[Federal Register: July 13, 2005 (Volume 70, Number 133)]
[Rules and Regulations]
[Page 40216-40225]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jy05-17]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[MB Docket No. 05-89; FCC 05-119]
Implementation of Section 207 of the Satellite Home Viewer
Extension and Reauthorization Act of 2004; Reciprocal Bargaining
Obligation
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this item, the Commission adopts final rules implementing
Section 207 of the Satellite Home Viewer Extension and Reauthorization
Act of 2004. Because the Commission has in place existing rules
governing good faith retransmission consent negotiations, we conclude
that the most faithful and expeditious implementation of the amendments
contemplated in the SHVERA is to extend to MVPDs the existing good
faith bargaining obligation imposed on broadcasters under our rules.
The item accordingly amends the Commission's rules to apply equally to
broadcasters and MVPDs. We also conclude that the reciprocal bargaining
obligation applies to retransmission consent negotiations between all
broadcasters and MVPDs regardless of the designated market area in
which they are located. Because the text of the statute applies without
qualification to ``television broadcast stations,'' ``multichannel
video programming distributors'' and ``retransmission consent
agreements,'' the item concludes that the reciprocal bargaining
obligation applies to all retransmission consent agreements.
DATES: Effective August 12, 2005.
FOR FURTHER INFORMATION CONTACT: For additional information on this
proceeding, contact Steven Broeckaert, Steven.Broeckaert@fcc.gov of the
Media Bureau, Policy Division, (202) 418-2120.
SUPPLEMENTARY INFORMATION: This is a summary of the Federal
Communications Commission's Report and Order, FCC 05-119, adopted on
June 6, 2005 and released on June 7, 2005. The full text of this
document is available for public inspection and copying during regular
business hours in the FCC Reference Center, Federal Communications
Commission, 445 12th Street, SW., CY-A257, Washington, DC, 20554. These
documents will also be available via ECFS (http://www.fcc.gov/cgb/ecfs/).
(Documents will be available electronically in ASCII, Word 97, and/
or Adobe Acrobat.) The complete text may be purchased from the
Commission's copy contractor, Best Copy and Printing, Inc., 445 12th
Street, SW., Room CY-B402, Washington, DC 20554. To request this
document in accessible formats (computer diskettes, large print, audio
recording, and Braille), send an e-mail to fcc504@fcc.gov or call the
Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530
(voice), (202) 418-0432 (TTY).
Paperwork Reduction Act
This document does not contain proposed information collection(s)
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. In addition, therefore, it does not contain any new or modified
``information collection burden for small business concerns with fewer
than 25 employees,'' pursuant to the Small Business Paperwork Relief
Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).
Summary of the Report and Order
1. In this Report and Order (``Order''), we adopt rules
implementing Section 207 of the Satellite Home Viewer Extension and
Reauthorization Act of 2004 (``SHVERA''). The Satellite Home Viewer
Extension and Reauthorization Act of 2004, Public Law 108-447, 207, 118
Stat. 2809, 3393 (2004) (to be codified at 47 U.S.C. 325). The SHVERA
was enacted on December 8, 2004 as title IX of the ``Consolidated
Appropriations Act, 2005.'' The SHVERA requires that the Commission
prescribe regulations implementing Section 207 within 180 days after
the date of the enactment thereof. Section 207 extends section
325(b)(3)(C) of the Communications Act until 2010 and amends that
section to impose a reciprocal good faith retransmission consent
bargaining obligation on multichannel video programming distributors
(``MVPDs''). This section alters the bargaining obligations created by
the Satellite Home Viewer Improvement Act of 1999 (``SHVIA'') which
imposed a good faith bargaining obligation only on broadcasters. SHVIA
was enacted as title I of the Intellectual Property and Communications
Omnibus Reform Act of 1999 (relating to copyright licensing and
carriage of broadcast signals by satellite carriers, codified in
scattered Sections of 17 and 47 U.S.C.), Public Law 106-113, 113 Stat.
1501, Appendix I (1999). As discussed below, because the Commission has
in place existing rules governing good faith retransmission consent
negotiations and because Congress did not instruct us through the
SHVERA to modify those rules in any substantive way, we conclude that
the most faithful and expeditious implementation of the amendments
contemplated in Section 207 of the SHVERA is to extend to MVPDs the
existing good faith bargaining obligation imposed on broadcasters under
our rules. We also conclude that the reciprocal bargaining obligation
applies to retransmission consent negotiations between all broadcasters
and MVPDs regardless of the designated market area in which they are
located.
II. Background
2. Section 325(b)(3)(C) of the Communications Act, as enacted by
the SHVIA, instructed the Commission to commence a rulemaking
proceeding to revise the regulations by which television broadcast
stations exercise their right to grant retransmission consent; see 47
U.S.C. 325(b)(3)(C). Specifically, that section required that the
Commission, until January 1, 2006:
Prohibit a television broadcast station that provides retransmission
consent from engaging in exclusive contracts for carriage or failing
to negotiate in good faith, and it shall not be a failure to
negotiate in good faith if the television broadcast station enters
into retransmission consent agreements containing different terms
and conditions, including price terms, with different multichannel
video programming distributors if such different terms and
conditions are based on competitive marketplace considerations; see
47 U.S.C. 325(b)(3)(C)(ii).
The Commission issued a Notice of Proposed Rulemaking seeking comment
on how best to implement the good faith and exclusivity provisions of
the SHVIA; see Implementation of the Satellite Home Viewer Improvement
Act of 1999: Retransmission Consent Issues, 14 FCC Rcd 21736 (1999)
(``Good Faith Notice''). After considering the comments received in
response to the notice, the Commission adopted rules implementing the
SHVIA good faith provisions and complaint procedures for alleged rule
violations; see Implementation of the Satellite Home
[[Page 40217]]
Viewer Improvement Act of 1999: Retransmission Consent Issues, 15 FCC
Rcd 5445 (2000) (``Good Faith Order''), recon. granted in part, 16 FCC
Rcd 15599 (2001).
3. The Good Faith Order determined that Congress did not intend to
subject retransmission consent negotiation to detailed substantive
oversight by the Commission; see Good Faith Order, 15 FCC Rcd at 5450.
Instead, the order found that Congress intended that the Commission
follow established precedent, particularly in the field of labor law,
in implementing the good faith retransmission consent negotiation
requirement; see Good Faith Order, 15 FCC Rcd at 5453-54. Consistent
with this conclusion, the Good Faith Order adopted a two-part test for
good faith. The first part of the test consists of a brief, objective
list of negotiation standards; see Good Faith Order, 15 FCC Rcd at
5457-58. First, a broadcaster may not refuse to negotiate with an MVPD
regarding retransmission consent. Second, a broadcaster must appoint a
negotiating representative with authority to bargain on retransmission
consent issues. Third, a broadcaster must agree to meet at reasonable
times and locations and cannot act in a manner that would unduly delay
the course of negotiations. Fourth, a broadcaster may not put forth a
single, unilateral proposal. Fifth, a broadcaster, in responding to an
offer proposed by an MVPD, must provide considered reasons for
rejecting any aspects of the MVPD's offer. Sixth, a broadcaster is
prohibited from entering into an agreement with any party conditioned
upon denying retransmission consent to any MVPD. Finally, a broadcaster
must agree to execute a written retransmission consent agreement that
sets forth the full agreement between the broadcaster and the MVPD; see
Good Faith Order, 15 FCC Rcd at 5457-58; 47 CFR 76.65(b)(1)(i)-(vii).
