[Federal Register: November 14, 2002 (Volume 67, Number 220)]
[Rules and Regulations]
[Page 68944-68951]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14no02-6]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[CS Docket No. 00-2; FCC 02-287]
Implementation of the Satellite Home Viewer Improvement Act of
1999: Application of Network Nonduplication, Syndicated Exclusivity,
and Sports Blackout Rules to Satellite Retransmissions of Broadcast
Signals.
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This document revises regulations which the Commission adopted
to implement certain aspects of the Satellite Home Viewer Improvement
Act of 1999. This document addresses petitions for reconsideration
filed by the Office of the Commissioner of Baseball, the National
Basketball Association, the National Football League, the National
Hockey League, and the Division 1-A Athletic Director's Association
(``Sports Leagues'') as well as by EchoStar Satellite Corporation
(``EchoStar'') and DirecTV, Inc. (``DirecTV''). The modifications to
the regulations are largely technical and pertain to notifications of
sporting events and programming to be blacked out, as well as to the
criteria for eligibility to request sports blackout protection.
DATES: Effective December 16, 2002, except for Sec. Sec. 76.122(c)(2)
and 76.127(c), which contain information collection requirements that
have not been approved by OMB. The Federal Communications Commission
will publish a document in the Federal Register announcing the
effective date for the amendments to Sec. Sec. 76.122(c)(2) and
76.127(c).
FOR FURTHER INFORMATION CONTACT: Peter Corea at (202) 418-7200 or via
Internet at pcorea@fcc.gov. For additional information concerning the
information collection(s) contained in this document, contact Les Smith
at 202-418-0217, or via the Internet at lesmith@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order on Reconsideration (``Order''), FCC 02-287, adopted October
10, 2002; released October 17, 2002. The full text of this decision is
[[Page 68945]]
available for inspection and copying during normal business hours in
the FCC Reference Information Center, Portals II, 445 12th Street, SW,
Room CY-A257, Washington, DC 20554, and may be purchased from the
Commission's copy contractor, Qualex International, Portals II, 445
12th Street, SW, Room CY-B402, Washington, DC 20554, telephone (202)
863-2893, facsimile (202) 863-2898, or via e-mail qualexint@aol.com or
may be viewed via Internet at http://www.fcc.gov/mb/.
Paperwork Reduction Act: This Order contains new or modified
information collection(s). The Commission, as part of its continuing
effort to reduce paperwork burdens, invites the general public to
comment on the information collection(s) contained in this Order as
required by the Paperwork Reduction Act of 1995, Public Law 104-13. A
Notice of Public Information Collection(s) being Reviewed by the
Federal Communications Commission is published elsewhere in this
Federal Register.
Synopsis of the Order
Introduction
1. In this Order on Reconsideration, we consider three petitions
for reconsideration of the Commission's Report and Order in
Implementation of the Satellite Home Viewer Improvement Act of 1999:
Application of Network Non-Duplication, Syndicated Exclusivity, and
Sports Blackout Rules To Satellite Retransmissions of Broadcast
Signals, (65 FR 68082, November 14, 2000) (hereinafter ``Report and
Order'') which implemented section 339 of the Communications Act of
1934 (``Act''), as amended by the section 1008 of the Satellite Home
Viewer Improvement Act of 1999 (``SHVIA''). Section 339(d)(4) defines
``satellite carrier'' by reference to the definition in the Copyright
Act of 1947, as amended, 17 U.S.C. 119(d). The Report and Order adopted
rules to apply the network non-duplication, syndicated exclusivity, and
sports blackout rules, previously applicable only to cable television
systems, to satellite carriers' retransmission of nationally
distributed superstations, and to apply the sports blackout rule to
satellite carriers' retransmission of network stations. The network
non-duplication, syndicated exclusivity, and sports blackout rules
(collectively referred to herein as ``the exclusivity rules''), protect
exclusive contractual rights that have been negotiated between program
providers and broadcasters or other rights holders. The satellite
network non-duplication and syndicated exclusivity rules provide that
specific programs must be deleted from ``nationally distributed
superstations'' delivered to subscribers within a specified area if the
programs are subject to exclusive rights pursuant to contracts with
local stations. A ``nationally distributed superstation'' is a
television broadcast station, licensed by the Commission, that meets
the following three criteria: (A) It is not owned or operated by or
affiliated with a television network that, as of January 1, 1995,
offered interconnected program service on a regular basis for 15 or
more hours per week to at least 25 affiliated television licensees in
10 or more States; (B) on May 1, 1991, it was retransmitted by a
satellite carrier and was not a network station at that time; and (C)
it was, as of July 1, 1998, retransmitted by a satellite carrier under
the statutory license of section 119 of title 17, United States Code.
The only television broadcast stations that meet this definition are
KTLA-TV (Los Angeles), WPIX-TV (New York), KWGN-TV (Denver), WSBK-TV
(Boston), WWOR-TV (New York) and WGN-TV (Chicago).
