FCC Unlikely to Answer Time Warner Cable's Plea for Help Against CBS

Both Industries in These Fights Are Politically Potent

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Regulators in Washington probably won't heed Time Warner Cable's call for help in a dispute that has blocked CBS shows from more than 3 million subscribers in cities New York, Los Angeles and Dallas.

Credit: Patrick T. Fallon/Bloomberg

Time Warner Cable, in a letter to the FCC released Aug. 5, asked the agency for "prompt action" to alter the rules to address "coercive" tactics by CBS.

But Federal Communications Commission Acting Chairwoman Mignon Clyburn has said the agency lacks the authority to intervene, and rewriting rules for settling such disputes would take too long to end the current disruption, according to Paul Gallant, Washington-based managing director at Guggenheim Securities.

Members of Congress or the FCC "are likely to issue statements urging the parties to reach agreement in the interest of the consumers who now lack access to CBS programming," Mr. Gallant said yesterday in a research note. "Such statements might be perceived as marginally diminishing CBS's negotiating position."

A dispute over fees led the cable company to stop sending programming from CBS-owned TV stations to viewers in the affected cities last Friday. The two sides are arguing over what the broadcaster charges Time Warner Cable to provide its shows to subscribers, and over rules for streaming CBS content on the internet. The showdown pits the most-watched U.S. TV network against the second-largest cable provider.

"The best way to resolve this dispute is at the bargaining table," Shannon Jacobs, a CBS spokeswoman, said by e-mail.

Maureen Huff, a Time Warner spokeswoman, declined to comment on the issues.

Fee dispute
Cable companies have asked the FCC for such changes as stalemates proliferate with broadcasters seeking higher fees for rights to send their programs to subscribers, or to retransmit the shows.

"The commission is disappointed that the respective parties could not reach a retransmission agreement," Neil Grace, an FCC spokesman, said by e-mail. "We urge all parties involved to resolve this situation as soon as possible."

The agency asked for comments more than two years ago on possible rule revisions but has not acted since. The request followed disputes in 2010, including one between Fox and Cablevision that cut World Series broadcasts to 3 million viewers.

Congress probably won't act quickly, in part because broadcasters are a potent lobbying force present in every lawmaker's district, said Jeffrey Silva, a Washington-based analyst with Medley Global Advisors.

Political nonstarter
"This is a fight between two parties," Mr. Silva said. "What upside is there from taking on the broadcasters?"

Commercial TV and radio stations spent $26.6 million on Washington lobbying in 2012, and gave $11.6 million in campaign contributions for that year's federal elections, according to the Center for Responsive Politics, a Washington-based nonprofit research group that tracks money in politics.

Cable and satellite TV producers and distributors spent more than twice as much lobbying in 2012 -- paying out $57.2 million -- and gave $14.6 million in campaign contributions, according to the research organization.

Any congressional action would place lawmakers between two powerful forces, said James Gattuso, a senior fellow in regulatory policy for the Heritage Foundation, a Washington-based research group that promotes limited government.

'No-win situation'
"You open a can of worms if you start stepping up on behalf of a network, or on behalf of a cable provider," Mr. Gattuso said. "It just politically is a no-win situation."

The FCC decided not to act on earlier disputes, and the Republican-led U.S. House of Representatives is disinclined to intervene in markets, Mr. Gattuso said.

Senator Edward Markey, a Massachusetts Democrat, in a letter yesterday to Ms. Clyburn asked the FCC to "bring the parties together" for negotiations.

Markey also asked the FCC to investigate CBS's blocking access to the network's online video for Time Warner Cable broadband customers. "In such instances, consumers lose their freedom to access the internet content of their choice," Mr. Markey said.

Representative Anna Eshoo of California, the top Democrat on the House telecommunications subcommittee, said in a statement yesterday that she would "carefully examine whether changes to the current law are needed."

Brian Dietz, a spokesman for the National Cable & Telecommunications Association, declined to comment. Members of the trade group include Time Warner Cable and the largest U.S. cable provider, Comcast Corp., which also owns broadcaster NBC.

'Bullying tactics'
"Policy makers should not reward the bullying tactics of Time Warner Cable or any other pay-TV providers with government intervention into free-market negotiations," Dennis Wharton, a National Association of Broadcasters spokesman, said by e-mail. The Washington-based group's members include CBS, NBC, Walt Disney Co.'s ABC, and Twenty-First Century Fox's Fox network.

In Senate testimony in June, President Barack Obama's nominee to lead the FCC, Tom Wheeler, said he's bothered when "consumers are held hostage over corporate disputes."

"That'll be something that I'll be looking at," Mr. Wheeler told the lawmakers.

Ms. Clyburn, who is the agency chairwoman in the interim, said in a March 2011 statement that "the law here is clear: the commission holds limited authority via limited methods."

~ Bloomberg News ~

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