4. The second part of the good faith test is based on a totality of
the circumstances standard. Under this standard, an MVPD may present
facts to the Commission which, even though they do not allege a
violation of the specific standards enumerated above, given the
totality of the circumstances constitute a failure to negotiate in good
faith; see Good Faith Order, 15 FCC Rcd at 5458; 47 CFR 76.65(b)(2).
5. The Good Faith Order provided examples of negotiation proposals
that presumptively are consistent and inconsistent with ``competitive
marketplace considerations;'' see Good Faith Order, 15 FCC Rcd at 5469-
70. The Good Faith Order found that it is implicit in Section
325(b)(3)(C) that any effort to further anti-competitive ends through
the negotiation process would not meet the good faith negotiation
requirement; see Good Faith Order, 15 FCC Rcd at 5470. The order stated
that considerations that are designed to frustrate the functioning of a
competitive market are not ``competitive marketplace considerations.''
Further, conduct that is violative of national policies favoring
competition--that, for example, is intended to gain or sustain a
monopoly, an agreement not to compete or to fix prices, or involves the
exercise of market power in one market in order to foreclose
competitors from participation in another market--is not within the
competitive marketplace considerations standard included in the
statute; see Good Faith Order, 15 FCC Rcd at 70.
6. Finally, the Good Faith Order established procedural rules for
the filing of good faith complaints pursuant to Sec. 76.7 of the
Commission's rules; see 47 CFR 76.65(c); 47 CFR 76.7. The burden of
proof is on the complainant to establish a good faith violation and
complaints are subject to a one year limitations period; see 47 CFR
76.65(d) and (e).
III. Discussion
7. In enacting the SHVERA good faith negotiation obligation for
MVPDs, Congress used language identical to that of the SHVIA imposing a
good faith obligation on broadcasters, requiring the Commission, until
January 1, 2010, to:
prohibit a multichannel video programming distributor from failing
to negotiate in good faith for retransmission consent under this
section, and it shall not be a failure to negotiate in good faith if
the distributor enters into retransmission consent agreements
containing different terms and conditions, including price terms,
with different broadcast stations if such different terms and
conditions are based on competitive marketplace considerations; see
47 U.S.C. 325(b)(3)(C)(iii).
The Commission issued a Notice of Proposed Rulemaking seeking
comment on how to implement the reciprocal bargaining obligation set
forth in the SHVERA; see Implementation of Section 207 of the Satellite
Home Viewer Extension and Reauthorization Act of 2004: Reciprocal
Bargaining Obligations, FCC 05-49 (rel. March 7, 2005) (``Notice'').
The Commission also requested comment on whether the good faith
negotiating standards may be different for carriage of television
broadcast stations outside of their designated market area (``DMA''). A
DMA is a geographic market designation created by Nielsen Media
Research that defines each television market exclusive of others, based
on measured viewing patterns. Essentially, each county in the United
States is allocated to a market based on which home-market stations
receive a preponderance of total viewing hours in the county. For
purposes of this calculation, both over-the-air and cable television
viewing are included.
A. The Reciprocal Bargaining Obligation for Entities Within the Same
DMA
8. In the Notice, the Commission observed that Congress did not
instruct the Commission to amend its existing good faith rules in any
way other than to implement the statutory extension and impose the good
faith obligation on MVPDs. Accordingly, the Commission stated that it
did not believe that Congress intended that the Commission revisit the
findings and conclusions that were reached in the SHVIA rulemaking. The
little legislative history directly applicable to Section 207 supports
this approach and, in pertinent part, provides:
In light of evidence that retransmission negotiations continue
to be contentious, the Committee chose to extend these obligations,
and also to begin applying the good-faith obligations to MVPDs. The
Committee intends the MVPD good-faith obligations to be analogous to
those that apply to broadcasters, and not to affect the ultimate
ability of an MVPD to decide not to enter into retransmission
consent with a broadcaster; see H.R. Rep. No. 108-634, 108th Cong.,
2nd Sess. 19 (2004) (``House Report'').
The Notice stated that the Commission believed that the implementation
of Section 207 most consistent with the apparent intent of Congress is
to amend our existing rules to apply equally to both broadcasters and
MVPDs and tentatively concluded Sec. Sec. 76.64(l) and 76.65 should be
amended accordingly. The Notice sought comment on that approach and any
other reasonable implementation of Section 207.
9. The majority of commenters agreed with the implementation
proposed by the Commission in the Notice as it applies to in-market
negotiations. The Network Affiliates assert that:
[b]ecause it is presumed that Congress acts with knowledge of the
existing regulatory framework when it enacts new legislation,
including when the new law incorporates the language of the prior
law, the Notice's conclusion that ``Congress did not intend that the
Commission revisit the findings and conclusions that were reached in
the SHVIA rulemaking'' is undoubtedly correct, as is the Notice's
tentative conclusion ``to amend our existing rules to apply equally
to both broadcasters and MVPDs.''
10. EchoStar asserts, however, that MVPDs and broadcasters occupy
significantly different positions when negotiating retransmission
consent and
[[Page 40218]]
that the Commission should recognize this distinction when applying the
totality of the circumstances test and in determining whether specific
terms and conditions are consistent with ``competitive market place
conditions.'' EchoStar asserts that it would be premature to provide an
extensive list of bargaining conduct that could be considered a failure
to negotiate in good faith under the totality of the circumstances test
and advises that the Commission pursue such measures on a case-by-case
basis. Finally, EchoStar argues that the Commission should clarify that
tying is not consistent with competitive marketplace considerations if
it would violate the antitrust laws.
11. NCTA argues that:
Congress intended that broadcasters have to offer to make their
programming available to all MVPDs at some price or other terms.
Otherwise, one MVPD could obtain de facto exclusivity over a
broadcaster's signal.
* * * * *
MVPDs, on the other hand, have a duty to carry a local broadcast
signal if the broadcaster opts for mandatory carriage, but no duty
to agree to pay or carry a broadcaster if it elects retransmission
consent. Indeed, Congress made clear in Section 207 that it intends
the ``analogous'' good faith obligations to ``not affect the
ultimate ability of an MVPD to decide not to enter into
retransmission consent with a broadcaster.''
Absent an MVPD's ability to ultimately refuse carriage of a broadcaster
that has elected retransmission consent, argues NCTA, reciprocal good
faith bargaining rules simply turn retransmission consent into another
form of must carry but with the possibility of payment in addition.