No new station can meet the date-specific criteria set forth in the
definition. The sports blackout rule provides that sporting events
carried on distant stations retransmitted to a specified area must be
deleted when carriage would violate sporting teams' or leagues'
exclusive rights in the local market.
2. The issues raised on reconsideration are largely technical
issues pertaining to the operation of the rules. The Office of the
Commissioner of Baseball, the National Basketball Association, the
National Football League, the National Hockey League, and the Division
1-A Athletic Director's Association (``Sports Leagues'') jointly filed
a petition for reconsideration concerning the timing for submitting
deletion notifications to satellite carriers and the method of
determining when the blackout rule is triggered. EchoStar Satellite
Corporation (``EchoStar'') filed a petition for reconsideration
concerning the duration of the phase-in period and the timing and
application of the notification requirements, with which DirecTV, Inc.
(``DirecTV'') joined in part. The Association of Local Television
Stations (``ALTV'') and the Motion Picture Association of America
(``MPAA''), as well as the Petitioners, filed oppositions or comments
in response to the petitions.
3. Our response to the petitions is governed by the Communications
Act and our own rules. Reconsideration of a Commission decision is
warranted only if the petitioner cites a material error of fact or law,
or presents additional facts and circumstances that raise substantial
or material questions of fact that were not considered and that
otherwise warrant Commission review of its prior action. The Commission
will not reconsider arguments that have already been considered. For
the reasons stated herein, we deny EchoStar's and DirecTV's petitions
and deny in part and grant in part the Sports Leagues' petition. We
also take this opportunity to clarify and, where necessary, amend some
of the requirements in the Report and Order and the rules.
Background and Summary of Petitions
4. In implementing sections of the SHVIA in the Report and Order,
the Commission was guided by the directive to place satellite carriers
on equal footing with cable operators, while also taking into
consideration that the operational structures of cable operators and
satellite carriers are different. To allow satellite carriers a
reasonable period of time to adjust to the new non-duplication and
syndicated exclusivity rules, the Commission gave carriers 120 days
from the time they received blackout request notices to implement the
necessary deletions for the first six months the rules were effective.
The rules took effect on November 29, 2000. Therefore, the six month
period ended May 29, 2001.
5. With respect to the sports blackout rule, the Commission applied
the rule to satellite retransmission of nationally distributed
superstations as well as to satellite retransmission of network
stations. Although the satellite sports blackout rules are very similar
to the cable rules, the notification periods in the satellite context
differ to ensure that satellite carriers are notified of blackouts as
soon as the rights holder has the information in hand. In addition, in
order to afford satellite carriers an opportunity to adjust to the new
requirements, the Commission provided a phase-in period for
implementing the sports blackout rules, albeit somewhat shorter than
the phase-in for the non-duplication and syndicated exclusivity rules.
6. EchoStar's petition for reconsideration requests a one-year
phase-in period, rather than the 120-day transition provided in the
Report and Order. EchoStar also requests a longer notification period
for sports blackout requests, and it objects to the application of the
sports blackout rule to all network stations. DirecTV's petition for
reconsideration joins EchoStar's petition with respect to application
of the sports blackout rule to all network stations and the length of
the
[[Page 68946]]
notification period. The Sports Leagues object to the requirement that
notice of sports blackouts be given within 48 hours of the telecast
schedule being set. The Sports Leagues also contend that Sec. 76.128
does not precisely track the defunct rule section it was intended to
replace.
Order on Reconsideration
Transition Phase-In Period
7. Background. In the Report and Order the Commission gave
satellite carriers time to phase-in compliance with the new network
non-duplication and syndicated exclusivity rules to ensure that they
would have adequate equipment and personnel to implement the deletions,
and to arrange for programming to substitute for deleted programming.
To afford both satellite carriers and broadcasters a reasonable period
of time to adjust to the new requirements and review the contract
language, the Commission provided that broadcasters would have up to
six months from the effective date of the Report and Order to
renegotiate contracts, and required that they notify satellite carriers
of deletion requests within sixty days of signing a renegotiated
contract. For notices provided before June 1, 2001, satellite carriers
were given 120 days before they were required to implement the
necessary deletions. For notices provided to satellite carriers after
June 1, 2001, the normal time requirements--within sixty days of
notification--apply. The six month period for renegotiations expired in
May, 2001.
8. With respect to the sports blackout rule, the Commission
required that rights holders provide sixty days advance notice for any
sports blackout that would occur on or before March 31, 2001. As of
April 1, 2001, the regular notice requirements, including twenty-four
hour notice for changes in previously scheduled blackouts, became
applicable. Because satellite carriers were complying with
contractually required sports blackouts prior to the implementation of
the SHVIA requirements, it was unnecessary to provide the same length
of time to phase-in the sports blackout rules as provided for the
network non-duplication and syndicated exclusivity rules.
