Chairman blogs that FCC will not be modifying “totality of the circumstances” test on his watch.
In the long-running retransmission consent war pitting broadcasters against MVPDs, a major threat to the status quo has been averted: according to a blog posted on the FCC’s website by Chairman Tom Wheeler, the Commission has opted not to make any changes to the agency’s existing approach to resolving retrans disputes “at this time”. That leaves the less-than-specific “totality of the circumstances” standard in place. While greater specificity could conceivably have been a good thing for both sides, it could also have favored one over the other. Given the level of broadcaster opposition to change, the Chairman’s announcement can be viewed as a big win for broadcasters.
As we all know, when broadcasters and MVPDs negotiate retrans deals, they are required to act in “good faith”. When one side believes the other is not doing so, it can complain to the FCC, which then assesses the parties’ respective conduct under a “totality of the circumstances” standard. Cable and satellite operators have for some time now been pressuring the Commission, as well as Congress, to make changes to the retransmission consent regime.
As we reported when it happened, in 2014 Congress directed the FCC to “review” the “totality of the circumstances” standard. In 2015 the Commission duly opened a rulemaking proceeding to that end, asking a wide range of questions about the types of conduct that might be deemed to demonstrate “bad faith”. As we reported, interested parties (mostly MVPDs) identified a large number of behaviors that they thought should constitute per se bad faith. Those included “bundling” of additional channels with a local broadcast station, and preventing online access to programming during retransmission consent disputes – i.e., behaviors used by broadcasters. Determination that such conduct should be deemed per se indicative of “bad faith” would have seriously diminished broadcasters’ negotiating position.
But according to Wheeler, the record developed in the proceeding didn’t justify adoption of any new rules directed at any specific negotiating practices.Instead, the Chairman concluded that the existing “totality of the circumstances” test for good faith was “pretty broad” and would allow the Commission to address instances of bad faith (at least as far as Congress has given the Commission authority to do so).
As a result, the Commission will “not proceed at this time to adopt additional rules governing good faith negotiations for retransmission consent”. Thus, no specific negotiating practices will be newly designated as per se violations of the “good faith” negotiation rules. But that doesn’t mean that various practices might not be considered unacceptable under the “totality of the circumstances” test. As Wheeler pointed out, that test is “intentionally broad,” and nothing in the record indicated that it was “inadequate to address the negotiating practices of broadcast stations or MVPDs in the marketplace today.”
In announcing that the FCC would not be taking further action for the time being, the Chairman reiterated that the Commission would remain involved when blackout-spawning impasses do occur. He mentioned in particular the involvement of FCC staff in the ongoing dispute between Tribune Media and DISH: the staff has called the parties to a meeting in Washington and issued “comprehensive information requests” to the parties to determine whether either party had violated the good faith standards.
While the Chairman’s announcement is clearly a win for broadcasters, it is only a single battle: the retransmission consent war is by no means over. While Wheeler’s announcement clearly suggests that no new rules are on the horizon while Wheeler remains Chairman, nothing will prevent a later Chairman from initiating a new proceeding in the future. Alternatively, unless the Commission formally closes the currently open proceeding, another Chairman could conceivably opt simply to take action in the context of that proceeding. (On this point, let’s bear in mind that Wheeler’s blog post announcement that no further action will be taken reflects only the views of one of five Commissioners. A blog post from one of the five – even if it’s from the Chairman – does not constitute formal agency action. Before the currently open proceeding can be deemed “closed”, a majority of the Commissioners will have to adopt an order expressly closing it. In other words, while Wheeler’s announcement may declare the vampire to be dead, nobody has yet pounded a stake through its heart.)
Still, at least for the immediately foreseeable future, the rules will remain as they are, which broadcasters can certainly consider a victory.