NCTA states that it is broadcasters' unique status as users of public
spectrum with the obligation to provide free over-the-air signals and
ability to exact mandatory carriage on cable and satellite providers
that triggers their obligation to negotiate retransmission consent in
good faith in all instances. NCTA asserts that there are ``no
corresponding reasons why cable operators should be required to
negotiate to carry the signals of broadcasters that have specifically
elected to forgo their statutory right to be carried.'' Citing a ``host
of legitimate editorial and business reasons why a cable operator could
decide not to carry a particular broadcast station,'' NCTA maintains
that the Commission should interpret the good faith negotiation rules
to give MVPDs the right to refuse to enter into retransmission consent
negotiations. NAB counters that NCTA's argument nullifies the language
of the statute imposing a reciprocal good faith negotiation obligation
on MVPDs and Congress's intent that such obligation ``be analogous [to]
those that apply to broadcasters.'' At the very least, NCTA asserts,
the Commission should confirm that cable operators have the right to
insist upon carriage compensation in all retransmission consent
negotiations.
12. Arguing that the Commission has recognized the imbalance of
power in retransmission consent negotiations between media
conglomerates and small and medium sized cable operators, ACA requests
that the Commission adopt procedural protections for these cable
operators. ACA requests that the Commission require that broadcasters
give 30 days written notice to a small or medium sized cable operator
of their intent to file a good faith complaint. In addition, ACA asks
that the Commission provide an extended 30 day period in which to
respond to good faith complaints filed against them. ACA argues that
these procedural protections should apply not just to cable companies
that serve 400,000 or fewer subscribers, but should also extend to
``all medium-sized, non-vertically integrated cable companies.'' ACA
emphasizes that these protections are solely procedural and that the
substantive good faith rules would be the same for MVPDs of all sizes.
NAB and the Network Affiliates assert that ACA offers no support for a
procedural distinction for medium and small cable operators and argue
that the better course would be to grant individual requests for
extensions of time on a case-by-case basis. Finally, ACA asks the
Commission to clarify that it is not a violation of the good faith
rules for a cable operator to decline to carry a broadcaster's
multicast programming. NAB and the Network Affiliates assert that the
Commission, in the Good Faith Order, found that proposals for carriage
``conditioned on carriage of any other programming, such as a
broadcaster's digital signals. * * *'' to be consistent with
competitive marketplace considerations. These commenters argue that ACA
provides no evidence to justify a departure from the Commission's
finding. Indeed, NBC asks the Commission to clarify that, now and after
completion of the digital transition, the good faith obligation
requires MVPDs to negotiate for the entire free, over-the-air signal
offered by a television station.
13. After reviewing the record in this proceeding, we adopt the
tentative conclusion set forth in the Notice in order to implement the
will of Congress as indicated in Section 207 and the legislative
history. Accordingly, we will amend our existing rules to apply equally
to both broadcasters and MVPDs. Sections 76.64(l) and 76.65 will be
amended. Broadcasters will now be able to file a complaint against an
MVPD alleging that such MVPD breached its duty to negotiate
retransmission consent in good faith. Broadcasters and MVPDs must
comply with the seven objective negotiation standards set forth in
Sec. 76.65(b)(1) as amended herein. In addition, MVPDs and
broadcasters will now be equally subject to, and able to file, a
complaint based on the totality of the circumstances.
14. We cannot agree with NCTA's assertion that, because of the
differences between MVPDs and broadcasters, MVPDs should have the
option of refusing outright to negotiate retransmission consent with
any broadcaster within that MVPD's DMA. To agree with NCTA's assertion
would be to render Section 207 a virtual nullity. Under NCTA's
interpretation of Section 207, the good faith negotiation obligation is
not triggered unless and until an MVPD has determined that
retransmission of a broadcaster's signal is attractive. The Commission
rejected similar arguments raised by broadcasters in implementing the
good faith provisions of the SHVIA:
[W]e do not interpret section 325(b)(3)(C) as largely hortatory
as suggested by some commenters. As we stated in the Notice,
Congress has signaled its intention to impose some heightened duty
of negotiation on broadcasters in the retransmission consent
process. In other words, Congress intended that the parties to
retransmission consent have negotiation obligations greater than
those under common law. * * * We believe that, by imposing the good
faith obligation, Congress intended that the Commission develop and
enforce a process that ensures that broadcasters and MVPDs meet to
negotiate retransmission consent and that such negotiations are
conducted in an atmosphere of honesty, purpose and clarity of
process; see Good Faith Order, 15 FCC Rcd at 5455.
This ``heightened duty of negotiation'' has now been imposed by
Congress on MVPDs. In drafting Section 207, Congress was fully aware of
the Commission's implementation of the SHVIA good faith provision; see
Lorillard v. Pons, 434 U.S. 575, 580-81 (1978) (``Congress is presumed
to be aware of an administrative or judicial interpretation of a
statute and to adopt that interpretation when it re-enacts a statute
without change. So too, where, as here, Congress adopts a new law
incorporating sections of a prior law, Congress normally can be
presumed to have had knowledge of the interpretation given to the
incorporated law, at least insofar as it affects the new statute.'')
(citations omitted); Bragdon v. Abbott, 524 U.S. 624, 645 (1998)
(same).
[[Page 40219]]
Armed with this knowledge, Congress crafted the reciprocal bargaining
provision to mirror the obligation imposed by the SHVIA and the House
Report stated that it was intended to be ``analogous'' to the SHVIA
good faith obligation; see House Report at 19. We believe that if
Congress had intended that this duty apply to MVPDs only when they were
affirmatively interested in a prospective carriage arrangement, it
would have so indicated in the statute or legislative history. Of
course, the reciprocal bargaining obligation would be largely
unnecessary if it were limited in this manner. Moreover, we do not
believe that the obligations imposed herein will unduly burden MVPDs.
First, the good faith obligation merely requires that MVPDs comply with
the per se negotiating standards of Sec. 76.65(b)(1) and refrain from
insisting on rates, terms and conditions that are inconsistent with
competitive marketplace considerations. Second, as discussed below,
because we conclude that negotiations involving truly distant
broadcasters and MVPDs and negotiations for which a broadcaster is
contractually precluded from reaching consent may be truncated, MVPDs
and broadcasters alike will not be required to engage in an unending
procession of extended negotiations. Finally, provided that a party to
a reciprocal bargaining negotiation complies with the requirements of
the Commission's rules, failure to reach agreement would not violate
either Sec. 325(b)(3)(C) or Sec. 76.65 of the Commission's rules.
Accordingly, NCTA's argument that the reciprocal bargaining obligation
will lead to another form of must carry is incorrect.
15. With regard to the totality of the circumstances test, we agree
with EchoStar that MVPDs and broadcasters occupy different positions
when negotiating retransmission consent and that the Commission should
recognize this distinction when applying the totality of the
circumstances test and in determining whether specific terms and
conditions are consistent with competitive marketplace considerations.
The Commission must always take into account the relative bargaining
positions of the parties when examining the totality of the
circumstances for a failure to negotiate in good faith. For example, a
negotiating proposal put forth by a small cable operator might be found
consistent with competitive marketplace considerations, whereas the
same proposal put forth by the nation's largest MVPD might not. We also
agree that identifying additional negotiating proposals that can be
considered to reflect a failure to negotiate in good faith under the
totality of the circumstances test should be done on a case-by-case
basis. Finally, we clarify that tying is not consistent with
competitive marketplace considerations if it would violate the
antitrust laws; see Good Faith Order, 15 FCC Rcd at 5470 (``Conduct
that is violative of national policies favoring competition--that is,
for example, intended to gain or sustain a monopoly, is an agreement
not to compete or fix prices, or involves the exercise of market power
in one market in order to foreclose competitors from participation in
another market--is not within the competitive marketplace
considerations standard included in the statute.'').