9. In its petition for reconsideration, EchoStar reiterated its
request for a one-year phase-in period to assess the ability of its
subscriber qualification system to differentiate protection zones for
superstation and network programming. Three of the superstations
informed EchoStar that the exclusivity rule requirements could require
deletion of all programming from 8:30 a.m. to 9 p.m., which would
prompt EchoStar to decide not to offer these superstations to their
subscribers. EchoStar also stated that if the number and complexity of
deletion requests make it necessary to replace its entire conditional
access system, the replacement process would take nine to twelve months
to complete from the time it receives such requests. EchoStar disagreed
with the Commission's conclusions concerning the need for new equipment
and suggested the Commission require rights holders to submit deletion
requests for a year before they would be implemented. The Sports
Leagues, ALTV, and MPAA opposed EchoStar's petition. Further, MPAA
asserts that the 120-day notice phase-in period stretches beyond the
one-year effective date Congress required in the SHVIA.
10. Discussion. The transition period provided in the Report and
Order ended in 2001, as did the one-year period EchoStar requested in
the original proceeding and again on reconsideration. Nonetheless, we
rule on the merits and decline to extend the phase-in period for the
implementation of syndicated exclusivity, network non-duplication and
sports blackout rules beyond the phase-in periods provided by the
Report and Order and rules. The Report and Order rejected EchoStar's
proposal for a transition period of one year as unnecessary,
impractical and unlikely to assist EchoStar in planning for deletions
given that rights holders would not submit deletion requests knowing
that they would not be acted upon for a year. Satellite carriers did
not demonstrate that they needed additional time to develop new
equipment in addition to their existing blackout and conditional access
equipment. EchoStar has not provided sufficient justification for its
request and has not presented new arguments that would warrant
reconsideration of this issue. EchoStar asserts that its system is near
capacity, but has not provided evidence of how the capacity was used or
how additional burdens affect the capacity. Although we understand that
EchoStar did not have specific deletion requests when it submitted
comments in the rulemaking proceeding, the potential scope of the
deletions required by the statutory mandate were largely apparent when
the statute took effect at the end of 1999. We therefore deny
EchoStar's petition for reconsideration with respect to lengthening the
phase-in periods.
Sports Blackout Rule
The Sports Blackout Rule Applied to Retransmission of Network Stations
11. Background. In the Report and Order the Commission applied the
sports blackout rule to retransmission of nationally distributed
superstations and network stations. The Commission's sports broadcasts
rule (``sports blackout rule'') is designed to allow the holder of the
exclusive distribution rights of sporting events, to control, through
contractual agreements, the display of that event on local cable and,
pursuant to the SHVIA, on satellite systems. The sports blackout rule
is triggered when a subject sporting event will not be aired live by
any local television station carried on a community unit cable system.
Under the sports blackout rule, the holder of the rights to the event
(e.g., a sports team or league, rather than a broadcaster) has the
power to demand that the local cable system or satellite carrier
blackout the distant importation of the subject sporting event. The
zone of protection afforded by the sports blackout rule generally is 35
miles surrounding the reference point of the broadcast station's
community of license in which the live sporting event is taking place.
Unlike the network non-duplication and syndicated exclusivity rules,
the sports blackout rule applies to retransmission of distant network
stations as well as to nationally distributed superstations. In the
case of retransmission of network stations, the SHVIA instructed the
Commission to apply the cable sports blackout rule to satellite
carriers only ``to the extent technically feasible and not economically
prohibitive.'' In the Report and Order the Commission considered
DirecTV's request that the Commission invoke the ``technical/economic
hardship exception of section 339(b)(1)(B)'' and decline to apply any
sports blackout requirement on satellite retransmission of network
stations. The Commission determined, however, that DirecTV and EchoStar
had not provided sufficient information regarding the costs and burdens
imposed by the requirement to satisfy the statutory exception. The
burden requires a showing that conforming to rules similar to those
applicable to cable operators ``would entail a very serious economic
threat to the health of the carrier.''
12. EchoStar's petition seeks reconsideration of that decision.
EchoStar maintains that ``there was simply no historical evidence
available to satellite carriers to illustrate the burdens from future
compliance'' and that the benefit to sports rights holders
[[Page 68947]]
is small compared to the ``formidable burden'' on satellite carriers.
EchoStar notes that the distant network signals in question may only be
retransmitted to unserved households of which there are few within any
protection zone. The statutory copyright license only permits
retransmission of distant signals to ``unserved households.'' Under
copyright law ``unserved households'' are those that are unable to
receive an over-the-air network signal of Grade B intensity or better.
In addition, ``grandfathered'' households, as well as recreational
vehicles and commercial trucks, are included in the definition of
unserved households. EchoStar follows that ``the limited practical
significance of the rules does not necessarily lessen the difficulty
that the satellite carrier would still confront in blacking out the
sports programming for those few households.'' DirecTV agrees and
asserts that blacking out a small area or small number of subscribers
in the satellite context is more complex than in the cable context
because of the several steps an operator must go through, including
encoding information; data entry; scheduling and processing; and
triggering each blackout manually by individually watching each event.
