In a blog entry that addressed the broader problems of the FCC attaching conditions to mergers and consolidations, Randy May at the Free State Foundation specifically takes the commission to task over its demand in the Adelphia Communications break-up that Time Warner and Comcast, who are splitting the Adelphia properties, make regional sports channels in which they hold an interest available to unaffiliated service providers.
The FCC did not cite any antitrust law or any part of Section 47 of the U.S. Code to back this up. Instead, Chairman Kevin Martin adopted an extremely subjective rationale that local sports programming is a "must have." In other words, he has declared that viewers have a right to watch home team sports on their cable systems, and securing that right falls within the purview of the FCC.
While not repudiating it, Martin's colleague Michael Copps puts his finger on the problem that arises when regulators start arbitrarily declaring what channels are "must haves." May writes:
The problematical nature of the agency making such content-based regulatory decisions is illustrated by Commissioner Michael Copps' dissenting statement. He agrees [regional sports network] programming is "must have" but asks if it is the only such programming. "What if you only speak Spanish? Wouldn't a Spanish language channel be 'must have'? How about local news? Children's programming?" Copps says "[w]e ought to be careful before starting down the slippery slope of determining what is and isn't 'must have' cable content." He's right about that, of course. But, unfortunately Commissioner Copps' preferred remedy apparently would be to impose common carrier-like "non-discrimination" requirements on cable operators and other broadband service providers as well. Right about the slippery slope. Terribly wrong remedy.
May goes on to discuss how such rules ultimately bump up against the First and Fourth Amendments. It is also worth adding how they interfere with the right to form voluntary contracts.
The crux of these disputes over channel carriage are about economics, usually over the cost the programmer demands from the cable company to carry the channel. Matters get more complicated when a cable company owns a share of a rival programmer. Moreover, negotiations, especially with regional programmers, tend toward brinksmanship and sometimes egos get involved more than they should‚Äďas they did in the fight in New York between Cablevision and George Steinbrenner's Yes Network, which carries New York Yankees baseball games. The fact that Steinbrenner created the Yes Network in order to retain TV rights to the Yankees, which had previously been held by Madison Square Garden Network, a Cablevision subsidiary, lent greater animosity to both sides.
Viewers can take heart that both cable companies and programmers know it's in their best interest to hammer out an agreement. Cable companies want to meet popular demand for local sports programming, especially as competitive alternatives, from satellite to IPTV to Web-based video streaming, proliferate. Meanwhile, programmers need the viewers cable systems provide, because more viewers drive more advertising.
This is all part of the rough and tumble of business negotiations. An unfortunate downside is that the public from time to time gets inconvenienced. Take management and labor negotiations for example. We've all had to deal with strikes. At the same time, our laws respect the right of collective bargaining, in which strikes, or threats of one, are recognized as a legal negotiating tactic. (There's a difference when it comes to public welfare, which is why in most areas, police officers and firefighters are not allowed to strike. But I'm with May and the PFF's Adam Thierer when they say its dubious to declare it a "right" to be able to watch the Tar Heels or the Blue Devils.)
It's important to remember that despite their animosity, Yes Network and Cablevision reached an agreement on carriage. The FCC's "must serve" puts gun to the head of the cable companies, forcing them to accept terms they might feel overcharge them (and by extension, their customers) or undervalue their participation. In any negotiation, one side always has the option to walk away. Good negotiators know how to leverage that option. The FCC's "must serve" rule takes this leverage away.
P.S. One more thing, doesn't this "must have" doctrine fly in the face of the "a la carte" policy the FCC was pushing just a few months ago? So, according to Martin, cable companies should allow consumers the right to chose only they channels they want. At the same time, the he says there are are channels that everyone, by right, must have. Will someone reconcile this for me please?