16. We decline to establish special procedures for medium and small
cable operators as requested by ACA. We agree with NAB and the Network
Affiliates that ACA has failed to justify different procedural
treatment for smaller cable operators. We fail to see what benefit the
30 day pre-complaint notice would have for these operators,
particularly in instances where a retransmission consent agreement will
imminently expire with the attendant loss of the broadcaster's signal.
Because the Commission concluded in the Good Faith Order that MVPDs
cannot continue to carry a broadcaster's signal after the existing
consent expires even if a complaint is pending with the Commission, it
benefits both broadcasters and MVPDs alike that the Commission decline
to institute a procedural delay that would preclude the filing of a
good faith complaint as soon as possible after the alleged violation;
see Good Faith Order, 15 FCC Rcd at 5471-2. Accordingly, we believe
that the more prudent course is to entertain individual requests for
extensions of time on a case-by-case basis through which MVPDs and
broadcasters, large and small, can establish that the existing pleading
cycle set forth in Sec. 76.7 of the Commission's rules is inadequate
to allow that party to present an effective defense to a good faith
complaint.
17. ACA requested that the Commission clarify that it is not a
violation of the good faith rules for a cable operator to decline to
carry a broadcaster's multicast programming. Conversely, NBC asks that
the Commission determine that now, and after completion of the digital
transition, the good faith obligation requires MVPDs to negotiate for
the entire free, over-the-air signal offered by a television station.
The Commission stated numerous times in the Good Faith Order that
``proposals for carriage conditioned on carriage of any other
programming such as a broadcaster's digital signals'' are presumptively
consistent with competitive marketplace considerations and the good
faith negotiation requirement see Good Faith Order, 15 FCC Rcd at 5469.
As the Commission stated:
We do not find anything to suggest that, for example, requesting
an MVPD to carry * * * digital broadcast signals is impermissible or
other than a competitive marketplace consideration. * * * After
passage of the 1992 Cable Act, Congress left negotiation of
retransmission consent to the give and take of the competitive
marketplace. In SHVIA, absent conduct that is violative of national
policies favoring competition, we believe Congress intended this
same give and take to govern retransmission consent. In addition, we
point out that these are bargaining proposals which an MVPD is free
to accept, reject or counter with a proposal of its own; see Good
Faith Order, 15 FCC Rcd at 5469-70.
Whether an MVPD carries a broadcaster's entire free, over-the-air
signal, be it high definition or multicast, is a matter to be
determined through the retransmission consent negotiation process. The
reciprocal bargaining obligation neither requires nor prohibits the
carriage of a broadcaster's entire free signal. If it is important for
a broadcaster to obtain full carriage of its digital signal, the
broadcaster must be willing to accommodate the reasonable requests of
an MVPD in order to secure such carriage. If it is important for an
MVPD to carry part, but not all, of a broadcaster's digital signal it
likewise must negotiate in good faith. In each instance, either party
must be willing to forgo carriage if agreement is not reached after
negotiating in accordance with the rules established herein.
B. The Reciprocal Bargaining Obligation and Entities Located in
Different DMAs
18. In the Notice, the Commission noted that the original SHVIA
good faith provision by its terms applied to ``television broadcast
stations.'' Similarly, the SHVERA good faith provision applies to
``multichannel video programming distributors.'' The Commission sought
comment whether, under the statute, the good faith negotiating
standards may be any different for carriage of significantly viewed
television broadcast stations outside of their DMA. Significantly
viewed television broadcast stations do not have carriage rights
outside of their DMA and carriage of their signals by out-of-market
MVPDs is permissive. The Notice asked whether the same good faith
negotiation standard should apply to broadcasters and MVPDs regardless
of the DMA in which they reside, or whether the good faith
retransmission
[[Page 40220]]
consent negotiation obligation should apply only to MVPDs and
broadcasters located in the same DMA. As discussed below, we do not
interpret section 325(b)(3)(C) to limit the geographic scope of the
reciprocal bargaining obligation in retransmission consent
negotiations. At the same time, we conclude that the nature of this
obligation may vary according to where the MVPD and the broadcaster are
located. With regard to significantly-viewed and in-market signals, we
believe that the obligation should be essentially the same. With regard
to more distant signals, the obligation applies, but distance is likely
to be a critical factor in determining compliance under the totality of
circumstances test.
19. The Network Affiliates, NAB, and NBC assert that the good faith
bargaining obligation should not apply to negotiations for consent to
retransmit broadcast signals outside of a television station's market.
The Network Affiliates argue that:
Indeed, SHVERA itself, in enacting new Sec. 340, the
significantly viewed provision, expressly provides (1) that
``[c]arriage of a signal under this section is not mandatory'' by a
satellite carrier and (2) that the ``eligibility of the signal of a
station to be carried under this section does not affect any right
of the licensee of such station to grant (or withhold)
retransmission consent under section 325(b)(1).''
The Network Affiliates stress that, in granting significantly viewed
broadcasters the right to withhold retransmission consent, the SHVERA
``specifically references section 325(b)(1), the statutory
retransmission consent provision, not section 325(b)(3)(C), the
statutory good faith bargaining provision.''
20. NBC argues that, in adopting the SHVIA, Congress expressly
intended to protect the property rights of program providers as well as
the market-based outcomes of private negotiations between program
providers and local broadcasters. Citing the legislative history of
SHVIA, NBC asserts that Congress was guided by three principles: (1)
The desire to promote competition in the marketplace for MVPD
programming to reduce costs to subscribers; (2) ``the importance of
protecting and fostering the system of television networks as they
relate to the concept of localism;'' and (3) ``perhaps most
importantly'' the need to act narrowly to protect the ``exclusive
property rights granted by the Copyright Act to copyright holders'' and
``minimize the effects of government intrusion on the broader market in
which the affected property rights and industries operate.'' NBC
maintains that neither Congress nor the Commission suggested that the
good faith requirement should be read to override the private property
rights of networks, syndicators or other program providers and permit a
distribution outlet, either broadcaster or cable operator, to consent
to further redistribution of programming that the outlet does not own.