DirecTV further asserts that these steps ``raise a question of whether
the Commission was justified in concluding that the application of
sports blackout rules to satellite carrier retransmission of network
stations is ``technically feasible and not economically prohibitive.'''
13. EchoStar argues that it is in a better position to make a
preliminary estimate of the possible burden of complying with the
blackout rules as applied to network programming during the
reconsideration process because it has evidence of actual deletion
requests, which it could not have had during the initial rulemaking
proceeding. EchoStar states that the primary issue determining the
impact of network blackout rules is the ``number of different regions
that must be defined as possible blackout zones, even more so than the
number of programs and events to be blacked out.'' EchoStar describes
its anticipated problem in implementing sports blackouts to be a result
of the complexity of, and lack of coordination for, blackout zones
among the various sports leagues. EchoStar states that its current
sports blackout system for ESPN and Fox uses 128 different blackout
zones coordinated with individual consumer's receivers, each associated
with a single blackout region for twelve categories of sports. EchoStar
explains that because several sports teams that are in close proximity
will have overlapping blackout zones, it will need to implement ``a
mosaic of smaller zone ``pieces''' to make up a complete blackout zone,
which will rapidly consume its blackout resources. EchoStar asserts
that if it receives blackout requests for zones that differ from its
current contractual blackout zones, and if it gets a significant
increase in the number of requests, as it expects with the addition of
blackout requirements for network stations along with syndicated
exclusivity and network non-duplication requests, that it will likely
have to replace its existing conditional access system for one with
expanded capabilities. EchoStar estimates the costs of system upgrade
in the $75 to $100 million range, and also provides an estimated figure
of $123.5 million dollars for total system replacement.
14. The Sports Leagues assert that EchoStar does not present any
new evidence to substantiate its claimed injury, but instead presents
arguments lacking foundation in fact and failing to satisfy the burden
imposed by Congress. The Sports Leagues also contend that the 35-mile
zone of protection applied to nationally distributed superstations
should be the same protection zone used to blackout network stations
and, therefore, ``no new codes [in addition to codes for the sports
blackout rule as applied to nationally distributed superstations]
should be necessary in implementing the [sports blackout rule] for
network signals.'' Further the Sports Leagues point out that EchoStar
does not attempt to differentiate nationally distributed superstations
from network stations. The Sports Leagues argue that EchoStar has
failed to support assertions that its coding is ``near capacity'' and
cannot therefore accommodate blackouts of sporting events carried on
network stations.
15. Discussion. EchoStar has presented evidence regarding the
potential burden imposed by the sports blackout rule, and suggested
that additional capacity demands on its system in connection with
providing sports blackout for network stations could require an
overhaul of its entire conditional access system, but has not presented
evidence of the burdens specifically associated with the application of
the sports blackout rule to the retransmission of the signals of
network stations. EchoStar asserts that the complexity of and lack of
coordination for blackout zones among the various sports leagues
creates difficulties in implementing sports blackouts. In connection
with this reconsideration proceeding, the four major sports leagues
have agreed to use a single, standardized zip code list for purposes of
the Sports Blackout Rule and have provided such a list to the satellite
carriers. In order to receive blackout protection, Sec. 76.127(b)
obligates rights holders to provide detailed information in the
blackout notices, including accurate zip code information. Therefore,
to ensure accurate application of sports blackout protection, the
Sports Leagues will be responsible for keeping the standardized zip
code list current. Although satellite carriers' other contractual
arrangements may still create the need for multiple codes in each
market, the standard zip code list will reduce the overall burdens on
satellite carriers in meeting sports blackout requirements.
Nevertheless, as the Commission found in the Report and Order,
EchoStar's evidence offered for reconsideration does not identify
separately the burdens imposed by blacking out network stations and the
burdens imposed by blacking out nationally distributed superstations,
nor does it provide information on the costs--incremental or total--of
deleting network stations. We are, therefore, unable to make a
meaningful evaluation of EchoStar's claim that it may not have capacity
to implement the required number of sports blackout zones based on the
record. Accordingly, we deny EchoStar's petition for reconsideration.
Forty-Eight Hour Notification Period
16. Background. In order to activate the protections of the sports
blackout rule, specific notification procedures regarding the sporting
events to be deleted must be followed. The notification requirement for
sports blackout, as historically applied to cable systems, requires
several days advance notice, but in certain circumstances can be given
as little as twenty-four hours in advance. With respect to cable
systems, notifications for regularly scheduled events subject to the
sports blackout rule must be received no later than the Monday
preceding the calendar week during which the deletion is to be made.
Notifications for events not regularly scheduled, or when the schedule
is revised, must be received within 24 hours after the time of the
deleted telecast is known, but in no event less than 24 hours before
the event will take place. Nothing we adopt herein regarding
modifications to notice requirements for the satellite sports blackout
rule is intended to modify the cable sports blackout rule.
