Kerry outlines bill to resolve TV disputes

Sen. John Kerry (D-Mass.) sent draft legislation to the Federal Communications Commission (FCC) on Tuesday aimed at resolving the kind of dispute that left 3 million people in the New York area unable to watch the Giants game on Sunday and "House" on Monday night. 

Cablevision subscribers have lost access to Fox channels as the company negotiates with Fox Networks about programming fees. The contract between the companies expired last week, and Fox has pulled its content until the companies find agreeable terms.

Broadcasters have the ability to pull their programming under rules for retransmission consent. Cable and satellite companies want the rules overhauled — they think broadcasters have too much power in the disputes.

Kerry, chairman of the Senate Communications Subcommittee, said the goal of his legislation is to protect consumers who "get caught in the middle." The legislation would prompt parties who agree they have reached an impasse to submit the situation to the FCC for mediation. 

The legislation would still allow broadcasters to pull their content, resulting in blacked-out channels, but the rules would make it more difficult for them to do so. 

"This system today isn’t working for anyone,” Kerry said in his letter to the FCC, adding that he welcomes agency and stakeholder feedback. 

The retransmission consent system is under review at the FCC. 

Below is how Kerry describes how the legislation works under various scenarios in his letter to the FCC. 

"In short, in any broadcaster-distributor negotiation, there are four basic possible impasse scenarios, for which I am considering a new process of resolution as follows.  Once both parties agree that they have reached an impasse, they both submit their last best offer for FCC evaluation and:

Scenario 1 – The FCC finds that the broadcaster is negotiating in good faith and making an offer consistent with market conditions but the distributor is not. In this case, the distributor shall agree to the broadcaster’s last best offer or terminate carriage and the FCC may fine the distributor for negotiating in bad faith. In lieu of termination of the signal, the broadcaster can withdraw the last best offer and ask the Commission to require binding arbitration.

Scenario 2 – The FCC finds that the broadcaster is not negotiating in good faith or making an offer consistent with market conditions and the distributor is negotiating in good faith and making an offer consistent with market conditions, then the FCC can require binding arbitration. The penalty for the broadcaster is forced participation in binding arbitration.

Scenario 3 – This will be the most likely scenario in most cases. The FCC finds that both parties have negotiated in good faith but reached a true impasse based on an honest disagreement on the value of the signal. In this case, the FCC may request them to submit to binding arbitration. If one party or the other refuses to engage in binding arbitration, then the FCC will provide both parties with a model notice by which to inform consumers of the potential loss of service as well as the difference in offers on the table so that consumers can judge for themselves who was making the fairest offer. This adds a more consumer friendly and transparent way to end transmission of services if necessary and creates an attractive option for arbitration for both parties.

Scenario 4 – The FCC finds that neither party is negotiating in good faith, then it can require binding arbitration and fine both parties."