Senate Bill S696A

                                 BILL NUMBER:  S696A

 TITLE OF BILL :  An act to amend the public service law, in relation
to requiring negotiation of fair terms between cable television
franchisees and competing independent cable channels

 PURPOSE OR GENERAL IDEA OF BILL :

The purpose of this bill is to require all cable franchisees to
negotiate fairly to determine terms and conditions under which
competing independent cable channels will be carried by the franchisee
and, in the event such agreement as to terms and conditions cannot be
reached, provisions require the commission to conduct an arbitration
of the matter.

 SUMMARY OF PROVISIONS :

Section 1 of the bill amends paragraph (b) of subdivision 2 of section
215 of the public service law, as added by chapter 83 of the laws of
1995, by adding a new provision requiring franchisees to negotiate
fairly to determine the terms and conditions under which competing
independent cable channels will be carried by the franchisee and, in
the event such agreement as to terms and conditions cannot be reached,
provisions require the commission to conduct an arbitration of the
matter.

              

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.