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Letter


Support the Next Generation Television Marketplace Act!
An Open Letter to the United States Congress:

February 9, 2012

Dear Member of Congress:

On behalf of the millions of taxpayers and consumers we represent, the undersigned organizations urge you to support H.R. 3675 and S. 2008, the Next Generation Television Marketplace Act. Sponsored by Representative Steve Scalise (R-LA) and Senator Jim DeMint (R-SC), these vital pieces of legislation will help address the underlying problems that lead to high-stakes standoffs between broadcasters and television service providers by removing anachronistic rules that do not reflect the modern market.

A recent dispute between DirecTV and Sunbeam Television which threatened to black out the Super Bowl for hundreds of thousands of consumers was just the latest manifestation of the problems created by poorly-designed government rules that have hampered free market negotiations. In 2010, Cablevision customers in New York were blacked out from the first two games of the World Series. Less high-profile blackouts now take place in markets around the country on a regular basis. Given that the Federal Communications Commission is currently considering tweaks in this area that are unlikely to solve the problem, the time is ripe for Congress to clarify the situation by removing barriers to free and fair negotiation.

As you may know, the current rules governing these “retransmission consent” negotiations were formulated in 1992, when Congress amended the Communications Act of 1934.  At that time, there was typically only one cable provider in most markets, so Congress granted broadcasters the option of invoking “must carry,” in which a cable operator was required to carry the broadcasters’ signal, or “retransmission consent,” which required the cable operator  to obtain and pay for the broadcast signals via negotiation.

However, Congress placed conditions on these negotiations that advantaged broadcasters, ostensibly to protect them from being taken advantage of by cable providers that were often the only game in town. These include restrictions on the ability of service providers to negotiate with more than one broadcaster, guaranteed channel placements, and guaranteed carriage during “sweeps” periods. It also created compulsory copyright licensing, where government dictates and processes all royalties paid to networks, and imposed strict ownership caps that are no longer relevant.

Fast forward twenty years, and consumers have multiple services to choose from, including one or more cable operators, satellite providers such as DirecTV and Dish Network, and companies such as AT&T and Verizon who now also offer video services over fiber-optic networks. However, the rules have not kept pace and still reflect the single provider landscape that existed in 1992. In a true free market, cable, satellite, and other operators could negotiate with multiple broadcasters for the same content, which in turn would encourage more reasonable prices and fewer blackouts. A free market would also get government out of the business of establishing royalties and placing arbitrary limits on media ownership.

The Next Generation Television Marketplace Act simply removes these barriers to market negotiations by repealing carriage mandates, retransmission consent and compulsory license provisions, and restrictive ownership caps. While there is no silver bullet solution that guarantees that a blackout will never take place, H.R. 3675 will lift government’s thumb from the scales and encourage accountability from all sides. We strongly urge you to support the Next Generation Television Marketplace Act to place television service negotiations into a free-market context, benefiting businesses and consumers alike.

Sincerely,

Duane Parde
National Taxpayers Union

Grover Norquist
Americans for Tax Reform
 
Thomas Schatz
Council for Citizens Against Government Waste
 
David Williams
Taxpayers Protection Alliance
 
Jeffrey Mazzella
Center for Individual Freedom
 
Kelly Cobb
Digital Liberty