FCC Chairman Defends Controversial New Rules on Retransmission Consent

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Speaking to a receptive group of cable operators, Tom Wheeler said that the goals Congress laid out when it passed the law have been “perverted,” and needed to be reformed.

Charging that broadcasters had "perverted the goals that Congress laid out for retransmission" consent -- which allows them to collect fees to carry their content -- FCC chairman Tom Wheeler launched a strong defense Wednesday of the commission's controversial action that prevents most TV stations from jointly negotiating with cable and satellite systems.

Speaking in Washington, D.C., at the American Cable Association's Summit conference, Wheeler explained why he moved quickly to address a situation his predecessors had considered "radioactive."

"Retransmission consent is the law of the land," said Wheeler. "Congress has spoken, period. The way retrans was being implemented, however, moved it off the concept that Congress had developed, which was one-on-one negotiations."

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Under the new FCC rules -- passed Monday by a unanimous 5 to 0 vote -- the top two to four stations in a market are prohibited from joining together to negotiate for retrans payments. By working together, the stations were seen as having greater leverage to get higher payments.

If stations negotiate together, then they must consider those stations as one company under the federal limits on ownership.

This comes after retrans payments rose to about $2.4 billion in 2012 compared to about $28 million in 2005. The numbers are expected to be even higher for 2013 and 2014 based on the most recent deals. Wheeler said the FCC had to act because the higher feels "were having an impact on consumers."

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A spokesman for the National Association of Broadcasters said Monday: "We would…note that broadcasters are not responsible for higher pay TV bills. Pay TV companies have been raising rates more than twice the rate of inflation for the last 20 years, according to Consumer Reports. The notion that a punitive crackdown on local TV stations will lead to lower cable rates is simply not credible."

Wheeler was speaking to a friendly audience at the ACA Summit, where cable operators have been openly unhappy about the rising cost to carry local stations, broadcast networks and cable networks.

"All we said was, 'Hey, the negotiating table has to be level,' " explained Wheeler. "Congress said there is retrans. Congress said it is one-on-one. Let's make sure that's the way things work."