While we are waiting for the full text of the FCC’s decision taken Monday on the multiple ownership rules, rolling one Quadrennial Review into another and prohibiting most Joint Sales Agreements, we can look in more detail at the FCC’s decision on retransmission consent issues. We wrote about the historical background of both of these issues earlier this week. When that is finally released, the full text of the decision will give us the details of the multiple ownership decision. But the Commission has released the full text of its decision prohibiting two independently owned Top 4 TV stations in the same market from jointly negotiating retransmission consent agreements, and starting a further proceeding to look at whether the network non-duplication and syndicated exclusivity rules should be abolished.
The restriction on the joint negotiation of retransmission consent agreements was founded on the FCC’s sense that such joint negotiations gave the negotiating stations too much power in their negotiations with cable systems and other multichannel video providers. The Commissioners concluded that this meant that TV stations engaged in such joint negotiations could get more money from cable systems than they could get if they negotiated independently. While the statements made by the Commissioners at Monday’s open meeting suggested that such negotiating power led to higher rates paid by consumers, the evidence cited by the Commission was principally based on theoretical arguments by economists as to the ability of jointly-negotiating stations to get these high rates. What specifically did the FCC prohibit?
The FCC did not place any restrictions on commonly owned stations in the same market from jointly negotiating retransmission consent agreements. So, in some smaller markets, where a station multicasts two of the four big networks, that station can still tie the stations together in its negotiations. The Commission did, however, restrict any sort of collusion between independent stations, banning:
- one Top Four broadcast television station delegating authority to negotiate a retransmission consent agreement to another station (or its representative), if the other station is not commonly owned and serves the same DMA;
- the delegation to a common third party of authority to negotiate or approve a retransmission consent agreement by two or more Top Four broadcast television stations that are not commonly owned and that serve the same DMA; or
- any informal, formal, tacit or other agreement and/or conduct that signals or is designed to facilitate collusion regarding retransmission terms or agreements between or among Top Four broadcast television stations that are not commonly owned and serve the same DMA.
So, effectively, the Commission bans formal or informal joint negotiations of retransmission consent agreements, or any coordination of such efforts by Top 4 stations that are not commonly owned.
The Commission did not undo agreements that are already in place. Those can remain in in place for the remainder of their terms. But any retransmission agreement entered into after the effective date of this order (30 days after it is published in the Federal Register) cannot be jointly negotiated.
The FCC’s decision also contained a request for public comment on a new FCC proposal to consider the repeal of the FCC rules that govern network nonduplication and syndicated exclusivity prohibitions. These rules essentially give local television stations the ability to block an MVPD from importing a distant television station of the same network, or one carrying syndicated programming to which a local station has exclusive rights, into a protected area in the local station’s market. The rules recognize the station’s rights to protection for the programming that they have in their local markets – and they can prevent the cable or satellite carriage of such programs in their market, even if the cable or satellite stations are not carrying the local stations, as might be the case if there is a retransmission consent dispute.
The Commission asks a number of questions about the practical impact of the repeal of these rules, seeking public comment on these questions. The questions include ones asking about the impact that the repeal would have on retransmission consent negotiations between TV stations and MVPDs, the ability of stations and programmers to enter into deals that would contractually prohibit distant stations from giving MVPDs the right to allow the transmission of their signals into distant markets and whether courts would enforce such agreements, would the repeal have an impact on localism, what would the economic impact be on various parties (and the practical impact on viewers), and whether new technologies allowing for instance internet transmission of programming already undercut local exclusivity rights.
These important questions will be weighed by the FCC, which could have an impact on the relationship between local TV stations and MVPDs. Watch for comment deadline on these proposed rule changes, to be determined based on when they are published in the Federal Register.