Recently the FCC decided it should examine the current “retransmission consent rules” to determine whether they are working for all parties, including broadcasters, content creators, service providers and customers.
Retransmission rules were adopted in 1992. They allowed US television stations to force video service providers, such as cable or satellite, to carry “local content” provided by the local television station (called “must carry”), or to negotiate with the video service provider for carriage of its broadcast programming.
But today, the rules need an update. Continuing the threat of “must carry” distorts price mechanisms and thus distorts negotiations—a short-sighted government construct rather than a true marketplace negotiation.
And the retransmission rules were written in a time before consumers had access to so many video and information choices—during a time that was nothing like today’s vibrant, competitive video service marketplace.
But the damage this system wreaks goes further. The broadcasters should receive fair value for the use of their content. However, in writing the current retransmission rules Congress second-guessed the market, believing that “many broadcasters may determine that the benefits of carriage are themselves sufficient compensation for the use of their signal by a cable system.” The rationale lacks the understanding that entire business models may change or that content may increase in value. Government should not be in the business of setting or regulating prices or even influencing prices.
In view of the changes that have occurred since the current rules were put in place, including both market and technological changes, it is appropriate for the commission to consider improvements in the retransmission rules. The appropriate changes would facilitate market-based negotiations so that content is appropriately valued while restoring balance, which would minimize consumer anxiety and provider uncertainty.