NBC concedes that under the good faith requirements, a station cannot
refuse to negotiate with an MVPD located in the same DMA regarding
retransmission consent. Similarly, argues NBC, a station cannot enter
into an agreement with an MVPD that prohibits the station from entering
into retransmission consent with another MVPD. Neither of these
concepts, however, prevents a station from refusing to grant out-of-
market retransmission consent with respect to programming for which it
does not hold extra-territorial rights. NBC also argues that Congress
has consistently, both in the 1992 Cable Act and the SHVIA, protected
the rights afforded by programming providers to local stations against
distant stations; see S. Rep. No. 102-92, at 38, 106 Stat. 1133, 1171
(1991). The legislative history to the 1992 Cable Act provides that
``the Committee has relied on the protections which are afforded local
stations by the FCC's network nonduplication and syndicated exclusivity
rules. Amendments or deletions of those rules in a manner that would
allow distant stations to be substituted on cable systems for carriage
[of] local stations carrying the same programming would, in the
Committee's view, be inconsistent with the regulatory structure created
in [the 1992 Cable Act];'' see also SHVIA Conference Report at 92. The
legislative history of the SHVIA states that ``the broadcast television
market has developed in such a way that copyright licensing practices
in this area take into account the national network structure, which
grants exclusive territorial rights to programming in a local market to
local stations either directly or through affiliation agreements.'' The
SHVIA Conference Report went on to state that ``allowing the
importation of distant or out-of-market network stations in derogation
of the local stations' exclusive right--bought and paid for in market-
negotiated arrangements--to show the works in question undermines those
market arrangements.'' Accordingly, Congress structured the compulsory
copyright license in SHVIA ``to hew as closely to those arrangements as
possible.'' The Network Affiliates note that this concern is carried
through in the legislative history of the SHVERA. The SHVERA House
Report provides that ``[w]here a satellite provider can retransmit a
local station's exclusive network programming but chooses to substitute
identical programming from a distant network affiliate of the same
network instead, the satellite carrier undermines the value of the
license negotiated by the local broadcast station as well as the
continued viability of the network-local affiliate relationship;'' see
House Report at 11. NBC also cites numerous points in the Good Faith
Order in which the Commission discussed the ``local'' nature of the
good faith negotiation obligation.
21. Several commenters argue that the reciprocal bargaining
obligation should be the same regardless of whether or not the entities
are located in the same DMA, or at a minimum, extended to those areas
in which a station is significantly viewed. EchoStar argues that ``[i]n
the absence of specific limiting language, the good faith standards
established by the Commission under section 325(b)(3)(C) apply to all
cases where retransmission consent is required.'' As support for this
conclusion, EchoStar, and other commenters, cite the Media Bureau's
decision in Monroe, Georgia Water Light and Gas Commission v. Morris
Network, Inc., in which the Media Bureau stated that ``[w]e caution
broadcasters to be aware of existing contractual obligations that
affect a television station's ability to negotiate retransmission
consent in good faith. The statute appears to apply equally to stations
and MVPDs in the same local market or different markets.'' The Network
Affiliates argue that reliance on the Media Bureau's Monroe decision is
misplaced because the statement quoted is no more than equivocal dicta.
22. DirecTV and EchoStar argue that the fact that out-of-market
broadcasters have no carriage rights is inapposite because once an in-
market broadcaster forgoes mandatory carriage, it too has no guaranteed
carriage rights. DirecTV asserts that allowing significantly viewed
broadcasters to refuse to negotiate with DBS operators where cable
operators already distribute such programming would violate SHVERA's
prohibition on exclusive retransmission consent agreements. ACA states
that this situation is particularly problematic for its members, many
of which serve rural communities on the edges of DMAs in which out-of-
market signals from an adjoining DMA are considered ``local'' by
subscribers.
23. EchoStar argues further that contractual provisions that
restrict a
[[Page 40221]]
broadcaster's ability to negotiate retransmission consent in good faith
(e.g., certain network affiliation agreements) must be declared per se
good faith violations by the Commission. Citing the Good Faith Order,
EchoStar states that the Commission has already determined that
``[p]roposals that result from agreements not to compete or fix
prices'' are presumed inconsistent with competitive marketplace
considerations. EchoStar asserts that NBC's ``protection of property
rights'' argument is flawed because it assumes that copyright holders
have the ``unfettered right to control further redistribution of
broadcast programming.'' EchoStar maintains that Congress limited
copyright holders' absolute control over redistribution of broadcast
programming when it created the cable and satellite compulsory licenses
for retransmission of broadcast signals. NBC asserts that compulsory
copyright licenses offer no refuge from territorial exclusivity because
``[t]hese limited statutory licenses provide an administratively
convenient means to permit redistribution of proprietary television
programming via cable and satellite, but only after the [cable or
satellite provider] has received the express consent of the affected
television station, subject to the terms of that station's existing
programming agreements with regard to territorial exclusivity.''
EchoStar argues that contractual provisions that prevent the granting
of retransmission consent to out-of-market MVPDs would thwart
Congress's intent to make out-of-market stations available to MVPD
subscribers through the compulsory licensing provisions of the
Copyright Act. ACA agrees asserting that the plain language of section
325(b), the legislative history of SHVIA and the Commission's
implementing regulations prohibit market exclusivity provisions in
network affiliation agreements. The Network Affiliates counter that
there is nothing in SHVERA or its legislative history to justify the
sweeping effect that EchoStar desires--``to effectively nullify the
territorial restrictions in programming agreements that serve to grant,
and to limit, program exclusivity.''
24. EchoStar also contends that local broadcasters are beginning to
demand that MVPDs contract away their right to import significantly
viewed out-of-DMA stations as part of retransmission consent
negotiations. The Network Affiliates defend this practice. Citing the
Good Faith Order, the Network Affiliates state that the Commission
found that it would be presumptively inconsistent with competitive
marketplace considerations and the good faith negotiation requirement
for a broadcast station to offer a proposal that ``specifically
foreclose[s] carriage of other programming services by the MVPD that do
not substantially duplicate the proposing broadcaster's programming.''
Thus, argue the Network Affiliates, broadcasters can offer proposals
that foreclose the carriage of other programming services by an MVPD
that substantially duplicate the local broadcast station's programming.
25. DirecTV advises the Commission to adopt an ``agree with one,
negotiate with all'' rule that applies to negotiations for
significantly viewed broadcast signals. Under this rule, both
broadcasters and MVPDs are free to refuse outright to negotiate
carriage of significantly viewed signals under certain conditions. Once
a party has agreed to significantly viewed carriage with any other
party, however, it must negotiate in good faith for carriage with all
other similarly situated parties. DirecTV explains its proposal as
follows:
Any broadcaster would be free, if it wished, to categorically
reject negotiations for carriage in out-of-market, significantly
viewed areas--but only if it did so with respect to all MVPDs. Once
a broadcaster granted consent for one MVPD to carry such signals,
however, it would have to negotiate with all other MVPDs for such
carriage, and such negotiations would have to comply with the
Commission's good faith negotiation standard. * * * This rule would
apply reciprocally to MVPDs. DirecTV would be free to decide, for
example, that it will not carry New York stations in significantly
viewed areas in the Hartford DMA and, having made that decision,
would be free not to negotiate with New York stations regarding such
carriage. If however, it were to carry one New York station in a
Hartford significantly viewed area, it would have to negotiate [in
good faith] with all [significantly viewed] New York stations
seeking carriage in Hartford.* * *
Under either scenario, DirecTV asserts, the parties would not be
required to reach agreement, but only to negotiate in good faith in
accordance with the Commission's rules.
26. As noted above, the SHVIA good faith provision by its terms
applied to ``television broadcast stations.'' Similarly, the SHVERA
good faith provision applies to ``multichannel video programming
distributors.'' Neither the text of the SHVIA or the SHVERA, nor their
respective legislative histories, expressly delineate a territorial
boundary of the good faith negotiation obligation. Some commenters
argue that the reciprocal bargaining obligation attaches to
negotiations between MVPDs and broadcasters that are significantly
viewed outside of their DMA. Others assert that these obligations
attach to any retransmission consent negotiation regardless of where
the MVPD and the broadcaster are situated. For the reasons discussed
below, we agree with the latter interpretation of section 325(b)(3)(C).
