Negotiations between television channels/networks and pay TV operators are a breed apart. The stakes are high and the consequence of failure – a “dark” screen – is all too public.
But the critical factor that sets these negotiations apart is the actual regulation of the negotiations under three main categories of rules.
- Broadcasters may invoke “Must Carry” status or seek to negotiate terms for “retransmission” under FCC rules requiring “good faith” negotiations.
- Program Carriage rules protect channels and networks from certain abuses by operators. Conversely, Program Access rules ensure operators have certain rights to license programming.
- The FCC also has issued a series of orders in connection with mergers and other transactions, some of which allow an arbitrator to pick one offer or the other in “night” baseball-style arbitration when certain networks and operators cannot agree on terms of carriage.
On August 26, 2016, the FCC Media Bureau ruled that broadcasters are limited to the first bucket above, the Must Carry/Retransmission Consent rules. (In re Liberman Broadcasting, Inc. v. Comcast Corp., MB Docket No. 16-121 (Aug. 26, 2016). This is significant because it comes in the midst of an ongoing debate over the Retransmission Consent rules and the FCC’s “totality of the circumstances” test. Generally speaking, a party to a retransmission consent negotiation may seek to demonstrate, based on the “totality of the circumstances” of a particular retransmission consent negotiation, that the other party breached its duty to negotiate in good faith. Under the Media Bureau’s ruling, broadcasters may look solely to the Retransmission Consent rules to regulate their carriage negotiations.