Whose Cable Bill Is This, Anyway? : Media: What began as a piece of pro-consumer legislation now bears the imprint of many special interest groups. : NEWS ANALYSIS

By JOHN LIPPMAN

July 31, 1992 12 AM PT

TIMES STAFF WRITER

It began as classic “pro-consumer” legislation. But the cable TV regulation bills that have been approved by both branches of Congress now bear the imprint of special interest groups as diverse as local broadcasters, Hollywood producers and even General Motors.

When a compromise bill emerges from a conference committee--possibly as early as next week--provisions guaranteeing a financial windfall for local broadcasters and a bigger piece of the cable pie for movie producers could be included. A new satellite TV service owned by a GM subsidiary may also get a break on program deals.

These were the compromises consumer groups were willing to make to curb skyrocketing cable TV rates.

“It should put a lid on cable rates and even drive them down in the short term,” said Gene Kimmelman, legislative director of the Consumer Federation of America. “And in the long run, it’s a strong impetus for competition.”

The bill approved by the House last week re-regulates the most basic tier of service, which includes local over-the-air signals, government access channels and public TV.

Also subject to price controls in some cases would be cable channels such as CNN and USA Network. Pay TV channels such as HBO and Showtime would be exempt.

The bills also would require cable TV networks, many of which are owned by cable TV operators, to sell their programming to competitors such as direct broadcast satellite companies or microwave satellite services at “reasonable” rates. The cable industry unsuccessfully opposed the measure.

Among the beneficiaries would be General Motors-owned Hughes Communications, which is launching a 150-channel satellite service in 1994.

Cable interests maintain that the bills have become the captive of special interests groups whose only concern is to use the legislation to promote their own agendas.

“This bill started out with good intentions to address legitimate consumer concerns,” said John Hendricks, founder of the Discovery Channel.

“But as it rolled through Congress, General Motors and CBS started asking what could they get out of it. . . . All this bill will do is freeze program options where they are today and stifle new program services.”

With the Bush Administration threatening to veto the bill, there is still a possibility it will not be enacted into law, despite the Senate having passed a similar measure earlier this year. But proponents claim they have the votes needed for an override.

One amendment that is expected to be introduced during conference is the “retransmission consent” provision, which would force cable systems to negotiate for carrying local over-the-air TV stations.

The provision is included in the Senate bill but failed to make it into the House version--mostly to avoid a nasty jurisdictional dispute between the House Commerce and Judiciary Committees.

Broadcasters are lobbying heavily for the provision on the grounds that cable operators have not been paying for some of their most-watched channels.

“Only through a quirk in the 1959 law did the the Federal Communications Commission, believing it would help a nascent industry, allow cable systems to take broadcast signals for free,” said Eddie Fritts, president of the National Assn. of Broadcasters. “TV stations currently may be dropped or changed at will from any cable system in the U.S.”

The cable industry contends that forcing them to pay for carrying local over-the-air stations will only drive up the cost of cable service because they will simply pass along the added expense to customers.

In testimony before Congress, CBS Inc. Chief Executive Laurence A. Tisch estimated that retransmission consent could generate anywhere from $300 million to $1 billion in new revenue annually to local broadcasters.

The provision would give a boost to many financially squeezed TV stations, which have seen their profit margins shrink in an increasingly competitive marketplace.

But the prospect that broadcasters would suddenly have more money going directly into their pockets sits poorly with the Hollywood studios, which produce most of the shows seen on television. The studios claim retransmission consent cuts them out of their fair share of royalties owed program producers.

Hollywood hopes to get a piece of the pie by lobbying for repeal of the so-called compulsory license, which allows cable operators to pay a nominal fee for retransmission rights rather than negotiating individually with each producer.

The studios, led by their powerful lobbyist, Motion Picture Assn. of America President Jack Valenti, maintain that they could significantly increase the approximately $175 million in compulsory license fees collected annually from cable operators if they negotiated directly over copyright payments.

Valenti, however, failed to get his compulsory license “reforms” inserted during debate of the cable bill on the House floor, and he too is now trying to have the provision adopted in conference.

In an unusual twist of political hardball, Valenti has threatened to support the Bush Administration’s expected veto of the cable bill if repeal of compulsory license does not make it into the bill during conference.

That, in turn, has provoked the NAB to warn it might carry out reprisals against the studios, most notably by switching position from neutral to hostile on such sensitive Hollywood issues as sex and violence in TV programs.

If Bush vetoes the compromise legislation, the battleground will move to the Senate, where the cable industry will need only 34 votes to uphold the veto.

But given that this is an election year and no politician would want to be tarred as supporting a veto on what is touted as a pro-consumer piece of legislation, even that number might be difficult to achieve.