Negotiating in good faith?

The media marketplace has changed significantly over the past decade, including more consumer choices for how, where, and when we watch video programs.  Content has always been king, but with alternative distribution channels available (e.g. internet, mobile), even more power has shifted to broadcasters in retransmission negotiations.  Without surprise, distributors are none too happy and are trying to wield their considerable influence with the FCC to get things changed….all under the guise of protecting the interests of consumers. 

So, while the number of program disruptions resulting from retransmission disputes have increased in recent years, without that threat and reality, we have to ask: who would be better off?  Maybe consumers would be in the short-run.  But, they have choices and could ultimately take their business elsewhere.  MVPDs, on the other hand….

Some background:

Section 325(b) of the 1934 Communications Act (as amended in 1992) requires cable systems and other pay television services to obtain a television station’s “retransmission consent” before carrying the station’s signal.  Broadcasters and MVPDs are required to negotiate these market-based agreements in good faith and minimize programming service disruptions (“blackouts”).  Violations of good faith negotiations can be determined as either per se breaches or in the totality of the circumstances.

And, now:

In March of 2011, the FCC released a Notice of Proposed Rulemaking (NPRM) to consider possible amendments to these rules, including providing guidance to the parties on good faith negotiation requirements.   With that NPRM still pending, Congress directed the FCC in the STELA Reauthorization Act of 2014 to begin a review of its totality of the circumstances test for good faith negotiations. Also included in the NPRM, released in September, was a request for comment on whether there are specific practices that constitute evidence of bad faith (i.e. preventing online access to programming, banning networks from negotiating on behalf of affiliate stations, and bundling broadcast and non-broadcast programming).