Because we reach this conclusion, we need not examine DirecTV's ``agree
with one, negotiate with all'' proposal.
27. The language adopted by Congress in section 325(b)(3)(C) of the
SHVIA, as well the amendment adopted in the SHVERA, support the
conclusion that the reciprocal bargaining obligation applies to all
retransmission consent agreements. The text of the statute applies
without qualification to ``television broadcast stations,''
``multichannel video programming distributors'' and ``retransmission
consent agreements;'' see 47 U.S.C. 325(b)(3)(C). Nor does the
legislative history appear to contemplate a limitation on the
reciprocal bargaining obligation such that it would apply to some, but
not all, retransmission consent negotiations. Other than mandatory
carriage pursuant to Section 614 and satellite carrier service to
unserved households, all other lawful carriage of television broadcast
stations is by retransmission consent. There is no statutory or
regulatory distinction between in-market carriage and out-of-market
carriage pursuant to retransmission consent. Here, we believe that the
statute is clear on its face and we must give effect to its plain
meaning; see Chevron USA Inc. v. Natural Resources Defense Council,
Inc., 467 U.S. 837, 842 (1984), Qwest Corp. v. FCC, 258 F.3d 1191, 1199
(10th Cir. 2001), Bell Atlantic Tel. Cos. v. FCC, 131 F.3d 1044, 1047
(DC Cir. 1997). Further, we believe that this is the best
interpretation of the provision consistent with the SHVIA, the SHVERA
and their respective legislative histories. This interpretation avoids
the incongruous result of satellite carriers seeking to carry a
broadcaster in significantly viewed communities facing outright refusal
to negotiate carriage by such broadcaster even though cable operators
in the same communities are actually carrying such programming through
retransmission consent. In this regard, we agree with DirecTV that a
contrary interpretation might conflict with the prohibition on
exclusive retransmission consent agreements contained in section
325(b)(3)(C); see 47 U.S.C. 325(b)(3)(C). We fail to see how
[[Page 40222]]
an interpretation of section 325(b)(3)(C) that permits this result
implements Congress's direction that ``MVPD good-faith obligations * *
* be analogous to those that apply to broadcasters.'' Accordingly, we
conclude that the reciprocal bargaining obligation of section
325(b)(3)(C) applies to the negotiation of all retransmission consent.
28. Some commenters argue that a separate provision of the SHVERA,
new Section 340 of the Communications Act, indicates that the
reciprocal bargaining provision applies solely to in-market
retransmission consent negotiations. We disagree. Section 340(d) of the
Communications Act, as enacted in the SHVERA, discusses the carriage
rights of satellite carriers with respect to significantly viewed
broadcast stations and states that ``[t]he eligibility of the signal of
a station to be carried under this section does not affect any right of
the licensee of such station to grant (or withhold) retransmission
consent under section 325(b)(1); see 47 U.S.C. 340(d)(2). The
legislative history of the provision provides that:
Cable operators are under no obligation to carry in a local
market a distant significantly viewed signal, and the Committee
intends satellite carriage of such a distant signal in a local
market to be similarly voluntary. * * * Cable operators must obtain
retransmission consent to carry distant significantly viewed signals
into a local market and the committee intends the same obligation to
apply to satellite.
We interpret this provision, and its legislative history, merely to
acknowledge that mandatory carriage operates only with regard to
broadcasters and cable operators and satellite carriers operating in
the same DMA. As discussed above, retransmission consent carriage of
significantly viewed signals is permissive. We do not interpret this
provision as limiting the geographic scope of section 325(b)(3)(C). Nor
do we interpret as conflicting with this reading the fact that
Congress, in section 340(d), referenced section 325(b)(1) of the
Communications Act, rather than section 325(B)(3)(C), the reciprocal
bargaining obligation; see 47 U.S.C. 325(b)(1). Section 325(b)(1) is
the statutory provision that gives rise to the right of retransmission
consent. It originates in the 1992 Cable Act and predates both the
SHVIA and the SHVERA. The right of in-market broadcasters and out-of-
market broadcasters alike to require retransmission consent arises from
section 325(b)(1). The reciprocal bargaining provision of section
325(b)(3)(C) is an obligation that Congress deliberately overlay upon
the substantive retransmission consent right created by section
325(b)(1).
29. We emphasize that, although the reciprocal bargaining
obligation applies without geographic limitation, that does not mean it
will apply exactly the same way in all negotiations. Rather, we
conclude that section 325(b)(3)(C) and the inherent nature of a good
faith obligation permit the Commission to account for the distinction
between in-market and out-of-market signals in determining compliance
under the totality of the circumstances test. In other words, the
determination of what conduct constitutes a breach of the duty of good
faith is necessarily contextual. Congress created the mandatory
carriage/retransmission consent framework as part of the 1992 Cable
Act; see Implementation of the Cable Television Consumer Protection and
Competition Act of 1992: Broadcast Signal Carriage Issues, 8 FCC Rcd
2965 (1993). Through this framework, a broadcaster has the option to
elect mandatory carriage and forgo compensation for carriage of its
signal or pursue retransmission consent and risk the failure to agree
and non-carriage; see Implementation of the Cable Television Consumer
Protection and Competition Act of 1992: Broadcast Signal Carriage
Issues, 8 FCC Rcd 2965 (1993). The mandatory carriage/retransmission
consent option applies only to carriage within a broadcaster's DMA. In
contrast, the carriage of significantly viewed signals outside of a
broadcaster's DMA has always been, and continues to be under the
SHVERA, solely at the agreement of the broadcaster and the out-of-
market MVPD. Notwithstanding the uncertain nature of retransmission
consent, we believe that broadcasters generally have a greater
expectation of carriage within their local market. Notwithstanding this
expectation, it is also possible, subject to certain limitations (such
as the invocation of network nonduplication and syndicated exclusivity
rights of broadcasters in the MVPD's DMA), that a cable operator
located in the New York DMA could through retransmission consent carry
the signal of a broadcaster located in the San Diego DMA. We believe
that a reasonable application of the statutory good faith standard
permits variations in parties' reciprocal bargaining obligations in two
such distinct situations.
30. With regard to significantly viewed signals and in-market
signals, we believe that the reciprocal bargaining obligation should be
essentially the same. In 1972, the Commission adopted the concept of
significantly viewed signals to differentiate between out-of-market
televisions stations ``that have sufficient audience to be considered
local and those that do not;'' see Cable Television Report and Order,
36 FCC 2d 143, 174 (1972). The copyright provisions that apply to cable
systems have recognized the Commission's designation of stations as
significantly viewed and treated them, for copyright purposes, as
``local,'' and therefore subject to reduced copyright payment
obligations; see 17 U.S.C. 111(a), (c) and (f). In the SHVERA, Congress
extended to satellite carriers the right, already held by cable
operators, to provide through retransmission consent out-of-market
signals to the communities in which they are significantly viewed; see
47 U.S.C. 340. Given the proximity of broadcasters to the communities
in which they are significantly viewed, we can discern no reason to
differentiate these signals from in-market signals for reciprocal
bargaining purposes. In either situation, failure to reach
retransmission consent is not a violation of the reciprocal bargaining
obligation provided the parties comply with our rules. Because
satellite carriers' retransmission consent rights apply only to in-
market and significantly viewed signals, their reciprocal bargaining
obligation applies only to retransmission of these signals; see 47
U.S.C. 338, 339 & 340.
