Calling the TV Business an ‘Injustice Being Inflicted on the American People,’ John McCain Unveils Legislation Challenging the Current TV Model

May 9, 2013  •  Post A Comment

Sen. John McCain introduced legislation today that he says will give consumers better control over their pay-television choices. The Los Angeles Times reports that the Arizona Republican announced the measure while proclaiming that the current practices of the television business amount to an “injustice being inflicted on the American people.”

McCain said his measure, the Television Consumer Freedom Act of 2013, will "help shift the landscape to benefit television consumers."

“Long a foe of how pay-TV distributors such as satellite and cable companies and programmers package and sell programming, McCain wants the industry to start selling channels on an individual or a la carte basis to consumers, the Times reports. “That way, a customer who doesn’t love sports isn’t stuck footing the high bill ESPN charges.”

Speaking on the Senate floor, McCain said: "Whether you watch ESPN or not, and admittedly I do all the time, all cable subscribers are forced to absorb this cost. Today we are putting up a stop sign."

The Times adds: “McCain criticized not only distributors but also programmers for so-called bundling. That is when a large company such as ESPN parent Walt Disney Co. or MTV parent Viacom rolls all of its channels together in one bundle to sell to distributors.”

McCain said: “The video industry, principally cable companies and satellite companies and the programmers that sell channels, like NBC and Disney-ABC, continue to give consumers two options when buying TV programming: First, to purchase a package of channels whether you watch them all or not; or, second, not purchase any cable programming at all."

The Times notes: “While a distributor can still opt to buy individual channels from a programmer, the bundle typically includes a discount for strong channels in return for carrying less popular networks. Cable executives argue that the bundle actually lowers prices for everyone. If an ESPN or a TNT was suddenly in 50% fewer homes, it would have to double what it charges to those customers still interested in receiving it, they say.”

The report adds: “Bundling has even become controversial within the television industry. Earlier this year, New York cable operator Cablevision Systems Corp. sued Viacom [alleging] anti-competitive behavior, claiming the parent of MTV and Comedy Central [is] using its muscle to force the carriage of smaller networks that customers don’t want.”

McCain said the measure is voluntary, but includes incentives that he hopes will bring the industry on board.

“One provision has to do with the cable compulsory license, which lets a pay-TV distributor retransmit programming without getting permission from the copyright holder,” the story reports. “The compulsory license typically applies to a pay-TV distributor that carries a local broadcast channel. In those cases, rather than pay a copyright holder directly for retransmitting a TV station that is carrying a rerun of ‘Seinfeld,’ it pays the Copyright Royalty Tribunal, which then compensates the copyright holder.

“If a pay-TV distributor does not offer programming on an a la carte basis, McCain’s bill would strip their right to use the compulsory license. That means that distributor would have to negotiate individual deals with all the rights holders of that content, which would be incredibly time-consuming and likely more expensive.”

The compulsory license provision would be applicable only to programmers owning both broadcast and cable operations, the piece notes, adding: “That includes Walt Disney Co., which owns ABC; News Corp., which owns Fox; and CBS, which besides its broadcast network also owns some cable channels, including CBS Sports Network.”

“But some other big programmers, including Viacom and Time Warner, do not own broadcast properties. For those companies, McCain’s bill would require them to sell their channels on an individual basis as well as a bundle for distributors,” the Times adds.

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