John Eggerton
Broadcasting and Cable
November 17, 2010

Senator John Kerry (D-Mass.) appeared to achieve what he set out to do–which was to hold a “thoughtful dialog” on the retransmission consent regime–at the Nov. 17 hearing on the issue. By the end, he advised the participants to try to find a way to negotiate those deals that would not result in consumer dislocations. He suggested that if such a solution is not found, the dialog would become government action.

Kerry is chairman of the Senate Communications Subcommittee, which held the Wednesday hearing. The dialog was among major players on the cable and broadcast sides of the equation.

After hearing from Cablevision COO Tom Rutledge, News Corp. Chairman Chase Carey, Time Warner Cable Chairman Glenn Britt, Univision President Joe Uva and Ovation CEO Charles Segars, Kerry said he would continue to have a private dialog.

“To the degree that you want this to remain a sort-of hands-off, arms-length transaction where the marketplace has the maximum amount of ability to play itself out,” he warned them, “and that would be our preference too, you have to think about what is the compromise mechanism here.”

Kerrry said all the companies at the table were making a profit and that the public was not going to be thrilled with the idea of becoming pawns in whatever extra percentage of profitability is at stake, measured against the profits they already make, measured against the “government gift” of their right to take place in the marketplace. That last part appeared to be directed at broadcasters.

Kerry said that he wanted to put to rest the “myth” that it was a free marketplace. He pointed to broadcasters gift of billions of dollars worth of spectrum and the public interest obligation that went with it. Rutledge, in one of his most pointed criticisms of broadcasters, said they were using that spectrum “in a way that is abusing consumers.” Carey pointed out that anybody who wanted to could have watched the World Series for free during the retrans impasse. “Which makes the notion of paying for it ridiculous,” shot back Rutledge, drawing laughter from the audience.

When Chase Carey asserted that broadcasters were going from getting paid nothing for their signals to getting paid something, Kerry countered that getting carriage for co-owned cable channels had been compensation for earlier deals: “That was the quid pro quo.” Carey conceded that the channels had been part of the deals, but was not conceding it as necessarily a “value transfer,” calling it instead more of a win/win for broadcasters and cable operators with the creation of channels like Nat Geo and Fox Deportes. “Time Warner Group is a bundle, Discovery is a bundle,” he said, It’s the nature of the business.”

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