BILL NUMBER:S665

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, 2013.

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 channels around the world), TruTV, TBS, 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, CabIevision 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:

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, 2013.