Commissioners of the Federal Communications Commission are escalating their rhetoric over the fee dispute between Cablevision and News Corp. that has led to the dropping of some Fox broadcast programming from the Cablevision cable network.
Today FCC commissioner Michael Copps, a former history professor who was a longtime aide to Senator Hollings, issued a statement saying, "in too many instances, retransmission consent has degenerated into a fight between huge monied interests to see who can milk who the most—and consumers are left holding an empty pail."
Mr. Copps went on, "The FCC's role has been limited. That's partly due to the statute under which we operate, which generally confines our role to encouraging 'good faith' negotiations between the private parties. We have interpreted this charge very cautiously. But the FCC is a consumer protection agency and, if the Fox-Cablevision dispute proves anything, it is that consumers are clearly not being protected. I believe the Commission should take a very serious look at whether 'good faith' negotiations are indeed occurring. What, indeed, does 'good faith' mean in the dog-eat-dog world of big media? If such talks are not taking place, we should move promptly to protect consumers."
Earlier this week, the FCC's chairman, Julius Genachowski, who was President Obama's Harvard Law School classmate and is a former aide to then-Rep. Charles Schumer, issued his own statement: "I am deeply troubled that Cablevision and Fox are spending more time attacking each other through ads and lobbyists than sitting down at the negotiating table. The time for petty gamesmanship is over. I have called the CEOs of both companies and reiterated the importance of reaching a deal, as many companies have done before. I reminded the companies that they share responsibility for consumer disruption, and that they shouldn't punish consumers because of their unwillingness to reach a deal. I also insisted that they negotiate in good faith."
The FCC commissioner's reference to "huge monied interests" is laughable. The federal government, which Mr. Copps represents, has more money and is more huge than either News Corp. or Cablevision.
This is a classic, and high-profile, case of business and government intersecting. News Corp. and Cablevision both are big boys and can protect themselves and their own interests without the FCC stepping in. As for consumers, the FCC itself points out they have plenty of options. They can watch something else on Cablevision. Or if they want to watch the Fox channels at issue, the consumers can either watch them over the air using a television with an antenna that receives a broadcast signal, or subscribe to some service other than Cablevision that provides the channels: AT&T, DIRECTV, DISH Network, RCN, or Verizon FIOS.
There's no market failure here that requires government action, or that even requires Mr. Genachowski's pestering or posturing. Cablevision has an interest in keeping its customers happy by giving them the programming they want, and News Corp. has an interest in reaching as many customers as possible with its programming (and with the advertising it includes with the programming). It's just a private price negotiation.
The statements by the FCC commissioners portray the agency as the defender of consumers. But it doesn't protect consumers for the government to lean on Cablevision to pay News Corp. any more than it otherwise would, and it doesn't protect consumers for the government to lean on News Corp. to settle for any less than it otherwise would. In one case, Cablevision loses money, and it may have to make that up in the future by charging consumers more. In the other case, News Corp. loses money, and it may have to make that up by spending less on quality programming. In each instance, the price for the "protection" of a government-imposed settlement ultimately is paid by the consumer.
