Posted on September 20, 2011 by Brendan Holland

Must-carry or Retransmission Consent? Television Stations Must Notify Cable and Satellite Operators by October 1st

Just a reminder that by October 1, Television stations must once again make their triennial carriage elections.  By that date, TV stations must notify the local cable systems and satellite carriers in their market in writing as to whether the station intends to be carried pursuant to must-carry or a retransmission consent agreement for the next three-year term, which runs from Jan. 1, 2012 through Dec. 31, 2014.  Accordingly, before Oct.1, stations must send a written election notice to the cable systems and satellite providers in their market via certified mail, return receipt requested.  The election letter should indicate the station's call letters, channel, community of license, DMA assignment, and contact information, in addition to answering the basic question of whether the station would like to elect carriage pursuant to must-carry or else negotiate a retransmission consent agreement.  In addition, those stations electing carriage pursuant to must-carry should also indicate the channel on which they wish to be carried (i.e., the over the air channel, the cable channel on which it has been carried historically, or some other mutually agreeable channel).  And be sure to keep copies of the election letters sent out.  Copies of all the election letters must be maintained in the station’s public inspection files. 

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Posted on August 30, 2011 by David Oxenford

FCC Issues Report to Congress on Access to In-State Television Programming

The FCC just issued a Report to Congress concerning the access of television viewers to in-state television stations.  This report was requested by Congress as part of STELA (the Satellite Television Extension and Localism Act), which extended the compulsory license for direct to home satellite television operators (DISH and DirecTV) - a license which gives them copyright clearances to retransmit all the programming transmitted by the broadcast television stations that they make available as part of their service packages.  Congress also requested a Report from the Copyright Office on the need for the compulsory license - a report also issued this week, which we will write about in another article.  The issue of access to in-state television stations has been a controversial issue, as several Congressmen have sought (and in a few cases actually received) legislative authority for cable providers to carry out-of-market television stations on cable systems serving areas in one state that are part of television markets where the television stations come from a different state.  The report refers to these areas as "orphan counties."  Once legislative authority was granted in one state, many other bills popped up in Congress trying for the same relief in their state - causing concern that the existing television markets (or Designated Market Areas or "DMAs", designated by the Nielsen Company) might be undermined.  To see what impact such changes would have, Congress requested this report from the FCC.

The report for the most part does not make recommendations, but instead simply provides information about the service provided to US television viewers, the potential options for bringing an in-state service to all viewers, and the issues that such proposals would raise. Perhaps the most interesting fact revealed by the report is that 99.98% of all US television households already have access to an in-state television station, either over-the-air or through a Multichannel Video Programming Distributor (e.g. cable or satellite TV system), so this is a very isolated issue.  However,when the FCC sought comments on the issues discussed in the report, a number of individuals in particular DMAs responded about situations where they could not get access to in-state television stations and asked that something be done.  The report assesses the implications of any action that could be taken.

Any attempt to provide access to in-state television stations to all television viewers implicate the following legal issues:

  • Potential issues with the must-carry and retransmission consent process.  Some television stations are concerned that changes could disrupt the retransmission consent process by allowing out-of-market TV stations to be substituted for in-market stations during disputes over retransmission consent fees. Satellite carriers, on the other hand, are concerned that any sort of obligation to carry additional television stations could affect channel capacity.
  • Syndicated exclusivity and sports blackout rules are all based on existing DMAs, which could be disrupted if new stations were imported into existing markets
  • Copyright compulsory licenses are based on DMA definitions, so issues under those licenses could arise with new carriage obligations

Potential alternatives to the DMA were suggested, though many parties were concerned about the disruption to existing business relationships in the television industry and of long-established consumer viewing habits.  Virtually all such relationships are all based on DMA definitions.  Nevertheless, the Commission looked at alternatives including:

  • Market drawn along state lines, a proposal that drew almost universal condemnation for the disruption of existing relationships, and the fact that the proposal would also ignore real viewing patterns based on the interests that center on multi-state metropolitan areas.
  • An expanded market modification process that would allow petitions to include a distant in-state signal in a market where that signal provided in-state programming to viewers in a DMA, allowing MVPDs to carry that signal.
  • A modified definition of a significantly viewed stations, with implications similar to the option above
  • An approach suggested by broadcasters to allow the importation of the news and local programming by in-state stations, but not the network and syndicated programs (an approach criticized by MVPDs who note that this programming constitutes a small portion of any station's broadcast day, and that would leave channels with large amounts of blocked programming, making it unlikely that audiences would find the in-state programs.

