Fox vs Cablevision: Should Washington Step in?

By James Gattuso

Last Sunday, countless Philadelphia Phillies fans settled down in front of their TV sets to watch their team take on the San Francisco Giants in the National League Championship Series. They were disappointed. Not because their team lost—they won—but because they couldn’t watch it.

The reason is a contractual spat between Fox Broadcasting and Cablevision over how much Cablevision must pay to put Fox’s programming on its cable TV system. With negotiations at an impasse, Fox stations in Philadelphia and New York (as well as some Fox cable channels) were dropped from Cablevision’s system, leaving some 3 million households Phillie-less.

It’s not the first time that such blackouts have occurred. In fact, disputes between content providers and distributors have led to more blackouts this year than any in a decade. In March, for instance, Cablevision subscribers nearly missed the Oscars broadcast due to a dispute with ABC.

The disputes have led to calls for Washington—and the Federal Communications Commission (FCC)—to step in and solve the problem (preferably before the start of the World Series, which may feature teams from both Philadelphia and New York). New Jersey Senators Frank Lautenberg and Robert Menendez, for instance, sent a joint letter yesterday to FCC Chairman Julius Genachowski asking the agency to “exercise all of its available authority to promptly resolve” the Cablevision–Fox dispute and to re-examine its “retransmission consent” rules, which allow broadcasters to stop cable firms and others from using their content without permission.

Such steps may sound good to video-starved sports fans who just want somebody, anybody, to put their games back on. But does it really make sense to put Washington in charge of this marketplace? There is no evidence that this is a non-functioning market. Standoffs between suppliers and buyers in the business world, after all, are not at all unique. Yes, pulling your product is a negotiating tactic, like walking out of the car dealership to get a better deal from the salesman. It’s no reason to throw out voluntary negotiations. Moreover, does anybody think the FCC would be able to umpire such disputes fairly, without putting its thumb on the scales for whatever outcome it favors?

Certainly, there are changes to the current system that should be considered. For instance, the “must-carry” option, under which a broadcaster can force a cable firm to carry its signal, should be repealed. But any such problems should be addressed on their own merits. It makes no sense to further distort the market by adding even more governmental interference.

So far, the FCC itself has been tight-lipped about its views. But the agency did release a consumer advisory informing Cablevision subscribers of their options. Specifically, the agency suggested switching to another video service, such as DIRECTV or FIOS, and watching the broadcast channels using an antenna.

The FCC is telling consumers that they have choices and should use them. In other words, competition, not regulation, is the answer.

What a concept.


Popular Video