadcaster and MVPD negotiations. It also tears down government price regulations and mandates that cable companies offer a mandatory “basic tier” of channels. In an era of on-demand programming, especially from web and other non-cable providers, this is a particularly outdated law. The law would also repeal cross-media ownership limitations that prevent companies from simultaneously owning radio and TV stations or newspaper and broadcast stations. This will allow industries struggling for capital, like newspapers, to seek investments from within the larger media industry.

The FCC has already undertaken steps toward eliminating the “sports blackout” rule. Yet, this hardly goes far enough to end government’s role in causing content and MVPD negotiations to break down and spill out into consumer view. As we argued in comments to the FCC last year, the current regulatory system needs a complete rewrite.

The last time most of these laws were touched was 1992, when consumers had fewer cable providers and programming options. Today there is strong competition amongst cable, satellite, and telecom companies, and amongst content distributors like broadcasters, cable channels, and web companies like Netflix and Hulu. It’s time to bring content delivery into the modern era, scrap outdated rules, and allow companies to negotiate in a free-market.

blog comments powered by Disqus