This is obviously a very sticky problem, where any solution to help the few people who do not have access to in-state programming may raise more problems than it solves.  The report generated by the Commission is fascinating in the detailed information that it provides about interstate viewing patterns in markets all across the country.  While not putting this issue to rest once and for all, the FCC certainly has provided plenty of information for consideration by those who may want to continue to debate how to help the .02% of the population that falls into this unfortunate hole where they cannot receive in-state television programming. 
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Posted on March 29, 2011 by Brendan Holland

Comments on Television Retransmission Consent Rules due to FCC by May 27

The Commission's recent Notice of Proposed Rule Making exploring possible changes to the television retransmission consent rules has now been published in the Federal Register setting the date for Comments as May 27th, with Reply Comments due by June 27.  As we wrote about recently (here), the FCC has commenced a rule making to consider revising its rules governing the interaction and negotiations between cable operators and broadcasters regarding carriage of local broadcast television stations.  Among other things, the NPRM seeks input on strengthening the good faith negotiation rules, changes to the notice requirements to require advance notice to consumers of carriage changes, and input on the potential benefits and harms of eliminating the Commission's network non-duplication and syndicated exclusivity rules.  Again, interested parties have until May 27th to file comments with the Commission either in paper or through the FCC's Electronic Comment Filing System.  Reply Comments will be due by June 27th. 

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Posted on March 6, 2011 by Brendan Holland

FCC to Take a Fresh Look at Retransmission Consent Rules Governing Carriage of Broadcast Television Stations

Among the many items adopted by the Commission at last week's open meeting was a Notice of Proposed Rule Making (NPRM) regarding retransmission consent agreements and the carriage of broadcast television stations by cable and satellite providers.  Retransmission consent has been a hot topic of late both in Washington and in the national press.  During the past year, a few carriage negotiations between broadcast television stations and cable or satellite operators have resulted in interruptions - or threats of interruptions - in the carriage of local stations.  As a result, both Congress and the public have paid increasing attention to retransmission consent negotiations, and the Commission's NPRM is a effort to review some aspects of its rules governing the relationship between local broadcast stations and the cable and satellite providers that retransmit their signals.  A copy of the NPRM is available here. 

The NPRM is the outgrowth of a petition for rule making filed in March 2010 by cable and satellite providers, along with several public interest groups.  These groups jointly petitioned the FCC seeking significant changes to the current retransmission consent process.  Perhaps the most notably aspect of last week's NPRM is not the changes the FCC proposes, but rather the changes it refrains from pursuing.  The Commission states in the NPRM that it does not believe that it has the authority to adopt either interim carriage mechanisms - to require the continued carriage of a station without a station owner's consent while negotiations continue - or mandatory binding dispute resolution procedures for retransmission consent negotiations, both of which were proposed by the cable and satellite providers in their petition for rule making.  In both cases, the Commission found that it lacked the statutory authority to pursue the rule changes proposed by the petitioners. 

While it proposes to refrain from action on those two elements of the petition for rule making, the Commission does propose to review several aspects of its rules in an effort to, in its words, "protect the public from, and decrease the frequency of, retransmission consent negotiation impasses within our existing statutory authority."   To that end, the NPRM seeks input on strengthening the good faith negotiation rules, including whether it would be  per se violation of the good faith negotiation rules for a station to give a network with which it is affiliated the right to negotiate for carriage, or for a station to grant another station or station group the right to negotiate for carriage, such as when a station is party to a local marketing agreement (LMA) or joint sales agreement (JSA).  In addition, the NPRM proposes changes to the notice requirements of its carriage rules to require advance notice to consumers if there is the possibility that a station will be dropped from a providers' programming line up.  This advance notice would allow consumers to make alternative plans if negotiations ultimately fail and a station's signal is deleted from the lineup.

The Commission also seeks to clarify the current rule prohibiting the relocation or deletion of a commercial television station during a sweeps ratings period.  While the legislative history suggests that the prohibition was intended to prevent a cable operator from dropping or repositioning a station during sweeps, the NPRM seeks comment on whether the rule would permit imposing a sweeps limitation on broadcasters.  Finally, the NPRM seeks comment on the potential benefits and harms of eliminating the Commission's rules concerning network non-duplication and syndicated exclusivity.  These rules support a station's exclusive rights to programming in a geographic area and prohibit a cable system from carrying another station with the same programming under certain circumstances.  The cable and satellite petitioners assert that the rules are no longer justified and urge that they be eliminated, while broadcast stations argue that the rules are important to fostering localism.  The NPRM seeks input regarding what effect elimination or modification of the rules would have on the marketplace and on retransmission consent negotiations.