31. The situation for cable operators beyond in-market and
significantly viewed signals, however, is more complex. As discussed
above, different statutory provisions govern cable operators and permit
pursuant to retransmission consent the carriage of distant signals
originating far beyond the boundaries of the cable operator's DMA. In
these cases, although the reciprocal bargaining obligation still
applies, we believe that the Commission should apply a different
calculus in evaluating complaints involving cable operators and distant
broadcasters. As with all retransmission consent negotiations, the per
se negotiating standards set forth in Sec. 76.65 will still apply to
such negotiations as will the requirement that both parties to the
negotiation refrain from insisting on terms that are not consistent
with competitive marketplace considerations. The main difference in
these distant reciprocal bargaining negotiations should lie in either
party's ability, after evaluating the prospect of distant carriage and
giving full consideration to the proposals of the party requesting
carriage, to reject the proposal and terminate further negotiation. We
emphasize that until such negotiations
[[Page 40223]]
are formally terminated, either orally or, preferably, in writing, the
reciprocal bargaining obligation must be observed.
32. We believe that, in many cases, distance will play a critical
factor in determining whether a party complied with its reciprocal
bargaining obligation. In the example discussed above, if a San Diego
broadcaster offered retransmission consent to a New York cable operator
in exchange for a monthly consideration per subscriber, the cable
operator after permitting the broadcaster to fully present its proposal
and giving such proposal due consideration, would not violate its
reciprocal bargaining obligation by concluding that the distance
between the broadcaster and cable operator is simply too great to make
retransmission consent worthwhile to the cable operator. After so
advising the broadcaster, the cable operator would have satisfied its
reciprocal bargaining obligation. As the distances involved lessen, we
would expect the party requested to engage in retransmission consent
negotiations to be more willing to engage in extended negotiations to
comply with the reciprocal bargaining requirement. In addressing
reciprocal bargaining complaints involving distant carriage
negotiations, the Commission will evaluate whether the party against
whom the complaint is filed complied with the per se standards during
the course of the negotiations. The length of the negotiation, the
decision to terminate further negotiation and the distance between the
broadcaster and the cable operator will be considered as part of the
totality of the circumstances test. We believe that further guidance on
this issue is best provided by the Commission through the resolution of
actual disputes. At bottom, we do not believe that the reciprocal
bargaining obligation should be used to engage distant entities and
require protracted good faith negotiation for signals that have no
logical or local relation to the MVPD's service area.
33. Certain commenters ask that the Commission declare a per se
violation of a broadcaster's reciprocal bargaining obligation a
contractual provision, such as one contained in a network affiliation
agreement, that restricts a broadcaster's ability to negotiate
retransmission consent in good faith. These commenters assert that some
networks, through their affiliation agreements, restrict a
broadcaster's ability to grant retransmission consent outside of a
specified geographic area, often the broadcaster's DMA. NBC and the
Network Affiliates assert that Congress has consistently acknowledged
and preserved the network-affiliate system. As the record indicates,
Congress in the 1992 Cable Act, the SHVIA and the SHVERA stressed the
importance of this system. We agree with NBC and the Network Affiliates
that neither the text nor the legislative history of the SHVIA or the
SHVERA indicate a congressional intent to restrict the rights of
networks and their affiliates through the good faith or reciprocal
bargaining obligation to agree to limit an affiliate's right to
redistribute affiliated programming. This is reflected in the Notice in
this proceeding which did not raise for comment the issue of the
reciprocal bargaining obligation and its relation to the preclusion of
retransmission consent through network-affiliate agreements. Because we
perceive no intent on the part of Congress that the reciprocal
bargaining obligation interfere with the network-affiliate relationship
or to preclude specific terms contained in network-affiliate
agreements, we decline to take action on these issues in this
proceeding. We note that the issue of retransmission consent generally,
and the impact of network affiliation agreements on retransmission
consent specifically, is more squarely raised in a petition for
rulemaking pending before the Commission; see Petition for Rulemaking
to Amend 47 CFR 76.64, 76.93, and 76.103: Retransmission Consent,
Network Non-Duplication, and Syndicated Exclusivity, RM 11203 (filed
March 2, 2005). In addition section 208 of the SHVERA requires the
Commission to complete an inquiry and report to Congress regarding how
the retransmission consent, network non-duplication, syndicated
exclusivity and sports blackout rules impact MVPD competition,
including the ability of rural cable operators to compete with
satellite carriers in providing digital broadcast signals. SHVERA,
Public Law 108-447, section 208. The Commission is currently preparing
this report. Even were we so inclined, we are concerned that the Notice
in this proceeding may not have given interested parties appropriate
notice that the Commission was contemplating action in this regard; see
5 U.S.C. 553(b)(1)-(3) (Administrative Procedure Act notice
requirements), Omnipoint Corp. v. FCC, 78 F.3d 620, 631 (D.C. Cir.
1996) (``a final rule is not a logical outgrowth of a proposed rule
`when the changes are so major that the original notice did not
adequately frame the subjects for discussion.' ''), quoting Connecticut
Light and Power Co. v. NRC, 673 F.2d 525, 533 (DC Cir.), cert. denied,
459 U.S. 835 (1982). However, because we decline to take action for the
reasons described above, we need not reach the issue of the sufficiency
of our Notice.
34. Nor do we agree that restrictions in existing network-affiliate
agreements are prohibited by Sec. 76.65 of the Commission's rules.
Section 76.65 provides that it is a per se violation of the good faith
negotiation provision for a television broadcast station to execute
``an agreement with any party, a term or condition of which, requires
that such television broadcast station not enter into a retransmission
consent agreement with any multichannel video programming distributor.
* * *;'' see 47 CFR 76.65(b)(1)(vi). As is evidenced by the discussion
in the Good Faith Order, that provision is intended to cover collusion
between a broadcaster and an MVPD requiring non-carriage by another
MVPD, ``[f]or example, Broadcaster A is prohibited from agreeing with
MVPD B that it will not reach retransmission consent with MVPD C;'' see
Good Faith Order, 15 FCC Rcd at 5464. In adopting Sec.
76.65(b)(1)(iv), the Commission did not intend to affect the ability of
a network affiliate agreement to limit redistribution of network
programming; see Monroe, 19 FCC Rcd at 13997 n.24 (``To the extent,
however, that Monroe Utilities is arguing that the existence of an
underlying agreement between Morris and NBC is itself a violation of
the good faith negotiation requirement, we agree with Morris that the
good faith requirement applies to negotiations between MVPDs and
broadcast stations, and not between a network and an affiliate.'').
