SBJ/20090316/Media

Cable companies see chance for fresh start with new FCC chief

The Federal Communications Commission had recently noticed a slight uptick in the number of consumer complaints about cable and telephone operators — centered on the digital transition — so its media bureau convened a meeting on March 5 to discuss them.

By all accounts, the afternoon meeting was unremarkable. About 20 lawyers representing the media companies spent more than an hour answering questions from about 10 FCC staffers — typical, mundane stuff that happens every day in Washington, D.C.

What made this particular meeting unusual, however, is the mere fact that it happened at the FCC. In the last four years during Kevin Martin’s chairmanship, the FCC did not conduct meetings like this, at least not with cable companies.

For lawyers representing cable operators, the meeting symbolized a chance for a new start with an agency that they feel has had an anti-cable agenda during the last four years.

Welcome to the new FCC — one that veteran lobbyists say already has become much more open and deliberative than the previous regime, even before the expected confirmation of Julius Genachowski, President Obama’s nominee to the FCC chairman’s post.

Veteran media lobbyists believe this change in FCC leadership is bad news for independent sports networks such as NFL Network and MASN, which have spent a lot of time in the FCC’s offices in the last four years lobbying for their cause. In Martin, these networks had a high-powered champion who bristled at cable’s hard bargaining positions with independent networks. Martin actively pushed for smaller startups to get carriage on cable’s expanded basic tiers.

Nobody yet knows Genachowski’s stance on the NFL Network’s carriage complaints against Comcast. But it’s unlikely that he will throw as much support behind the networks’ agenda as Martin.

Genachowski

“Martin clearly had strong views that cable was leveraging its distribution business into the content arena,” said Paul Gallant, senior vice president of telecommunications and media at the Stanford Group. “I doubt that Genachowski will approach these matters as aggressively as Martin.”

Still, Genachowski is an unknown to many in D.C., mainly because he has worked in the private sector since 1996 and has not taken public positions on media issues. He spent a lot of time working with Barry Diller’s InterActive Corp., a company that operated a number of TV networks, like USA Network, and successful Web sites, which cable executives say gives him an intimate understanding of the issues facing channels like NFL Network and MASN.

“He knows the programming issues cold,” said Steve Effros, a longtime cable industry lobbyist who is serving as an adviser to the National Cable & Telecommunications Association.

While nobody has a grasp on Genachowski’s specific stances, it’s clear that cable executives view him as a breath of fresh air. They unanimously describe Martin as an ideologue, sympathetic to the religious right and unyielding in his desire to force cable to deliver channels on an a la carte basis. They believe that Martin spent years pursuing an agenda that punished the cable industry with onerous regulations after Comcast and others did not pursue Martin’s a la carte plan.

They believe that Martin used channels like NFL Network and MASN as political footballs, pushing their agendas as a way to further punish cable operators. It was striking to hear a former Republican FCC chairman, Mark Fowler, tell NPR earlier this month that Martin’s FCC was “semi corrupt” and gave “favors to favorite lobbyists.”

Cable executives, however, say that the FCC already has changed considerably under interim chairman Michael Copps, who took over when Martin resigned. As evidence, they point to last week’s ruling that upheld Cox Communications’ San Diego system continuing to carry Padres games exclusively, without making them available to Cox’s telephone and satellite competitors.

Martin had started looking into closing the regulatory loophole that allowed Cox to keep the games exclusive to cable, which would have given DirecTV, EchoStar and AT&T access to the Padres games. With Martin now out of the building, the commission ruled in favor of Cox.

“The commission will be massively different,” Effros said. “It already is.”

John Ourand can be reached at jourand@sportsbusinessjournal.com.

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