Requires negotiation of fair terms between cable television franchisees and competing independent cable channels

Section 2 provides for this act to take effect immediately and shall apply to any agreement between cable television franchisees and competing independent cable channels entered into on or after January 1, 2016.

Justification

The cable television industry continues to see a proliferation of "vertically integrated cable operators" which are companies that own both the franchise to provide cable television service, as well as cable channels that provide programming on their parent cable system in addition to other systems.

In situations where the vertically integrated operators own channels that produce programming in competition with other independently-owned cable channels, the franchisee-owned channels are given preferred status in their placement on a standard service tier, whereas the independently owned channels are placed on a more expensive tier. This gives the vertically integrated companies incredible bargaining power when negotiating carriage agreements with the independently-owned channels. These vertically integrated operators use their franchise ownership to deny access to programming to their competitors in an effort to gouge prices and protect their own financial interests.

In many cases, such systems have resulted in Virtual monopolies for these companies in terms of both the services they provide and the programming made available on their cable systems. This has been especially true in markets like New York City where up until 2008 only two companies, Cablevision and Time Warner, both vertically integrated cable operators, held the franchise rights for approximately 90% of customers throughout the city and also controlled a significant number of very popular cable channels. As of 2009, Time Warner owned Home Box Office, Inc. (HBO, Cinemax, HBO Sports, HBO Pay-Per-View, HBO on Demand, Cinemax Multiplexes, Cinemax on Demand, HBO HD, Cinemax HD, as well as HBO chan- nels around the world), TruTV, TES, TBS HD, Boomerang, Cartoon Network, Turner Classic Movies, TCM Europe, TeM Asia Pacific, TNT, TNT HD, CNN Airport Network, CNN International, CNN Headline News, CNN en Espanol, CNN en Espanol Radio, CNN Pipeline. As of 2011, Cablevision owned MSG, MSG+, FUSE,AMC Networks: AMC, IFC, Sundance Channel and WE tv. This situation invariably results in customers being unable to see much desired programming for extended periods of time while the companies fail to reach an agreement.

In New York, this battle has played out repeatedly between Time Warner and Cablevision. As of February 1, 2012, Time Warner has engaged in a month-long battle with Cablevision over carriage rights to programming produced by Cablevision owned stations MSG, MSG+ and FUSE, which includes fan access to major New York sports teams including the ongoing seasons for the New York Rangers and New York Knicks.

This is an identical battle to one in 2005 where Time Warner battled with Cablevision over carriage rights to programming produced by Cablevision owned stations MSG and FSNY, which included fan access to Mets games. Prior to that, in 2002-2003, Cablevision battled with the independently owned YES Network for more than year over carriage rights to YES programming including Yankees games.

Until such time as these vertically integrated cable operators are required to negotiate fairly and submit to arbitration when there is an impasse, these types of interruptions in access to programming will continue and the viewing public will suffer the consequences.

Therefore, it is essential that we take the lead on this issue of nationwide importance and require vertically integrated franchisees in the state of New York to negotiate fairly and, if necessary, submit to arbitration to determine the terms and conditions on which independent cable channels that compete with the affiliated cable channels will be carried by the franchisee.

Prior legislative history

2013-14: S.665 2011-12: S.6230/A.9092 (Simanowitz)

Fiscal implications for state and local governments

None.

Effective date

This act shall take effect immediately and shall apply to any agreement between cable television franchisees and competing independent cable channels entered into on or after January 1, 2016.