A Lesson for Congress on Retrans Negotiations?

Scott R. Flick

Posted October 2, 2013

By Scott R. Flick

The irony. The sheer irony. Just a few weeks ago, Congress was holding hearings in which the challenges of concluding retransmission negotiations without the occasional service disruption featured prominently. Representative Eshoo's draft legislation targeting such disruptions had just been released, and there was little doubt that some members of Congress felt that CBS and Time Warner Cable had not worked hard enough at preventing a disruption of CBS programming on TWC cable systems, or worse, had been indifferent to the impact on cable viewers.

Fast forward a few weeks and we now face another impasse where the parties have been unable to negotiate an accord, with the resulting disruption greatly affecting the public. Also familiar are the statements to the press and the public by the negotiators that the inability to reach a negotiated resolution is entirely the other party's fault.

The difference this week is that we are not talking about a retrans dispute, but the shutdown of the federal government. While the ramifications of this disruption are far greater than any retrans dispute, the similarity of circumstances is striking. First, all of the parties to the negotiation knew well in advance exactly when the current authorization was expiring and of the need to negotiate an extension. Second, all of the parties knew that the stakes are high and that disruption of service to the public should be avoided if at all possible. Third, it is primarily a dispute about money.

And yet, despite the early warning, the high stakes, and the impending loss of service to the public, Congress failed to reach agreement and the government shut down. As I wrote a few weeks ago, as nice as it would be to avoid it, one of the inherent characteristics of arm's length negotiations is that a disruption is sometimes necessary to jolt the parties into moving off of their original positions and on to a negotiated result. Admittedly, national budgetary policy is more complex than most (but perhaps not all) retransmission negotiations, but then the adverse impact of the accompanying disruption is vastly greater as well.

Unlike a retrans dispute, however, where the public can fully restore service with a set of rabbit ears, nothing I can buy at my local radio Radio Shack will open the national parks or allow FCC staffers to return to their desks to process my applications. In short, even where the harm from service disruption is infinitely greater than in any retrans negotiation, Congress failed to find common ground and avoid that disruption.

Given the high stakes, it is interesting that there are actually far more protections against failed negotiations in the retrans context than in the congressional context. For example, unlike Congress, parties to retransmission negotiations are subject to the FCC's rule requiring good faith negotiations. While those who assert that the current retrans process is broken frequently argue that merely policing the negotiation process to ensure the parties are negotiating in good faith is not enough, it seems like those rules might actually be fairly useful in the current congressional conundrum.

For example, a party violates the FCC's good faith rule if it refuses to show up for negotiations, unreasonably delays negotiations, refuses to put forth more than a single unilateral proposal (the "take it or leave it" approach), or fails to respond to a proposal by the other party. Some might argue that such restrictions limit a party's freedom to negotiate, but all retrans negotiations are conducted within that regulatory framework, making retrans negotiations more regulated than most, and giving proponents of adding yet further layers of restrictions a high hurdle to jump.

That will of course not prevent continued efforts by regulatory proponents to make that leap, but given the events of this week, it will be hard for members of Congress to feign shock and disbelief that two parties, even after making arduous efforts, aren't always able to negotiate away their differences before those differences disrupt service to the public. Where such intractable disputes arise, we should all be thrilled if all that is needed to solve the problem is a pair of rabbit ears.