Broadcasters Urge Continued Exclusivity Protection; MVPDs, DBS Companies Want Elimination
NAB and broadcasters clashed with many pay-TV companies and small broadband providers and local exchange carriers over whether the FCC network non-duplication and exclusivity rules should be eliminated. The broadcasters backed keeping the rules intact to help protect exclusivity rights, in comments that were due last week in docket 10-71. Pay-TV groups and companies argued that the rules are unnecessary in a complex video marketplace. American Cable Association, Dish Network and other pay-TV providers pushed for more retransmission consent reforms in their comments.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
USTelecom, which represents some multichannel video programming distributors (MVPD), urged the FCC to move forward in eliminating the exclusivity rules. Doing so will foster more market-based negotiations for broadcast signal carriage, it said (http://bit.ly/1llln65). The current system allows broadcasters to “game the MVPD marketplace” to generate windfall profits for broadcast licensees, it said. The must-buy provisions and basic tier requirements are “artificial legal benefits for broadcasters that skew the retransmission consent negotiation process in their favor,” it said. Allowing MVPDs the flexibility to negotiate for placement and packaging of these stations “would lead to more innovative offerings for consumers,” it said.
Prohibiting network and local station interference will be especially important “should the Commission decide to eliminate its broadcast exclusivity rules with the aim of permitting MVPDs the opportunity to secure retransmission consent from an out-of-market station to protect subscribers from loss of access to network programming during a negotiating impasse with the local affiliate,” ACA said (http://bit.ly/1mE4l8a). The rules unfairly permit local affiliates to exercise the rights of the rules even where the station isn’t carried by the MVPD in its local market, it said.
Direct broadcast satellite companies backed elimination and action to ensure that “an otherwise straightforward deregulatory action does not inadvertently create a competitive imbalance between the cable and satellite industries,” DirecTV and Dish Network said in joint comments (http://bit.ly/1pzyysz). They also urged the commission to impose a mandatory standstill “to ensure that the broadcast signal stays up” during a retransmission consent impasse, they said. AT&T argued that there’s no reason for the FCC to provide a regulatory mechanism to enforce private exclusivity agreements (http://bit.ly/1yVena8). AT&T, which is attempting to buy DirecTV, also said the rules “artificially exacerbate this anti-competitive dynamic.”
Small- and mid-sized cable companies, like Mediacom and Bright House, argued that to make the proposed modification of the non-duplication rules meaningful, the FCC should clarify that it’s a violation of the good faith rules for any negotiating entity “to participate in any competition-defeating agreement, arrangement or understanding with any third party where such agreement ... has the effect of depriving the MVPD of the opportunity to obtain retransmission consent to carry an out-of-market station during a retransmission consent blackout,” in joint comments (http://bit.ly/1qC63r7).
Time Warner Cable also urged the commission to adopt a dispute resolution mechanism and provide for interim carriage during retransmission consent disputes. The FCC also should take action preventing broadcasters “from blocking the ability of an MVPD’s broadband subscribers to access broadcast content made freely available on the Internet,” it said (http://bit.ly/1nNk9TP).
NAB called the exclusivity rules “essential” and said eliminating them would “deter investment in broadcast content, including local content, and inflict serious harm on local broadcasters and the audiences they serve” (http://bit.ly/1pXKC4D). The affiliate stations of ABC, CBS, Fox and NBCUniversal agreed with NAB that the rules preserve broadcasters’ bargained-for exclusivity rights, given the existence of statutory compulsory copyright licenses, in separate comments. A substantial asymmetry between cable operators and satellite carriers would result from getting rid of the rules, NAB said. Cable operators wouldn’t be limited by regulation from importing a distant network signal “to households throughout a television market, but satellite carriers would remain prohibited by statute from doing the same thing,” it said.
LIN Media and Sinclair said the FCC lacks authority to end the rules. Congress “has clearly provided for these rules in legislation,” Sinclair said. The commission also lacks authority to revise policies that Congress “has specifically and emphatically established and re-confirmed more than five times since 1988,” LIN said. If the commission attempts to make changes, it shouldn’t do so “merely to shift bargaining leverage from broadcasters to MVPDs,” it said.
Smaller broadband providers said the commission does have the authority to end the rules, and that doing so will improve broadband services. NTCA said ending the rules will result in lower consumer rates and increased broadband investment. Even in cases where a small MVPD determines that there’s some benefit to obtaining a duplicative network signal from a nearby market, “private network-station contracts combined with consumer demand for local content are likely to make such a scenario infeasible,” said WTA (http://bit.ly/1jWmKbL). If the FCC maintains the rules, it should increase the small MVPD exemption to the network non-duplication rules, WTA said. Reply comments are due July 24.