35. The question arises, however, what is a broadcaster's
reciprocal bargaining obligation with regard to MVPDs which it is
precluded from granting retransmission consent by its network
affiliation agreement. As discussed above, the reciprocal bargaining
obligation imposes a ``heightened duty of negotiation'' on broadcasters
and MVPDs involved in retransmission consent negotiations. We believe
that it is incumbent on broadcasters subject to such contractual
limitations that have been engaged by an out-of-market MVPD to
negotiate retransmission consent of its signal to at least inquire with
its network whether the network would waive the limitation with regard
to the MVPD in question. We believe that in many situations
retransmission of the broadcaster's signal by a distant MVPD would be
deemed advantageous to the network as well as the broadcaster and MVPD.
In such situations, we believe that a network that has otherwise
restricted a broadcaster's redistribution rights might be amenable to a
limited waiver of the restriction.
[[Page 40224]]
36. With respect to EchoStar's contention that local broadcasters
are beginning to demand that MVPDs contract away their right to import
significantly viewed out-of-DMA stations as part of retransmission
consent negotiations, we reiterate our conclusion in the Good Faith
Order that ``[p]roposals that specifically foreclose carriage of other
programming services by the MVPD that do not substantially duplicate
the proposing broadcaster's programming'' are ``not consistent with
competitive marketplace considerations and the good faith negotiation
requirement. * * *;'' see Good Faith Order, 15 FCC Rcd at 5470. If
complaints are filed on this issue, we will evaluate as part of the
totality of the circumstances whether or not the programming sought to
be foreclosed actually substantially duplicates the programming of the
broadcaster negotiating retransmission consent.
IV. Procedural Matters
A. Congressional Review Act
37. The Commission will send a copy of this Order in a report to be
sent to Congress and the Government Accountability Office pursuant to
the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
V. Ordering Clauses
38. Accordingly, it is ordered that pursuant to Section 207 of the
Satellite Home Viewer Extension and Reauthorization Act of 2004, and
sections 1, 4(i) and (j), and 325 of the Communications Act of 1934, as
amended, 47 U.S.C. 151, 154(i) and (j), and 325, the Commission's rules
are hereby amended.
39. It is further ordered that the rule amendments will become
effective 30 days after publication in the Federal Register.
40. It is further ordered that the Reference Information Center,
Consumer and Governmental Affairs Bureau, shall send a copy of this
Report and Order, including the Final Regulatory Flexibility Analysis,
to the Chief Counsel for Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 76
Cable television, Television.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Proposed Rules
0
For the reasons discussed in the preamble, the Federal Communications
Commission amends 47 CFR part 76 as follows:
PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
0
1. The authority citation for 47 CFR part 76 continues to read as
follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303,
303a, 307, 308, 309, 312, 315, 317, 325, 338, 339, 340, 503, 521,
522, 531, 532, 533, 534, 535, 536, 537, 543, 544, 544a, 545, 548,
549, 552, 554, 556, 558, 560, 561, 571, 572 and 573.
0
2. Section 76.64(l) is revised to read as follows:
Sec. 76.64 Retransmission consent.
* * * * *
(l) Exclusive retransmission consent agreements are prohibited. No
television broadcast station shall make or negotiate any agreement with
one multichannel video programming distributor for carriage to the
exclusion of other multichannel video programming distributors. This
paragraph shall terminate at midnight on December 31, 2009.
* * * * *
0
3. Section 76.65 is revised to read as follows:
Sec. 76.65 Good faith and exclusive retransmission consent
complaints.
(a) Duty to negotiate in good faith. Television broadcast stations
and multichannel video programming distributors shall negotiate in good
faith the terms and conditions of retransmission consent agreements to
fulfill the duties established by section 325(b)(3)(C) of the Act;
provided, however, that it shall not be a failure to negotiate in good
faith if:
(1) The television broadcast station proposes or enters into
retransmission consent agreements containing different terms and
conditions, including price terms, with different multichannel video
programming distributors if such different terms and conditions are
based on competitive marketplace considerations; or
(2) The multichannel video programming distributor enters into
retransmission consent agreements containing different terms and
conditions, including price terms, with different broadcast stations if
such different terms and conditions are based on competitive
marketplace considerations. If a television broadcast station or
multichannel video programming distributor negotiates in accordance
with the rules and procedures set forth in this section, failure to
reach an agreement is not an indication of a failure to negotiate in
good faith.
(b) Good faith negotiation.
(1) Standards. The following actions or practices violate a
broadcast television station's or multichannel video programming
distributor's (the ``Negotiating Entity'') duty to negotiate
retransmission consent agreements in good faith:
(i) Refusal by a Negotiating Entity to negotiate retransmission
consent;
(ii) Refusal by a Negotiating Entity to designate a representative
with authority to make binding representations on retransmission
consent;
(iii) Refusal by a Negotiating Entity to meet and negotiate
retransmission consent at reasonable times and locations, or acting in
a manner that unreasonably delays retransmission consent negotiations;
(iv) Refusal by a Negotiating Entity to put forth more than a
single, unilateral proposal;
(v) Failure of a Negotiating Entity to respond to a retransmission
consent proposal of the other party, including the reasons for the
rejection of any such proposal;
(vi) Execution by a Negotiating Entity of an agreement with any
party, a term or condition of which, requires that such Negotiating
Entity not enter into a retransmission consent agreement with any other
television broadcast station or multichannel video programming
distributor; and
(vii) Refusal by a Negotiating Entity to execute a written
retransmission consent agreement that sets forth the full understanding
of the television broadcast station and the multichannel video
programming distributor.
(2) Totality of the circumstances. In addition to the standards set
forth in Sec. 76.65(b)(1), a Negotiating Entity may demonstrate, based
on the totality of the circumstances of a particular retransmission
consent negotiation, that a television broadcast station or
multichannel video programming distributor breached its duty to
negotiate in good faith as set forth in Sec. 76.65(a).
(c) Good faith negotiation and exclusivity complaints. Any
television broadcast station or multichannel video programming
distributor aggrieved by conduct that it believes constitutes a
violation of the regulations set forth in this section or Sec.
76.64(l) may commence an adjudicatory proceeding at the Commission to
obtain enforcement of the rules through the filing of a complaint. The
complaint shall be filed and responded to in accordance with the
procedures specified in Sec. 76.7.
(d) Burden of proof. In any complaint proceeding brought under this
section, the burden of proof as to the existence
[[Page 40225]]
of a violation shall be on the complainant.
(e) Time limit on filing of complaints. Any complaint filed
pursuant to this subsection must be filed within one year of the date
on which one of the following events occurs:
(1) A complainant enters into a retransmission consent agreement
with a television broadcast station or multichannel video programming
distributor that the complainant alleges to violate one or more of the
rules contained in this subpart; or
(2) A television broadcast station or multichannel video
programming distributor engages in retransmission consent negotiations
with a complainant that the complainant alleges to violate one or more
of the rules contained in this subpart, and such negotiation is
unrelated to any existing contract between the complainant and the
television broadcast station or multichannel video programming
distributor; or
(3) The complainant has notified the television broadcast station
or multichannel video programming distributor that it intends to file a
complaint with the Commission based on a request to negotiate
retransmission consent that has been denied, unreasonably delayed, or
unacknowledged in violation of one or more of the rules contained in
this subpart.
(f) Termination of rules. This section shall terminate at midnight
on December 31, 2009.
[FR Doc. 05-13739 Filed 7-12-05; 8:45 am]
BILLING CODE 6712-01-P