FCC Official Calls for End to Broadcast Exclusivity

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By Lydia Beyoud

Sept. 22 — The FCC's Media Bureau chief backed a commission effort to end broadcast exclusivity rules in a Sept. 22 blog post, dealing a blow to broadcasters that want the agency to keep the rules.

Federal Communications Commission Chairman Tom Wheeler teed up the issue in August by circulating an order that would end the rules, which require cable providers to respect local television stations' exclusivity rights by not carrying duplicative television programming from another market. The blog post by Media Bureau chief Bill Lake signals that the agency wants to proceed with the order over broadcasters' objections.

“There was a time and a place for the Commission’s exclusivity rules. That time has passed,” Lake wrote. “It is now time for the Commission to step aside and let programming negotiators in the private marketplace do their jobs.”

The National Association of Broadcasters fired back later on Sept. 22 that the FCC appeared to be “on a singular crusade” to eliminate rules the trade association says are an important part of broadcasters' ability to provide local content and news.

But Lake made it clear that the FCC plans to do away with the current rules, which require the agency to play a role in resolving retransmission consent disputes between broadcasters and pay TV providers if the latter seek to “import” out-of-market TV station to provide content during a blackout by an in-market broadcaster.

Lake refuted broadcasters' claims in the docket on retransmission consent issues (MB Docket No. 10-71) that elimination of the rules would be a giveaway to cable operators by allowing them to retransmit copyrighted material without paying for it, as required under the retransmission consent regime established in the 1992 Cable Act.

Lake said that even without the rule, contract terms between broadcasters and their affiliated networks and other business partners may still be able to help enforce exclusivity provisions without the need for the FCC to step in. “They will have multiple means of enforcing those provisions without the additional device of an exclusivity complaint to the Commission, which has scarcely ever been filed,” he said.

“As Chairman Wheeler explained, these 50-year old rules are past their prime in light of the significant statutory and marketplace changes that have occurred since their adoption,” Lake said in reference to Wheeler's Aug. 12 announcement about the proposed order.

NAB, the top broadcasting trade association, said that neither Wheeler nor the Media Bureau have been able to identify any consumer benefit to eliminating the rules, according to an e-mailed statement. The group pointed to provisions in the STELA Reauthorization Act of 2014 that, it said, provide broadcast exclusivity protections in negotiations with satellite TV providers as underscoring the FCC's role in helping preserving localism.

“We're hopeful other FCC members will reject this government giveaway to Big Cable,” NAB spokesman Dennis Wharton said in the statement.

Compulsory Licenses

Broadcasters have said that the network non-duplication rules and syndicated exclusivity rules are inextricably linked to—and help to offset—compulsory copyrights and carriage rules. These copyrights and carriage rules allow cable providers to retransmit broadcaster programming “at government-established, below-market rates, without bargaining for such content in the marketplace or incurring any transaction costs,” according to a Sept. 15 NAB agency filing.

In his blog post, Lake teed up the possibility that the FCC may reexamine the need for the compulsory license regime for cable and satellite providers at a future point, but said they didn't provide a rationale for retaining the exclusivity rules.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Keith Perine in Washington at kperine@bna.com

Text of the FCC's blog post is at https://www.fcc.gov/blog/time-has-come-end-outdated-broadcasting-exclusivity-rules.

Text of the NAB's ex parte filing is at http://apps.fcc.gov/ecfs/document/view?id=60001323986.