News Corp., Univision Chiefs to Argue Against Government Intervention at Retrans Hearing

Meanwhile, Time Warner and Cablevision executives are expected to counter with arguments saying that current rules favor broadcasters over cable operators.

NEW YORK -- Chase Carey of News Corp., Glenn Britt of Time Warner Cable, Tom Rutledge of Cablevision and Joe Uva of Univision are among those heading to Capitol Hill to speak Wednesday about broadcast retransmission consent reform.

During a subcommittee hearing organized by Sen. John Kerry, D-Mass., Carey will argue that there is no need to change the current retrans system and make rules different from the ones governing carriage deal negotiations involving cable networks.

According to prepared testimony obtained by The Hollywood Reporter, Carey will say that current upheaval is a sign of temporary growing pains and that government involvement would lead to less local news and a possible move of key sports and entertainment programs from broadcast to cable.

A spokeswoman for Kerry told THR that the senator has circulated a draft bill for feedback from colleagues and review at the hearing. Kerry has said he plans to introduce the bill before the new Congress starts its session in January.

"Our goal is to discuss alternative ways to resolve these disagreements and protect consumers from being used as pawns in corporate negotiations," Kerry said Tuesday.

Kerry's retrans proposal -- unveiled during this fall's showdown between News Corp./Fox and Cablevision, which saw the latter lose programming for more than two weeks -- calls for both a broadcaster and distributor to go through a process with the FCC to ensure good faith negotiations without broadcast signals being pulled.

If both sides are found to have negotiated in good faith but can't reach agreement, the FCC could request binding arbitration. If one party refuses, consumers would be informed about the difference in offers "so that consumers can judge for themselves who was making the fairest offer" before a loss of signal ensues.

According to his prepared testimony, Carey will argue that not even distributors object to the fact that broadcasters should be paid for carriage.

"We find it hard to believe that the negotiations for broadcast channels should be different, in structure or form, from the negotiations for the hundreds of other channels carried by multichannel distributors," he will say, arguing that if retrans reform was already in place, Cablevision may not have returned to he bargaining table to solve the Fox dispute. And he will highlight that less than 1% of negotiations end in service interruptions.

"So-called reforms, if adopted, would clearly tip the balance of negotiations toward distributors," Carey plans on telling the subcommittee.

"If we can't sell our content for a price that allows us a fair return on our investment, we will no longer be able to invest in the high-quality content that viewers enjoy," including in highest-quality sports and entertainment as well as local news, Carey will say. "Broadcast channels would become much less desirable, and broadcasters and the people they employ and the viewers they serve would be irreparably harmed."

Uva similarly will argue that "even the threat of government intervention will have a negative impact on our business." One key reason: "Univision recognized that in order to meet the changing needs of the rapidly-growing U.S. Hispanic community, we needed the additional resources that come from a dual revenue stream." This added retrans revenue stream has allowed the company to "expand its mission of informing, entertaining and empowering Hispanics in the U.S."

Uva also plans to argue that it is "fair and appropriate to participate with our distribution partners in the value of our high-quality programming." New retrans regulation could "further depress investor confidence in broadcasting and local program services."

Rutledge will naturally counter those arguments, according to his prepared remarks. He will tell senators that current retrans rules "heavily favor the broadcaster over the cable operator." Also: "Because government laws and regulations created the problem, only the government -- the FCC or Congress -- can fix it."

Cablevision suggests that retrans contracts not be conditioned on the carriage and payment for other networks and deal terms be disclosed, among other things.

"Where these simple requirements fail to stem disputes that threaten to disrupt customers, the FCC has authority to impose standstill requirements and mandatory arbitration when negotiations have reached an impasse," Rutledge will say. "And Sen. Kerry's proposed legislation would make this authority explicit."

Britt is planning a similar argument. "Time Warner Cable agrees with the principle that free markets are preferable to regulated markets," his prepared remarks say. "Retransmission consent, however, is not a free market. Retransmission consent negotiations are conducted under a thicket of outdated regulations that have not kept pace with the dramatic changes in this dynamic industry. Retransmission consent is only one of a number of special privileges that the government has given to broadcasters."

Ovation CEO Charles Segars also is on a witness list provided by the committee.