Cable bill to get another hearing Measure would allow most cities to control cable prices.

January 06, 1992|By New York Times

WASHINGTON -- Having struck out twice in the last two years, Congress will begin a third effort later this month to pass legislation that would allow most cities to regulate prices for basic cable television services.

Similar cable bills have foundered largely because of opposition from the cable industry's formidable lobbying group and from Republicans who oppose rate regulation. But this time, despite broad support among lawmakers who see the measure as an ideal consumer issue, it is in danger of being derailed by opposition from a new quarter: Hollywood movie studios and their renowned lobbyist, Jack Valenti.

The entry of Hollywood forces, which had until recently shown little interest in cable television issues, highlights the tangled deal-making that has transformed a modest consumer bill into a turf battle.

In an attempt to get the political support of the broadcasting industry, Senate sponsors of the legislation inserted a provision last spring that had long been sought by broadcasters. But that provision has incensed Valenti and the movie studios, who now want to defeat the bill.

Both the Senate and House bills are meant to curb rising cable prices, which have doubled or tripled in many cities since Congress deregulated the industry in 1984. The new bills would allow local governments to regulate prices for a basic tier of cable service, which generally includes the retransmission of signals from local television stations.

They would also give local governments limited power to regulate prices for premium cable services like HBO and Showtime.

What sparked the opposition from Valenti and the studios was a provision to the Senate bill that would require cable television systems to obtain a license from local television broadcasters before being allowed to retransmit their signals.

Valenti and the studios fear the measure will allow broadcasters and the three networks to capture all royalties that the cable operators might pay for retransmission rights and not give any to the studios. If any royalties are going to be paid, Hollywood wants to negotiate directly with the cable operators for the money.

The mere threat of a campaign by Valenti, the president of the Motion Picture Association of America, has alarmed many advocates of cable legislation. Indeed, broadcast lobbyists believe -- though they cannot prove it -- that Valenti was closely linked to a decision last November by the Senate majority leader, George J. Mitchell, D-Maine, to delay a vote until Jan. 27.

Some lawmakers who support the legislation also fear that the cable industry has acquired new lobbying stature as a result of its growing corporate relationship with Hollywood. Time Warner Inc., for example, is one of the eight members of the Motion Picture Association and also owns cable systems and produces cable programming.

Valenti will not discuss his lobbying strategy, but he has not been shy about his distaste for the cable bill. "We are opposed to rate regulation of our products in any form," he said. "That's a matter of principle."

"I'm not carrying water for the cable industry," he added. "Warner can't dictate to the other seven companies. The point is, from time to time various industries make common cause together."

Valenti and his clients are formidable political players. The former aide to President Lyndon B. Johnson has acquired a nearly mythic reputation for his extensive network of political friendships and his ability to mobilize armies of Hollywood producers at a moment's notice.

Last year, he orchestrated a lobbying campaign and, against long odds, succeeded in watering down a move at the Federal Communications Commission to allow the three big networks to own the rights to sell reruns in syndication.

The cable industry has adamantly fought attempts to subject it to new price regulation, as has the Bush administration, which argues that the solution to high cable prices is to increase competition by letting telephone companies and other rivals enter the cable business.

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