Proposed law looks to address multiple aspects of TV in the MVPD era, including bundling, broadcast abandonment and blackouts.
True to his reputation as a maverick, Arizona Senator John McCain has authored a bill seemingly designed to please nobody, while arguably disserving just about everybody. Dubbed the “Television Consumer Freedom Act of 2013”, it consists of clumsily crafted legislative language that mashes together in one bill three disparate and contentious aspects of the current video delivery system. In only one of those three areas does McCain’s proposal come to remotely practical terms with the problem it seeks to address.
McCain’s bill aims to: (1) promote “a la carte” program availability for MVPD subscribers; (2) discourage broadcasters from removing their programming from over-the-air availability (in response to the success that Aereo has recently enjoyed); and (3) eliminate broadcast blackouts of sports coverage in certain situations.
Promoting “A la Carte” MVPD offerings
McCain has long been an advocate of an a la carte approach to program availability. Under that approach, cable and satellite TV subscribers would be able to sign up for only those channels they want to watch – no more required “bundles” or “tiers”, i.e., packages of channels including some really desirable choices and a bunch of others that probably won’t be watched much, if at all.
The practice of “bundling”, of course, is not unique to the MVPD operator/MVPD subscriber relationship.
Upstream of that relationship, program producers like to make their programming available to MVPD operators in bundles because bundling allows producers to use their popular programs as an incentive for MVPD operators to carry the producers’ less popular programs. It’s a lot easier to convince the MVPD operator to carry one or more niche channels with limited curb appeal if such carriage is required as a condition to securing an established and guaranteed crowd-pleaser or two. MVPD operators then pass the consequences along to their subscribers by offering subscription packages that require the subscriber to take non-A-list material in order to get the A-list stuff.
Basically, it’s a win-win set-up – except (as far as McCain is concerned) for the viewer/consumer, who is forced to pay for channels he or she probably won’t watch.
McCain’s bill would provide program producers (including broadcasters) and MVPD operators certain “incentives” to offer MVPD subscribers a la carte options. “Incentives”, here, is really just a polite term for “threats”.
Under the bill, MVPD operators would be free not to provide an a la carte option. But those who don’t offer an a la carte option would lose the benefit of the statutory copyright license that for years has made their lives much easier and, probably, cheaper.
Broadcasters who happen to be under common control with non-broadcast program producers (think any of the major TV networks, for the most obvious examples) be similarly “incentivized”: such broadcasters would lose the right to retransmission consent and the protection of network non-duplication and syndicated exclusivity rules if all of the programming under common control is not made available to MVPD operators on an a la carte basis.
And what about program producers who don’t happen to control any broadcast licensees? Lacking any legislative benefit to withdraw (such as retrans consent for broadcasters or statutory copyright licenses for MVPDs), McCain would simply say that program producers cannot offer packages of various programs to MVPDs unless those producers also offer those same programs a la carte.
One additional twist: The bill would require that, if a program producer and an MVPD can’t come to terms on the availability of programming on an a la carte basis, the two parties would have to notify the FCC of the last terms each side offered the other. The bill is silent about what, if anything, the FCC could or should do with that information.
McCain’s proposal isn’t likely to thrill either MVPDs, or broadcasters, or program producers. Each derives some benefit from the current bundling system: MVPDs get their desired programming, along with the ability to bundle that programming with a bunch of less desirable programming and charge subscribers more; and program producers (including broadcasters under common control with producers) are able to use their popular material to assure carriage of their less popular material. A mandatory a la carte option would arguably undermine this mutually beneficial arrangement.
That is immaterial to McCain, though, because he attaches overriding importance to the availability of an a la carte option to MVPD subscribers. Let’s give the people what they want, and only what they want!
Many MVPD subscribers might agree with him, at least at first blush. But think about the real consequences. Since the current system allows popular programming to subsidize, in a sense, the production of less popular programming, the cost to access the less popular shows would likely increase in an a la carte universe, where the potential for such subsidization would be dramatically diminished. As with ordering a la carte at a restaurant, sure, you can get exactly what you want, but in the end you’ll probably end up paying more and getting less. Can we be sure that that’s what viewers really want?
And let’s not forget the niche programming that might not garner enough viewers to warrant continued production. While many of us may share the Boss’s despair at the seeming lack of viewable programming fare, the fact is that even the narrowest of niche programming presumably has some viewers. And niche programming contributes to the much-vaunted diversity of information we hear so much about. By discouraging various bundling practices, McCain’s bill could threaten that diversity by forcing lesser-viewed programming out of production.
Deterring broadcasters from defecting from OTA operation
Since Aereo started to get traction with its system allowing mobile Internet access to over the air broadcasting – and particularly since that system survived an initial challenge in the Second Circuit – some broadcasters have been making noises about removing their programming from their OTA operations in favor of some subscription-only venue (e.g., cable, satellite, or maybe even their own version of an Aereo set-up). McCain obviously thinks that that’s not a good idea, and he means to do something about it in the second section of his bill.
Here’s where he hauls out the big guns: TV stations that engage in such mischief will lose their licenses! Yikes! While that threat is guaranteed to get your attention, upon closer scrutiny that threat largely disappears, thanks to some truly bad wording.
According to the bill, the mischief that would lead to license loss occurs when a “television broadcast station does not retransmit the signal over-the-air that is identical to the signal retransmitted” to an MVPD.
Can we be frank here? That language makes no sense at all. A TV station doesn’t “retransmit” its signal – it transmits it. And in practical terms, it’s unlikely in the extreme that a broadcast station would attempt to broadcast one batch of programming while simultaneously feeding a different batch to the local MVPDs. More likely, the broadcasters’ threat alluded to above would play out by having the networks opt not to provide their affiliates with primo, prime-time programming. So, for example, the Fox prime-time schedule might end up exclusively on the MVPD-only FX channel, while the Fox Network feeds its affiliates re-runs of old Fox shows. In that case, the station affiliates would still be feeding their OTA programming to the MVPDs, so McCain’s proposed threat wouldn’t reach them.
Maybe we’re missing something, but this proposal would achieve nothing in terms of addressing the issues swirling around Aereo. (If McCain really wanted to revolutionize copyright law to ensure that the next Aereo controversy doesn’t occur, he would take a crack at redefining “MVPD” in a way that reflects the increasing level of online viewership that is tied to the decreasing level of scheduled OTA television viewing.)
Prohibiting blackouts of certain sports programming
The final section of the bill is probably the only one likely to please both the broadcast and cable industries. It provides that sports programming cannot be blacked out (like when an NFL team doesn’t sell out its home game within a certain period before kickoff) when the game is played in a publicly-financed stadium. Hard to argue with that, unless you’re a professional sports league or team that has negotiated out extensive agreements based on the existence of the blackout.
But really, in the overall scheme of things whether or not blackouts are permitted in some limited instances isn’t likely to compel support for McCain’s bill.
Hopefully, the bill wasn’t intended as something to be enacted, but rather as a starting point for further change. But even there, you have to wonder: why? After all, McCain’s bill is more or less a recycling of identically titled legislation originally introduced by Senator Ron Paul in 2007.
Over the years, John McCain’s maverick nature has garnered him his fair share of supporters and detractors. That’s not just because he’s been willing to go out on a limb for what he believes in, popular support be damned, but also because he’s been a very skilled and effective legislator that produced results on a regular basis. Sadly, this time, it looks like he’s just gone off on a tangent.
