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Cable execs ask for new rules in programming talks

Cable execs ask for new rules in programming talks

November 18th, 2010 by JOELLE TESSLER, AP Technology Writer in News

WASHINGTON (AP) - Executives for two leading cable companies are asking lawmakers for new government rules that would give them more clout in negotiations with TV broadcasters over programming.

Thomas Rutledge, chief operating officer of Cablevision Systems Corp., and Glenn Britt, chairman, president and chief executive of Time Warner Cable Inc., told members of the Senate Commerce Committee Wednesday that new rules are needed following a series of high-profile disputes over the fees that cable companies pay broadcasters to transmit their signals.

Broadcasters have begun demanding more for those signals in recent years as advertising revenue has dropped off. But too often, Rutledge told the Senate panel, consumers are caught in the middle when broadcasters withdraw their signals during negotiations, often right before high-profile events.

Last month, a bitter stand-off between Cablevision and News Corp.'s Fox network left 3 million Cablevision subscribers in the New York area without Fox programming for 15 days - including through two World Series games - after the broadcaster pulled its signal.

Such contract disputes, Rutledge said, "are wreaking havoc on consumers, and we ought to find a way to resolve them without holding consumers hostage."

For his part, News Corp. deputy chairman, president and chief operating officer Chase Carey argued in his testimony that broadcasters are simply using free-market negotiations to seek fair compensation for the "very popular and expensive content we air." He added that if broadcasters are not paid enough for their programming, they will no longer be able to invest in high-quality content, including sporting events and local news.

But both cable executives argued at Wednesday's hearing that existing law and current Federal Communications Commission rules favor broadcasters in these so-called "retransmission consent" negotiations by giving them exclusive local network franchises and requiring cable companies to carry their signals.

Cablevision and Time Warner are members of a coalition of pay-TV providers that have asked the FCC to adopt new rules that would prohibit broadcasters from interrupting signals during negotiations or before popular events, and mandate binding arbitration in disputes. So far, the agency has remained on the sidelines - even during the recent Fox blackout on Cablevision - arguing that it does not have authority to get involved.

Britt told lawmakers Wednesday that this is the wrong approach. "The FCC has repeatedly signaled - incorrectly, we believe - that its hands are tied when it comes to protecting the public from the consequences of retransmission consent fights."

The cable executives' pleas found a receptive audience among some Senators.

"Our predilection is not to get involved, not to try to somehow manage the marketplace in ways that are inappropriate," said Sen. John Kerry, D-Mass., who chairs the Senate Commerce Subcommittee on Communications, Technology, and the Internet. "But when the consumers keep getting crunched in the middle, and keep coming back to us and saying 'we feel powerless, and we're tired of it,' that's when we come to the table. Our constituents should not be the pawns in these corporate negotiations."

Kerry is drafting legislation intended to prevent broadcasters from pulling a signal until the parties have gone through a process with the FCC to ensure good faith negotiation and consider arbitration as an option.