The deadline for submitting Comments will be 60 days after publication of the item in the Federal Register with Reply Comments due 90 days after publication.  Comments can be filed with the Commission in paper or online through its Electronic Comment Filing System.  Interestingly, during the open meeting at least two of the Commissioners, including Chairman Genachowski, stressed in their comments that the release of this rule making should not be taken as an excuse by broadcast stations or cable and satellite operators to delay or suspend retransmission consent negotiations, or to look to the FCC to resolve impasses in such negotiations. 
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Posted on February 13, 2011 by David Oxenford

Next FCC Meeting Full of Issues for Broadcasters - Retransmission Consent, Moving Rural Radio Stations Toward Urban Areas, and TV Video Description

After a series of FCC meetings where the only mention of broadcasters was in connection with taking TV spectrum for wireless broadband, the tentative agenda for the next FCC meeting, to be held on March 3, 2011, is full of broadcast issues - issues that could have broadcasters wishing that they were ignored once more.  The biggest issue is the initiation of a proceeding to re-examine the retransmission consent process by which television broadcasters negotiate with cable and satellite companies for payment for the carriage of their signals.  But also on the agenda are proceedings to look at rural radio services and whether the Commission should limit the ability of broadcasters to move stations from rural to urban areas, and the initiation of a proceeding to require that television programmers provide audio descriptions of the action taking place on the video portion of their programs to aid those who are visually impaired.

The retransmission consent proceeding is one which arises after several well-publicized cases where television stations and multichannel video program distributors (like cable and satellite television providers) have had disputes about the amount to be paid to the television broadcaster for the carriage of their signal by the MVPD.  In a few cases, this has resulted in the television station being pulled from the MVPD for some period of time until the dispute can be resolved.  Some MVPDs have argued that there should be more oversight over the process by which television stations can force the MVPD to pull the station's signal until the retransmission negotiation is completed.  MVPDs argue that viewers, who can get the signal over the air as it is made available by the TV station for free, should not be held hostage to the negotiations and should not suffer when the station is pulled from the MVPD to further the TV station's negotiation posture.  Broadcasters, on the other hand, argue that the system is working, that the number of stations who have been pulled from an MVPD is few, and that the MVPD should pay for the valuable television signal, just as it pays for other programming that it carries from cable networks.  The FCC is expected to ask whether some reform of the process, and perhaps some government oversight or mandatory mediation, should be required.

The rural radio proceeding is one which we wrote about here.  In addition to the proposal to give a preference to the initiation of new radio services on Tribal lands to service Native American populations, the proceeding more broadly looks at whether some restrictions should be placed on the ability of owners of rural stations to move those stations toward more urban areas.  Virtually all of the comments in that proceeding opposed more restriction, asking how the rural and urban areas would be defined and, as long as some minimum level of service was preserved to the rural area, are such limits really necessary?  Restrictions on the ability to move stations, in the name of Section 307(b)(the section of the Communications Act that mandates a fair and equitable distribution of broadcast services among the states and communities), could undo the liberalization granted to broadcast station owners to move their stations to respond to marketplace demands, that was just adopted four years ago (about which we wrote here).  As comments have already been filed in this proceeding, the Commission could issue a final decision in this proceeding next month.

The final proceeding, to require television stations to provide an audio description of action that occurs visually on a TV screen so that the visually impaired can understand what is happening.  Several years ago, the FCC had adopted such a requirement, which was thrown out by the Courts as being beyond the statutory authority of the Commission.  To overcome that court decision, Congress has adopted new legislation to require the FCC to adopt such rules, spelling out much of the adoption timetable (see our article here).  So watch for the FCC to specify at its upcoming meeting how this requirement will be implemented.

All in all, a big meeting for broadcasters.  So pay attention.
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Posted on March 19, 2010 by David Oxenford

FCC Asks for Comments on Petition Seeking Reform of Retransmission Consent Process

The FCC’s Media Bureau today asked for public comment on the Petition recently filed by a number of multichannel video providers - including seven large cable companies, both DBS companies, and Verizon – along with the American Cable Association and several public interest and trade organizations. The Petition seeks changes in the rules governing the retransmission consent process, including potentially requiring arbitration of disputes and limiting the ability of television stations to withhold their signals while the retransmission consent negotiation process is proceeding. Comments in this proceeding are due on April 19 and replies on May 4.

This Petition was prompted in part by several recent high profile retransmission consent negotiations, where television stations threatened to pull their signals from cable systems if their requests for compensation were not met. While television companies argue that being able to pull their signals is a necessary bargaining chip in the negotiation process, petitioners submit that the changed video marketplace makes this option unreasonable, as it can harm both the video provider and the local viewers who are deprived of the station’s signal while negotiations are ongoing.