17. In the original rulemaking proceeding, DirecTV described a
satellite blackout system that is more complex than cable. The
Commission
[[Page 68948]]
acknowledged in the Report and Order that although ``the process
described by DirecTV did not appear to present such a serious technical
or economic burden as to excuse compliance with the sports blackout
rules altogether, it does suggest that the challenge of implementing
multiple, simultaneous blackouts and identifying and arranging
substitute programming is greater for satellite carriers than for cable
operators.'' DirecTV proposed a notification period of 60 days prior to
the start of a season for sports with a specific season, 60 days prior
to the event for non-seasonal but regularly scheduled events, 30 days
for events not regularly scheduled, and ten working days for revisions
to previously submitted notices. The Commission found that satellite
carriers made ``reasonable arguments in support of revising the
notification periods in the satellite sports blackout rules to the
extent possible without depriving the teams and leagues of their
contractual rights by establishing time frames that afford practical
protection.''
18. In the Report and Order the Commission found that satellite
carriers were complying with contractually mandated sports blackouts,
which require that they delete sporting events and provide subscribers
with replacement programming. However, recognizing differences in the
structure and operation of the satellite and cable industries, the
Commission ruled that some adjustment in the application of the sports
blackout rules was justified. The Commission found that the lack of
specific information in the record limited our ability to finely tailor
the notice requirements with respect to satellite sports blackout. The
Commission therefore declined to adopt DirecTV's notification
proposals, and instead ruled that the sports blackout rules for
satellite carriers would retain the same advance notice requirements
used in the cable context for regularly scheduled events (notice must
be received the Monday before the calendar week in which the deletion
is to be made), but would also require that rights holders notify
satellite carriers within 48 hours of the time the telecast to be
deleted is known.
19. In its petition for reconsideration, EchoStar asserts that the
complexity of carrying local sports broadcasts over a nationwide
satellite system requires more time to black out programming than for
cable operators. EchoStar argues that the rule requiring notice within
48 hours of the time a telecast is scheduled, without establishing a
limit on how close in time the scheduling of the event can be to the
event itself, does not give satellite carriers enough time to comply
because the notice might be delayed until as late as twenty-four hours
before the event to be broadcast. EchoStar requests that the Commission
reconsider its decision regarding notification periods for sports
blackout, and align the notification period with the network non-
duplication and syndicated exclusivity rules requiring a minimum of
sixty days notice. In addition, EchoStar requests that the Commission
not allow deletion requests for unscheduled events.
20. The Sports Leagues state that the requirement that rights
holders notify satellite carriers within 48 hours of the time the
telecast is known creates a significant and unwarranted burden on the
Sports Leagues while also causing confusion on the part of the
satellite carries. The rule, according to the Sports Leagues, results
in a piecemeal notice scheme where numerous, often unnecessary, notices
must be sent. The Sports Leagues explain that the various sports teams
make decisions to televise their away games at different times in the
pre-season months. The Sports Leagues contend that the rule requires
that each time a visiting team sets its away game telecast schedule,
and communicates it to the home team or the league, the home team
broadcast rights holder must send a notice to the satellite carrier to
blackout the games. If, subsequent to the visiting team's decision to
telecast, the home team decides to telecast the game in its home
market, within 48 hours of that decision, notices countermanding the
blackout request must be sent. The Sports Leagues surmise that this
rule would require ``hundreds, if not thousands, of notices, an
unbelievable burden on the Leagues and an administrative nightmare for
the carriers as they attempted to monitor the constant flow of notices
coming in.''
21. The Sports Leagues urge the Commission to adopt the same
standard of notice for satellite carriers as it has for cable
operators. The Sports Leagues state that the cable rule, by allowing
notice on the Monday of the week preceding the calendar week of the
game, has enabled the Sports Leagues ``to compile national and local
telecasting schedules and distribute all notices at one time, it also
allows cable operators (even those with systems in dozens of major
markets) to receive all notices at one time.'' The Sports Leagues
indicate that this procedure has been used in the cable context for
over twenty-five years. The Sports Leagues also state that in some
circumstances, such as for the NFL, the league may know before the
season begins that a team's scheduled games have been sold out and
that, therefore, no blackouts will be necessary. The Sports Leagues
explain that if the satellite rule followed the cable rule procedures
for notification, in the ``vast number of circumstances'' the Leagues
would be able to provide notices ``no less than six days before a
blackout at the beginning of the season and, in most cases, six months
before blackouts at the end of the regular season.'' The Sports Leagues
also assert that satellite carriers need only a ``couple of days
notice'' to perform blackouts necessitated by regular season and
playoff schedule changes. The Sports Leagues also oppose EchoStar's
request that the Commission eliminate the twenty-four hour notice
provision for revisions to existing notifications and notifications of
unscheduled events because that would preclude protection for post-
season or rescheduled games.
22. In its opposition, EchoStar argues that the Sports Leagues have
not offered any new evidence, study, or specific facts to support
changing the rule. Rather, EchoStar suggests the burden of providing
notices could be alleviated by better coordination between teams within
the Sports Leagues.
