House passes STELA, boosts pay TV retrans leverage, ends CableCARD requirement

The House of Representatives has passed a bill that renews the compulsory license allowing satellite operators Dish Network (NASDAQ: DISH) and DirecTV (NASDAQ: DTV) to import distant broadcast network TV station signals into markets that don't have a particular network affiliate.

And in passing the Satellite Television Extension and Localism Reauthorization Act of 2014 (a.k.a. "STELA," as well as "STELAR"), the House also prevented broadcast stations with different owners from jointly negotiating retransmission consent deals with pay TV operators. And it ended a prohibition on pay TV operators involved in retrans disputes with broadcasters from dropping their signals during Nielsen sweeps periods.

Additionally, STELAR overturned a 2007 FCC ban on cable set-top boxes with integrated security, ending a mandate that required a separate and unpopular CableCARD module.

The Senate has until Dec. 31, when the current blanket license expires, to either adopt the language of the House bill or reconcile its version with it.

Passage of the bill was rhetorically driven by fear that 1.5 million predominantly rural House member constituents would not have access to various broadcast-network stations after the current license expires.

The bill gave one bone to broadcasters--those who were forced by the FCC earlier this year to unwind joint sales agreements were given an additional 18 months.

Understandably, the cable TV industry was more pleased with this legislation.

"Importantly, the bill includes a ban on retransmission consent bargaining collusion by separately owned local TV stations serving the same market," noted an American Cable Association statement. "That provision builds on a similar bipartisan collusion ban adopted by the Federal Communications Commission on March 31.

"ACA is also pleased that the House STELAR bill repeals the FCC rule requiring cable operators to deploy set-top boxes (STBs) with a separate security module known as the CableCARD. This regulation has proved to be costly, burdensome and, by the FCC's own analysis, ineffective in creating a retail market for cable STBs."

Added the National Cable & Telecommunications Association: "By eliminating the FCC's Integration Ban, the legislation removes an unnecessary technology mandate that imposes higher costs and energy use on cable customers who lease set-top boxes while offering no benefits. The legislation also appropriately protects consumers from anticompetitive harm by preventing separately owned broadcast stations in local markets from jointly coordinating or participating in negotiations for retransmission consent. We look forward to working with the Senate after the August recess to act on this important legislation."

For more:
- read this Multichannel News story

Also read:
The nasty battle over retrans: Titanic deck chairs, Rome burning come to mind
STELA compromise boosts satellite providers, impacts broadcaster JSAs
TV interest groups rise to fight the retransmission wars

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