
A team of federal lawmakers have proposed a measure that, if signed into law, would effectively require cable companies to issue refunds to customers if they remove channels during carriage disputes.
The bill, called the “Stop Sports Blackout Act,” is intended to curb the effects of disputes that result in cable and satellite operators dropping regional and national sports networks, though it would apply broadly to all types of channels.
On Friday, Representative Pat Ryan and Senator Chris Murphy said they were inspired to act after a recent programming dispute led Altice USA-owned Optimum TV to drop several channels owned by MSG Networks. The dispute, which continues today, means subscribers of Optimum TV are unable to access locally-televised games from the New York Rangers, New York Knicks, Brooklyn Nets and a few other sports franchises unless they switch to a different TV service or pay $30 per month for the streaming version of MSG Networks, called MSG Plus, through the Gotham Sports app.
Disputes like the one involving Altice USA and MSG Networks have become more common over the years as the owners of broadcast and cable channels make multi-billion dollar investments in the pursuit of sports rights, then pass those costs on to advertisers and pay TV subscribers.
In many ways, the broadcasters have the leverage in contract negotiations, because existing federal copyright laws allow them to withhold their channels unless cable and satellite TV platforms pay for the rights to redistribute them. Congress permits the Federal Communications Commission (FCC) to enforce laws regarding distribution of channels on cable and satellite TV, and the FCC requires programmers and distributors to negotiate carriage of channels in good faith.
But “good faith” is an arbitrary and vague term that has seldom been defined, and there is no law that sets reasonable limits on how much broadcasters can charge for their channels. There are also few remedies for cable and satellite providers to provide alternative programming options to customers, since broadcasters typically have exclusivity in a particular area and the sole rights to certain sports and other programs.
The end result is that broadcasters can charge whatever they want for the redistribution of their channels on cable and satellite — and if cable and satellite companies refuse to pay, they lose the right to offer those channels to customers.
Over the past few years, some cable and satellite TV companies have offered voluntary rebates or unlocked access to other channels during carriage disputes. In 2004, Dish Network gave subscribers free access to HBO Family after pulling channels owned by Viacom Networks (now Paramount Global), including Nickelodeon. Two years ago, DirecTV issued one-time bill credits to customers who lost access to Nexstar Media Group-owned broadcast stations just before the start of the National Football League’s (NFL) season, and again when the company was forced to pull local TV stations owned by TEGNA before the NFL playoffs.
But those acts are not required by law — they amount to a goodwill gesture to keep subscribers satisfied while all sides work toward a new distribution agreement. Altice USA has not offered bill credits to its customers; instead, the company has pushed Optimum TV subscribers to an offer that gives them Fubo, a comparable streaming TV service, at a discounted rate for two months. Altice USA has also demanded MSG Networks issue refunds to Optimum TV customers that total $125 million.
The measure proposed by Ryan and Murphy will do nothing to stop the trend of rising cable and satellite bills, or to reign in demands for higher distribution fees by broadcasters. Instead, it would instead require cable and satellite companies to issue immediate refunds to customers that offset the loss of carrying certain channels.
Nonetheless, Ryan and Murphy affirm their measure is a step in the right direction because customers of Optimum TV and other cable companies engaged in disputes are paying for channels during blackouts that they are not receiving.
“It’s outrageous that millions of folks couldn’t watch the Knicks, Judy Justice, or dozens of other programs for weeks because of blackouts — and, it’s even more ridiculous that we’re all still paying for the right to stare at black screens,” Ryan said in a statement on Friday. “I don’t see why this is even a debate – cable companies simply should not be able to advertise and charge for services they are not providing.”
Murphy echoed similar sentiments, calling blackouts a “slap in the face to every customer paying their hard-earned money for TV shows they can’t even watch.”
“It’s ridiculous the rest of us get stuck in the crossfire of negotiations between cable and broadcast companies,” Murphy said on Friday. “Our bill is simple: if cable companies can’t provide the service you’re paying for, they owe you a refund.”
The measure was met with elation from some programmers, including MSG Networks, which applauded the two lawmakers for “standing up for their constituents.”
“We appreciate Senator Murphy and Congressman Ryan’s efforts to fight for sports fans who are stuck paying for content they aren’t receiving, while Altice pockets their money,” two separate MSG Networks officials said in identical statements to The Desk. “It’s time for Altice to do what’s right and agree to binding arbitration so that sports fans can again begin to watch games of their favorite teams.”
Officials within the cable and satellite industry say they agree that programming-related blackouts are a problem that is getting worse over time, but they said Ryan and Murphy’s bill do not adequately address the root cause of the issue — the higher fees demanded by broadcasters in the first place.
“This bill gives billion-dollar broadcast corporations a complete free pass,” said Grant Spellmeyer, the CEO of ACA Connects, an industry group that represents small and mid-size cable TV operators.
Spellmeyer continued: “If we don’t address the root problem with reforms to the retransmission consent regime, insatiable broadcasters will continue to abuse market power to extract higher fees, jack up prices and force blackouts.”
In a separate statement, the American Television Alliance (ATVA) said they agreed with the two federal lawmakers that something needed to be done to curb programming-related blackouts, but the measure — while well-intentioned — will cause more harm than good.
“This bill will only raise prices for consumers,” Hunter Wilson, a spokesperson for ATVA, said in a statement emailed to The Desk. “Blackouts are the result of networks and other big programmers holding their channels for ransom to force pay-tv providers into higher-priced programming deals. Requiring pay-tv providers to pay rebates will only encourage big broadcasters to further increase prices at a time when retransmission consent fees are at record highs.”