23. In response, the Sports Leagues propose a compromise
resolution. The Sports Leagues agree to provide, along with a master
list of zip codes, a master blackout notice covering every team in a
league for all regular season games to be received by carriers no less
than fifteen days before the start of a sports season. The Sports
Leagues suggest that the use of a fifteen-day period in advance of the
season would allow satellite carriers sufficient time to enter the
necessary game and zip code information to accomplish the blackout
requests.
24. Discussion. On reconsideration, we agree that the requirement
that rights holders notify carriers 48 hours from the time the telecast
to be deleted is known (the ``48-hour rule'') will potentially create
significantly more burdensome notice requirements for both rights
holders and satellite carriers than intended. We therefore grant the
Sports Leagues petition, in part, insofar as the Sports Leagues request
modification of the rule. For the same reasons discussed in the Report
and Order, we deny EchoStar's and DirecTV's petitions repeating their
requests for sixty-day notice periods for scheduled events and
elimination of blackout requirements for unscheduled events. As the
Commission indicated in the Report and Order, the purpose of the 48-
hour rule was to give carriers sufficient time to enter blackout
requests and line up substitute programming by ensuring that rights
[[Page 68949]]
holders notify satellite carriers as soon as the telecasts are
scheduled. However, given that many teams set their telecast schedules
at different times over the months leading to the start of a season,
our rules can be interpreted to require each team to send out multiple
notices to satellite carriers as they sporadically receive the telecast
schedules of their opposing teams. Moreover, many of the notices must
be subsequently rescinded when the complete telecast schedules of the
home teams and visiting teams are reconciled. For example, if,
subsequent to sending out blackout notices to satellite carriers of
away team telecasts to be deleted, the home team determines that it
will also telecast one or more of the same games, then blackout
protection would be removed under Sec. 76.127(a), and notifications
would need to be sent out under Sec. 76.127(c). This application of
the 48-hour rule could indeed result in numerous notices being received
by satellite carriers in a confusing and unnecessarily complex manner.
25. We continue to recognize the unique technical challenges that
satellite carriers face in implementing sports blackouts and arranging
for substitute programming. However, in light of the potential volume
of notices created by the rule as applied to the professional sports
leagues, we reconsider and amend it to require that rights holders
choose between providing notice within 48 hours of the time the
telecast to be deleted is known, or fifteen days prior to the
commencement of the season, as described below.
26. As EchoStar suggested, some coordination among the teams in the
league is necessary in connection with the notice requirement. This is
what the Sports Leagues are requesting to do, and have done in
connection with the cable rule for years. Therefore, we will permit
rights holders for sports with a discernable season to submit blackout
notifications for an entire season, but we establish a date certain by
when those notifications must be received by satellite carriers. The
Sports Leagues have proposed that they can coordinate their teams'
telecast schedules and submit notices of blackout requirements for
those schedules by fifteen days before the beginning of each league's
season. This proposal is reasonable. In connection with the
standardized zip code list the Sports Leagues will provide to the
satellite carriers, we think that carriers will have enough time to
schedule the blackouts and to arrange for substitute programming where
needed. This approach is very similar to the implementation of the
cable sports blackout rule, while also reflecting the satellite
carriers' demonstrated need for additional advance notice. We also
recognize that in some circumstances pre-season sporting events will
use sports blackout protection similar to regular season games.
27. We will maintain the 48-hour rule for situations where the
fifteen-day pre-season notice is impracticable or unnecessary. If the
participants in a sports league are able to organize the entire
league's telecast schedule before the start of the season, or a pre-
season period, blackout notices for that season, or pre-season, may be
submitted to satellite carriers all at once fifteen days prior to the
start of the season or pre-season. However, should a team or league not
be able to provide its entire telecast schedule in advance of a season,
or pre-season, the rights holder may send the notices game by game, but
must do so within 48 hours of the time the telecast to be deleted is
known. For broadcasts of individual sporting events or for sports
without a complex league structure or a defined season it will likely
be more practical to send blackout notices of regularly scheduled
sporting events within 48 hours of the time the telecast to be deleted
is known.
Definition of ``Local'' for Purposes of the Application of the Sports
Blackout Rules
28. Background. Prior to amending the sports blackout rules in the
Report and Order, the sports blackout provisions could be applied ``if
the event is not available live on a television broadcast signal
carried by the community unit meeting the criteria specified in
Sec. Sec. 76.5(gg)(1) through 76.5(gg)(3) of this part.'' The
Commission deleted Sec. 76.5(gg) in its 1993 Order rescinding rate
regulation. In the Report and Order the Commission adopted language to
replace the deleted provision. In adopting a new standard based on
former Sec. 76.5(gg), the Commission shortened and consolidated the
provisions of that section and included them in a new rule provision,
Sec. 76.128, which was not intended to change the operation of the
cable sports blackout rule.
