A pair of proposals made by the head of the Federal Communications Commission (FCC) this week that are meant to reign in programming-related disputes on cable and satellite platforms have drawn the ire of pay TV advocacy groups, who say they wrongly place the blame on their members.
The proposals, announced on Wednesday by FCC Chairperson Jessica Rosenworcel, would force cable and satellite companies to disclose carriage disputes that last longer than one full day through a public portal established by the agency, and to issue refunds to customers who are missing one or more channels due to those business disputes.
“Enough with the blackouts,” Rosenworcel said in a press release. “When consumers with traditional cable and satellite service turn on the screen, they should get what they pay for. It’s not right when big companies battle it out and leave viewers without the ability to watch the local news, their favorite show, or the big game. If the screen stays dark, they deserve a refund.”
It wasn’t clear how either of the proposals offered by Rosenworcel would actually prevent blackouts from happening in the first place. For years, cable and satellite companies have complained that broadcasters and the owners of cable channels have demanded more money in exchange for their programming. The demands leave pay TV companies with few options: They can pay the higher fees, and pass those costs on to subscribers in their bills, or they can reject the demands and pull the channels.
Over the last few years, cable and satellite companies have increasingly opted for the later tactic as more customers ditch pay TV due to rising costs. The platforms say ratings on traditional broadcast and cable television don’t justify paying more for the same package of channels, and complain that media companies are increasingly keeping their best TV shows and movies for their own streaming services.
Shortly after Rosenworcel’s proposals were announced, groups advocating on behalf of cable and satellite companies issued public statements saying they appreciated efforts by the FCC’s chairperson to tackle programming-related disputes, but said the plans put forth by Rosenworcel missed the mark.
“Every blackout — every single one — is caused by the same thing: Broadcasters want consumers to pay higher prices,” Cora Mandy, the spokesperson for the American Television Alliance (ATVA), said in a statement emailed to The Desk. “We appreciate the Commission’s acknowledgement that blackouts are a problem. However, we’d like to see the focus on the broadcasters, who increased retransmission consent fees from $200 million in 2006 to $11.7 billion in 2019 — an unbelievable 5,359 percent – rather than just on the companies that are negotiating to keep prices down for their customers.”
Mandy said the ATVA wanted more opportunities to “advance proposals that ensure broadcasters carry out their public interest obligations so that blackouts can be avoided all together.”
The ATVA’s sentiment was echoed by Grant Spellmeyer, the head of ACA Connects, an advocacy organization that works on behalf of rural, small and mid-sized cable and broadband operators.
“The nation’s independent broadband and cable providers work hard every day to deliver high-quality programming and services to their customers at fair prices. They hate blackouts as much as anyone,” Spellmeyer said in a statement. “Unfortunately, the proposals announced today do not appear to address the root cause of these blackouts: the insatiable demand of broadcasters for outrageous, ever-increasing fees. We urge the FCC to focus on tackling this underlying problem and to avoid proposals that are more likely to make it worse by giving mega-broadcasters even more leverage in their negotiations with smaller cable operators.”
Last month, Spellmeyer appeared before a panel at the House of Representatives’ Energy and Commerce Committee, during which he complained that major media companies that own broadcast and cable channels make it difficult for pay TV platforms to offer affordable packages to their customers.
That difficultly is mostly rooted in contractual terms programmers propose to cable and satellite operators, which require top-tier channels like ESPN, Fox News Channel, USA Network, CNN and TNT to be licensed together with lower-rated channels like Disney XD, Freeform, Fox Sports 2, SyFy and Tru TV.
“The little secret that consumers don’t understand is that the content providers won’t let us, the cable companies, offer smaller packages,” Spellmeyer said. “For my members, without leverage over the content providers, it’s take-it-or-leave-it.”
While Rosenworcel’s proposals have drawn some criticism, they did score the approval of the advocacy group Consumer Reports, which said on Wednesday it applauded the FCC chair for announcing what it called “pro-consumer initiatives.”
“One of the biggest harms facing consumers in the video marketplace is the prevalence of blackouts. When two major companies fail to reach a deal, consumers are left without being able to access the content they paid for,” Jonathan Schwantes, the senior policy counsel at Consumer Reports, said in a statement. “On one side is a broadcaster or media conglomerate, and on the other side is a video distributor, which in most cases is a cable or satellite television provider. We are pleased to see that the FCC is working to hold cable and satellite providers accountable to ensure that consumers get what they pay for.”
Schwantes pointed out that a recent dispute between Charter Communications and the Walt Disney Company left customers of Spectrum TV without access to around a dozen broadcast and cable channels, including ESPN, Disney and some ABC-owned stations. Consumer Reports published a petition asking Charter to issue refunds to customers who were affected by the issue, with the petition receiving over 30,000 signatures.
No present-day federal regulation requires cable or satellite companies to issue refunds for missing channels. But many of them issue refunds or credits on a voluntary basis as a goodwill gesture, including Charter, which offered prorated credits to customers during the dispute with Disney.
Schwantes said the proposals made by Rosenworcel brings into focus the reality that “these disputes are all about money, and universally harm consumers.”
“The recent dispute between content powerhouse Disney and Charter, which brands its cable product as Spectrum, the second-largest cable company in the country, serves as Exhibit A for understanding this problem,” he affirmed. “Because two multi-billion companies could not come to an agreement on a price for carrying Disney’s content, 15 million Charter cable subscribers were denied ABC, ESPN and other channels owned by Disney for more than a week.”
As far as Rosenworcel’s proposals go, both have been outlined in separate notices of proposed rule making, which will go before a vote of the full FCC board at some point in the near future. If approved by the board, the proposals will be put on the FCC docket for public comment.