This is the first step in the consideration of this Petition. If the FCC decides to pursue the matter, it would start a rulemaking proceeding to more specifically explore options for reform of the retransmission consent process. Even at this early stage, this is bound to be a controversial proceeding, which companies on both sides of the issue will vigorously debate. The FCC has designated it as a permit-but-disclose proceeding, meaning that parties can make oral presentations to the Commissioners and FCC staff, if they file the appropriate ex parte disclosures (see our post on the ex parte rules here). There are sure to be many such notices filed. 
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Posted on April 23, 2007 by David Oxenford

Copyright Office Begins Inquiry to Reexamine Cable and Satellite Statutory Licenses - and Asks if Statutory Licenses are Appropriate for Internet Video

The Copyright Office last week released a wide-ranging Notice of Inquiry, asking many questions about the statutory licenses that allow cable and satellite companies to retransmit broadcast television signals without getting the specific approval of all the copyright holders who provide programming to the television stations. The notice was released so that the Copyright Office can prepare a report to Congress, due June of 2008, in which it will present its views as to whether the various statutory licenses still perform a necessary function, and whether any reforms of the current licenses are necessary. To complete its report, the Notice asks many questions about how these licenses currently work, whether the licenses function efficiently, and whether they should be retained, modified or abolished in favor of marketplace negotiations. The Notice even asks whether the existing statutory licenses should be expanded to take into account the different ways video programming is now delivered to the consumer, including various Internet and mobile delivery systems. Thus, virtually anyone involved in the video programming world may want to be part of this proceeding. Comments are due July 2 and reply comments are due September 13.

The cable and satellite statutory licenses were adopted by Congress to allow these multi-channel video systems to retransmit broadcast  signals. Without these licenses, the individual owners of copyrighted material – including syndicated,  network, sports, and music programming -- would have to be consulted to secure necessary copyright approval before the television signal could be retransmitted. As the multi-channel video providers would, in many cases, not even know who held all these rights, they instead pay a statutory license which is collected, pooled, and then distributed to the various rights holders in proportions agreed to by those copyright holders or, in the absence of agreement, set by the Copyright Royalty Board.

As the Notice sets out, the statutory rights held by cable and by satellite are different in many ways. Cable systems pay certain minimum fees which vary depending on the revenue of the cable system, and increase when a system carries a “distant signal,” i.e., a television signal from outside of its market area. However, the definitions of a distant signal for purposes of these rules is based  on byzantine FCC rules in existence back in 1977, which long ago were eliminated except for purposes of these copyright calculations. Satellite carriers also pay fees to the Copyright Office, but these fees are based on a per subscriber fee, and the importation of distant signals by satellite carriers remains heavily regulated. At the same time, while cable operators pay a “minimum fee” to carry any broadcast signals, satellite carriers are able to carry local broadcast signals at no cost. 

The Notice requests comment on whether these different licensing schemes, and the different royalties that they entail, continue to make sense. Should the systems be modified to provide greater parity between the platforms? Do royalties that are paid approximate the royalties that would be received by copyright holders if there were negotiations for rights in an open market, unfettered by the statutory license? Should these licenses even continue to exist, or should the parties simply negotiate for the rights to the programs they retransmit (perhaps by shifting the burden to broadcasters to obtain the underlying rights, which the broadcaster would then grant as part of the retransmission consent negotiation process)? Obviously, these are fundamental questions about the manner in which the statutory license operates – and recommendations from the Copyright Office could have an impact on virtually every aspect of the video marketplace – from the course of retransmission consent negotiations between broadcasters and multichannel video providers, to the prices and terms that burden those providers under their statutory license, to the competition that broadcasters face in their marketplace (if, for instance, the higher rates for cable importation of distant signals were reduced, or if the limits  on such importation by satellite carriers were relaxed, more competition to the local broadcaster could result).

Finally, in its discussion of the future of statutory licenses, the Copyright Office asks if the existing statutory licenses should be modified, or new licenses adopted, to facilitate the emergence of new video technologies. For instance, the Notice asks if such licenses would hasten the inclusion of local television programs on video mobile phones. The Copyright Office also asks whether new IPTV systems using Internet technologies to retransmit broadcast programs are covered by the existing cable statutory license or must a new license be adopted.  The Copyright Office simultaneously asks whether the on-demand availability of much broadcast programming through the Internet, by the programming networks and by services like You Tube, undercut the need for the statutory licenses. As the statutory license was designed to foster the distribution of programming by making it easier to obtain the necessary copyright rights, if that programming is already available on-line, has the underlying purpose of the license been met?

The Notice also specifically mentions several discrete issues affecting the existing cable statutory license.  For example, it specifically asks how the ongoing digital transition should impact cable royalty calculations. The Copyright Office also appears prepared to address how a “network” should be defined for purposes of the cable royalty calculations, as FOX broadcast affiliates historically received different treatment than ABC, CBS, and NBC broadcast affiliates. The Notice also raises longstanding concerns regarding system consolidation and the relationship between subscriber groups, the signals they receive, and the resulting royalty calculation. The Copyright Office suggests that a reform to the statutory license might remove the troubling “phantom signal” issue, under which cable systems pay royalties for signals that are not actually delivered to certain subscriber groups. 

In addition to comments and reply comments, the Copyright Office plans a hearing on these important issues. It is clear that this proceeding, and the ultimate recommendations of the Copyright Office, should be closely monitored by all video industry participants. 
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