29. In their petition for reconsideration, the Sports Leagues
assert that the application of the rule would likely have an unintended
effect. The Sports Leagues point out that Sec. 76.128 now defines a
``local'' station as, ``among other things, a station either within 35
miles of the cable or sports event community or one placing a Grade B
contour over the cable or sports event community.'' The Sports Leagues
assert that under the 1972 must carry rules, Grade B contour stations
had no must-carry rights and were subject to deletion under the cable
sports blackout rule. The Sports Leagues explain that with respect to
cable television systems, a broadcast station transmitting a Grade B
signal of a particular game into the 35-mile sports blackout zone of a
rights holder could prevent that rights holder from requiring the cable
operator to black out a non-televised home game. The Sports Leagues ask
us to re-establish the protections for sports blackouts that have
existed for over twenty-five years, and to create the same type of
protection for satellite importation. The Sports Leagues state that
this can be achieved by ``specifically recognizing that coverage by a
Grade B contour does not vitiate blackout protection.'' ALTV recognized
the problem raised in Sports Leagues' petition, but states that there
is insufficient evidence in the record to assess the impact of the
request.
30. EchoStar asserts that the Commission revised the definition of
``local'' for purposes of the sports blackout rule in order to simplify
the definition and reflect changes in the must carry rules. EchoStar
states that the rule now says that the sports blackout will not be
triggered when the sports event is available live on a station whose
grade B contour covers the community in which the event occurs.
EchoStar argues that the revision in the rule is consistent with the
purpose of the sports blackout rule, which is to protect gate receipts
when a game is not locally available over the air.
31. Discussion. We agree that the revisions to the sports blackout
rules may have an unintended effect in rare situations such as those
described by the Sports Leagues. Contrary to EchoStar's assertions, it
was not the Commission's intention to alter the operation or effect of
this part of the rules for cable operators or satellite carriers. To
address the points raised by the Sports Leagues, we amend Sec. 76.128
so that it will more closely track the terms and effect of the former
Sec. 76.5(gg) by reestablishing that the Grade B contour provision
applies only in non-major markets.
Clarification of Non-Duplication Protection Notices
32. Background. Emmis Television Broadcasting, L.P. d/b/a WCKF-TV,
Orlando, Florida (``Emmis'') in an ex parte submission requested
reconsideration and revision of Sec. 76.122 of our rules. Emmis
asserts that Sec. 76.122(c)(2) is dissimilar to the notification
requirements in the cable context insofar as Sec. 76.122(c)(2)
requires the inclusion of specific program
[[Page 68950]]
information regardless of an affiliate's ability to furnish that
information based on the content of its affiliation contract.
33. Discussion. In the Report and Order, the Commission concluded
that stations should notify satellite carriers of exclusivity rights in
the same manner required under the cable rules. The Commission intended
that the satellite rules would require that the notice asserting
exclusivity rights contain the same identifying information about the
programming to be deleted and the extent of the exclusivity as required
in the cable rules.
34. We take this opportunity to revise Sec. 76.122(c) so that the
rule conforms to the cable rules in Sec. 76.94(a) and (b). We take
this action partly sua sponte and partly in response to the informal
request for clarification of our rules. Broadcasters requesting non-
duplication protection from satellite carriers are required to include
the name of the program, series or specific episodes for which
protection is sought if such information is identified in the station's
network agreement.
Procedural Matters
35. Paperwork Reduction Act of 1995 Analysis. This Order on
Reconsideration contains new or modified information collections
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. It will be submitted to the Office of Management and Budget (OMB)
for review under section 3507(d) of the PRA. A Notice of Public
Information Collection(s) being Reviewed by the Federal Communications
Commission is published elsewhere in this Federal Register.
36. Supplemental Final Regulatory Flexibility Certification. The
Regulatory Flexibility Act of 1980, as amended (RFA), see 5 U.S.C.
605(b), requires that a regulatory flexibility analysis be prepared for
rulemaking proceedings, unless the agency certifies that ``the rule
will not have a significant economic impact on a substantial number of
small entities.'' The RFA, see 5 U.S.C. 601 et. seq., has been amended
by the Contract With America Advancement Act of 1996, Public Law 104-
121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA). The RFA,
see 5 U.S.C. 601(6), generally defines ``small entity'' as having the
same meaning as the terms ``small business,'' ``small organization,''
and ``small governmental jurisdiction.'' In addition, the term ``small
business'' has the same meaning as the term ``small business concern''
under the Small Business Act. A small business concern is one which:
(1) Is independently owned and operated; (2) is not dominant in its
field of operation; and (3) satisfies any additional criteria
established by the Small Business Administration (SBA).
37. In the Report and Order adopting the rules, the Commission
issued a Final Regulatory Flexibility Analysis. In this Order on
Reconsideration, the Commission amends Sec. 76.122 of our rules so
that it conforms to the cable rules in Sec. 76.94(a) and (b). The
Commission intended that the satellite rules would require that the
notice asserting exclusivity rights would contain the same information
about the programming to be deleted and the extent of the exclusivity
as is required in the cable rules. The correction to this rule requires
notices to satellite carriers to contain specific information only when
the information is readily available to the rights holder, as similarly
required by the cable rules. Therefore, the rule change eases the
notification process, and the economic impact on rights holders and
satellite carriers will not be significant.
