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  • Fox v. Cablevision: Should Washington Be Television’s Umpire?

    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.

    (Hat tip to Jerry Brito of the Technology Liberation Front for spotting the FCC’s release.)

    Posted in Economics [slideshow_deploy]

    13 Responses to Fox v. Cablevision: Should Washington Be Television’s Umpire?

    1. Tom Cellini says:

      Yes the FCC should step in and cablvison hadn't the right to take fox's over the air signal broadcast it on their system unlike other fox channels fox5 and my9 are over the air in the public interest they should be allow to broadcast that signal because the airwaves are public owned. This shouldn't be the case other fox channels because not public trust like local station.

    2. Heidi D., Hartsdale, says:

      I'm fed up with disputes between content providers and Cablevision. Suggesting I turn to Fios or Direct TV is not a reasonable response — I have the very basic cable service (under $12/month), am on a tight budget, and can't afford to switch away from Cablevision. I think the FCC should make binding arbitration a requirement for the broadcast neworks.

    3. emk, rockaway nj says:

      I can't get FOX by Antenna out here and it makes no sense to switch carriers over one channel. So, I will just have to go back to post 21 Jump Street tv and miss out on FOX programming.

    4. Tom, who has Cablevi says:

      Depending on whether Cablevision subscribers are people or sheeple, they may act on their own. If Verizon FiOS is available in your area (it is for us), some may switch. If over the air reception is reliable, some may buy antennas and DTV converter box (for older TV sets). Most people won't go through the hassle of putting an antenna on the roof, but some may venture online to watch their shows.

      As a Cablevision subscriber I am getting disgusted at repeatedly having service cut. First Food Network, then ABC, now Fox. This is just encouraging me more and more to cut the cord. Apparently I am not alone.

      http://www.fierceiptv.com/story/fox-cablevision-t

    5. Mike, NJ says:

      The FCC needs to step in and do what any government entity should be doing – protect the interests of the public. When corporations like CV and NewsCorp stop treating people like customers and start using them as bargaining chips, someone with authority needs to step in and act. That someone is the FCC, only because there is no other entity with the authority to act in this matter. Maximum rates set by the FCC to protect consumers from things like this, which inevitably will end up raising the cost of service. The government has no problem telling other industries what they are allowed to charge (i.e. tobacco, electricity), so why should this be any different? Rates keep climbing, yet there hasn't been a comparable increase in quality or technology to justify those rates. Both sides are wrong to put profit over public, and this situation proves that neither side has the customers' best interest in mind – only the corporation's bottom line.

      The fact that there is no simple competition in the industry makes it even worse. (By "simple" I mean it's not as easy as buying another brand if it's cheaper, like gasoline. If one station is a few cents cheaper than the other, you can easily go there and it's not a whole day affair to change your mind.) Telling people to switch providers isn't a viable solution in this market, simply because the greed will flow over to the next provider when the time comes, and you'll be forced to switch again. With companies bundling services together, it's proven that people are less likely to switch, making this even more hard to swallow. I get my tv, internet, and 2 phone lines from Cablevision – not exactly an easy choice to switch every time there's a dispute. A person like me needs and expects the regulators – aka The FCC – to act on my behalf and protect my best interests in the matter. Deregulation obviously didn't work, otherwise my TV bill wouldn't have doubled in the past decade, despite having less channels. It's time to re-examine the landscape of the industry and reset the rules and regulations accordingly.

    6. Jim, CT says:

      Interesting comparison between this article and one from the previous day titled "Pushing Back on China Works." In this one the position is that the government should not interfere in the affairs of Fox and Cablevision, in the other the position is that the government should interfere in the affairs of Japan and China.

      I like this article better.

    7. Ben Macauley - Eugen says:

      I agree. Free market will take care of itself. There are always options without Washington taking more control, thus limiting our freedom.

    8. M,manhatt says:

      Why are the American taxpayers paying for an FCC employee to Twitter sport scores?

    9. Jon, Mercer County N says:

      I get the whole free market economy concept argument-but the argument is spurious, as it is NOT a true Free Market in the re-broadcast business. In my area of NJ, Cablevision has the state sanctioned cable monopoly. FIOS is not on my street. HDTV signals 1/2 way between NYC and PHL are minimally good, and then you would not have all the cable-only content you desire if you kill your Cablevision account. Satellite Dishes are an option, but more expensive for the content we desire and the number of sets we run. So just to see FOX stations, you need to spend extra money to equip-and I don't have a single HDTV, so I need multiple boxes, plus an antenna that sticks up significantly off the roof; all that while STILL paying for the 95% of content I use from Cablevision.

      Based on the huge difference in pricing FOX demands compared to other networks, I've decided I can live without FOX. Oh, and by the way, Rupert and NEWSCORP have also blocked Cablevision internet users(us) from seeing the same FOX owned properties over the internet-which is weird, as he still would get his advertising revenue. Seems like corporate greed run amok to me. SO, we just eliminated about 8 hours per week of FOX programs from our lives. It actually may be a real positive here. THANKS, RUPIE!

    10. Tim AZ says:

      There is still another option that has not been discussed. Fox Sports is doing the same thing to Dish Network subscribers as well. I'm not at all interested in paying more to watch Fox Sports programing. I do enjoy watching the Coyotes hockey games but I am at the limit of how much I will pay for television viewing. Viewers that refuse to pay more for Fox Sports programing should e-mail, phone, or write Fox Sports Network and tell them that they refuse to pay the rate increase. At the same time viewers should e-mail, phone, or write there Television providers like Dish Network and Cablevision and tell them that you will not except a rate increase on your television service bill to continue to receive Fox Sports Network. Any rate increase will result in the loss of another television service subscriber. We have been considering giving up television for two years now and this is certainly making the decision to terminate television from our home much easier. The viewers are the customers and it is up to us to decide whether Fox Sports Network deserves a larger share of the television viewing market. If the owner of Fox Sports Network can't continue to profit at the market price set by the consumers then they can sell off the company or shut it down and another company will come along and fill that market at a profit. It's known as the free market system. It may be slow at times but it always works in favor of the consumer as long as the consumers don't behave like a bunch of Homer Simpson's and grab their ankles and just take what ever comes.

    11. VZSocial, Richmond says:

      Hey there,

      For those who ARE considering switching, Verizon would love to have your service. Sure, rabbit ears might help you get the big games, but for those who want more from their cable, we would love to help.

      There are fantastic deals running currently, which you can view here: http://j.mp/switchnow

      Full disclosure, yes, I am a Verizon employee, but that means I AM available if you have questions! You can find me on Twitter @VZSocial. We are also on Facebook at http://j.mp/FiOS_Facebook

      Thanks so much for reading!

    12. Spiritof76, NH says:

      Defund FCC and stop asking the government to intervene in every aspect of our lives. The government is the problem by creating stupid rules to satisfy the lobbyists. They created the monpolies in the first place.

    13. kevin hubble says:

      It is untrue that it is a fair and competitive market. Many neighborhoods and buildings in the NY or Philly market do not offer a choice. You only have one option, you cannot switch to another company. FOX actions are deplorable. Why will they not agree to binding arbitration? Could it be that what they are asking for is unfair. Cablevision has agreed. FOX will pay for this long after an agreement is made. I and many other consumers will boycott all FOX affiliated companies.

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