38. The Commission also amends a notification requirement in Sec.
76.127 enabling sports rights holders to submit blackout notices to
satellite carriers on an individual basis, or to cover an entire sports
season at the rights holder's election. This elective notification
scheme potentially reduces the burdens on sports rights holders and
satellite carriers in conforming to the satellite sports blackout rule.
The modification to this requirement aligns the satellite rule more
closely with the application of the cable rule, as intended by the
Report and Order. The changes we make to the requirements should not
increase or decrease the number of event broadcasts to be blacked out,
but should allow for more efficient scheduling and implementation of
blackouts, and hence the economic impact on rights holders and
satellite carriers will not be significant.
39. Finally, the Commission amends Sec. 76.128 of our rules so
that it more closely tracks the former Sec. 76.5(gg) it was intended
to replace. In particular, the revision clarifies the definition of
local station for purposes of the application of the sport blackout
rules. The Commission never intended to alter the operation or effect
of this rule, and this aspect of the definition would have had effect
only in very rare instances.
40. For the above reasons, we certify that the requirements of this
Order on Reconsideration will not have a significant economic impact on
a substantial number of small entities. The Commission will send a copy
of the Order on Reconsideration including a copy of this final
certification, in a report to Congress pursuant to the Congressional
Review Act, see 5 U.S.C. 801(a)(1)(A). In addition, the Order on
Reconsideration (or a summary thereof) and this certification will be
published in the Federal Register, see 5 U.S.C. 605(b), and will be
sent to the Chief Counsel for Advocacy of the SBA.
Ordering Clauses
41. It is ordered, pursuant to section 405(a) of the Communications
Act of 1934, 47 U.S.C. 405(a), and Sec. 1.429 of the Commission's
rules, 47 CFR 1.429, that EchoStar's and DirecTV's Petition for
Reconsideration are denied.
42. It is further ordered, pursuant to section 405(a) of the
Communications Act of 1934, 47 U.S.C. 405(a), and Sec. 1.429 of the
Commission's rules, 47 CFR 1.429, that the Sports Leagues' Petition for
Reconsideration is denied in part and granted in part.
43. It is further ordered, that, pursuant to authority found in
Sections 4(i) 4(j), 303(r), and 339 of the Communications Act of 1934,
as amended, 47 U.S.C. 154(i), 154(j), 303(r), and 339, the amendments
to part 76 of the Commission's rules, 47 CFR part 76, as discussed in
this Order on Reconsideration and set forth in Appendix B, and the
clarifications of those rules discussed in this Order on
Reconsideration, are adopted, and shall become effective December 16,
2002 except that rules Sec. 76.122(c)(2) and Sec. 76.127(c) that
contain information collection requirements under the PRA are not
effective until approved by OMB. The FCC will publish a document in the
Federal Register announcing the effective date for those sections.
44. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Order on Reconsideration, including the Supplemental Final
Regulatory Flexibility Certification, to the Chief Counsel for Advocacy
of the Small Business Administration.
45. It is further ordered that this proceeding is terminated.
List of Subjects in 47 CFR Part 76
Cable television, Satellite carriers, Television broadcast
stations.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Rule Changes
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 76 as follows:
[[Page 68951]]
PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
1. The authority citation for part 76 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 303, 303a,
307, 308, 309, 312, 317, 325, 338, 339, 503, 521, 522, 531, 532,
533, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554,
556, 558, 560, 561, 571, 572, 573.
2. Section 76.122 is amended by revising paragraph (c)(2) to read
as follows:
Sec. 76.122 Satellite network non-duplication.
* * * * *
(c) * * *
(2) Where the agreement between network and affiliate so
identifies, the name of the program or series (including specific
episodes where necessary) for which protection is sought;
* * * * *
3. Section 76.127 is amended by revising paragraph (c) to read as
follows:
Sec. 76.127 Satellite sports blackout.
* * * * *
(c)(1) With respect to regularly scheduled events, within forty-
eight (48) hours after the time of the telecast to be deleted is known;
or, for events that comprise a season or pre-season period, fifteen
(15) days prior to the first event of the season or pre-season,
respectively; and no later than the Monday preceding the calendar week
(Sunday-Saturday) during which the program deletion is to be made. (2)
Notifications as to events not regularly scheduled and revisions of
notices previously submitted, must be received within twenty-four (24)
hours after the time of the telecast to be deleted is known, but in any
event no later than twenty-four (24) hours from the time the subject
telecast is to take place.
* * * * *
4. Section 76.128 is amended by revising paragraph (b) to read as
follows:
Sec. 76.128 Application of sports blackout rules.
* * * * *
(b) For communities in television markets other than major markets
as defined in Sec. 76.51, television broadcast stations within whose
Grade B contours the community of the community unit or the community
within which the sporting event is taking place is located, in whole or
in part;
* * * * *
[FR Doc. 02-28894 Filed 11-13-02; 8:45 am]
BILLING CODE 6712-01-P