Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Annual Assessment of the Status of ) MB Docket No. 07-269 Competition in the Market for the ) Delivery of Video Programming ) To: The Commission REPLY COMMENTS OF THE NATIONAL ASSOCIATION OF BROADCASTERS The National Association of Broadcasters (“NAB”)1 submits these reply comments in the above-referenced proceeding. In response to the Commission’s request for data and information, several multichannel video programming distributors (“MVPDs”) discussed issues relating to retransmission consent, including the purported relationship between the rates that MVPDs choose to charge their subscribers and the fees paid to some broadcasters for retransmission consent;2 claims that efficiency- enhancing negotiations involving more than one broadcast station are somehow harmful 1 The National Association of Broadcasters is a nonprofit trade association that advocates on behalf of free local radio and television stations and also broadcast networks before Congress, the Federal Communications Commission and other federal agencies, and the Courts. 2 See Comments of the American Cable Association in MB Docket No. 07-269 (filed June 8, 2011) at 8 (“ACA Comments”); but see Comments of the National Association of Broadcasters in MB Docket No. 10-71 (filed May 27, 2011) (“NAB Retransmission Consent Comments,” attached hereto as Attachment A) at 41-47; Reply Comments of the National Association of Broadcasters in MB Docket No. 10-71 (filed June 27, 2011) (“NAB Retransmission Consent Reply Comments,” attached hereto as Attachment B) at 15-18 (broadcast signals represent a tremendous value for MVPDs, especially relative to the costs of other less popular sources of programming); id. at 34-47 (proposed regulation of retransmission consent prices is unwarranted, unlawful and would not improve consumer rates). to the public interest;3 and the relationship of the program exclusivity rules to retransmission consent negotiations.4 NAB has refuted MVPD arguments on these and other retransmission consent-related issues on several previous occasions. Most recently, we refuted such erroneous and unsupported claims in our filings in the Commission’s open proceeding on retransmission consent issues. Because they are responsive to arguments made by MVPDs in this proceeding, NAB’s comments and reply comments in the retransmission consent proceeding are attached hereto for inclusion in the record. Respectfully submitted, NATIONAL ASSOCIATION OF BROADCASTERS 1771 N Street, NW Washington, DC 20036 (202) 429-5430 ____________________________ Jane E. Mago Jerianne Timmerman Erin L. Dozier July 8, 2011 3 See ACA Comments at 10-14; but see NAB Retransmission Consent Comments at 23-33; NAB Retransmission Consent Reply Comments at 47-53 (describing public interest benefits of joint negotiations); Reply Declaration of Jeffrey A. Eisenach and Kevin W. Caves (“Eisenach Reply Declaration”), attachment to NAB Retransmission Consent Reply Comments at ¶¶ 24-25 (showing that stations involved in joint negotiations for retransmission consent are less likely to be involved in MVPD carriage disruptions and, thus, that such negotiations are “more efficient” and “actually facilitate agreements”). 4 See Comments of DISH Network, L.L.C. in MB Docket No. 07-269 at 8-9 (filed June 8, 2011); but see NAB Retransmission Consent Comments at 55-62 (exclusivity rules are necessary to promote localism and for the effective operation of the video programming marketplace); NAB Retransmission Consent Reply Comments at 53-61; Eisenach Reply Declaration at ¶¶ 28-30 (explaining why broadcast-related program exclusivity agreements “are presumptively efficient and promote consumer welfare” and also help maintain the “economic viability of local TV stations”). 2 ATTACHMENT A COMMENTS OF THE NATIONAL ASSOCIATION OF BROADCASTERS IN MB DOCKET NO. 10-71 Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) Amendment of the Commission’s Rules ) Related to Retransmission Consent ) MB Docket No. 10-71 ) ) ) ) COMMENTS OF THE NATIONAL ASSOCIATION OF BROADCASTERS NATIONAL ASSOCIATION OF BROADCASTERS Jane E. Mago Jerianne Timmerman Erin Dozier Scott Goodwin 1771 N Street, NW Washington, D.C. 20036 (202) 429-5430 Sharon Warden Theresa Ottina NAB Research May 27, 2011 Table of Contents I. The Current Market-Based Retransmission Consent System Is an Effective, Efficient and Fair System that Benefits Consumers ............................................................3 II. Limited Revisions to the Retransmission Consent Rules Would Enhance Consumers’ Ability and Freedom to Make Informed Decisions and Would Facilitate Transparency and Carriage-Related Communications .........................................9 A. The FCC Should Extend the Consumer Notice Requirement to All MVPDs ..................................................................................................................10 B. The FCC Should Ensure that Early Termination Fees Do Not Inhibit Consumers’ Ability to Cancel MVPD Service or Switch Providers in the Event of an Impasse in Retransmission Consent Negotiations ..............................13 C. Requiring MVPDs to Submit Current Data on Their Ownership, Operations, and Geographic Coverage Would Facilitate Carriage-Related Communications ....................................................................................................15 III. The Commission Correctly Concluded that It Lacks Statutory Authority to Mandate Interim Carriage During Negotiations or to Require Mandatory Arbitration to Resolve Retransmission Consent Disputes .................................................17 A. Mandatory Interim Carriage Contravenes Statutory Authority, Congressional Intent and Past FCC Decisions.......................................................17 B. The FCC Lacks Authority to Mandate Binding Arbitration ..................................19 IV. Many of the Proposed Per Se Violations Are Unnecessary, Inconsistent with Law, or Harmful to the Public Interest, and Would Not Improve the Retransmission Consent Process .................................................................................................................22 A. There Is No Legal or Public Policy Basis to Prohibit Joint Negotiations by Non-Commonly Owned Broadcasters ...................................................................23 1. Legislative History Demonstrates that Congress Never Intended to Prohibit Joint Negotiations and the FCC Has Correctly Acknowledged Such Intent ........................................................................24 2. MVPDs Have Failed to Show that Joint Negotiations Are Against the Public Interest or Would Improve the Retransmission Consent Process .......................................................................................................25 3. Joint Negotiations Increase Efficiencies, Level the Retransmission Consent Negotiation Playing Field, and Serve the Public Interest ............27 4. There Is No Need for the FCC to Adopt a Rule Permitting Small MVPDs to Jointly Negotiate Because Nothing Prohibits Them from Doing So............................................................................................33 B. The Commission’s Proposal Relating to Bona Fide Proposals on Key Issues Is Implicit in the Current Good Faith Standard and Cannot Be Implemented in a Manner Consistent with the FCC’s Statutory Authority ...........33 C. The Commission Should Not Require Negotiating Parties to Submit to Non-Binding Mediation, Which Is Costly and Would Interject Significant Delays into the Retransmission Consent Process ..................................................35 i 1. Government Mandated Mediation Would Exceed the Commission’s Authority ............................................................................35 2. Non-Binding Mediation Would Lead to Unnecessary Delays and High Costs ..................................................................................................36 D. Short-Term Retransmission Consent Agreements Are Not Commonly Used and Thus It Is Not Necessary to Amend Existing Rules to Make the Use of Such Agreements a Per Se Violation ..........................................................39 V. Placing Regulatory Constraints on the Fees, Terms and Conditions of Retransmission Consent Agreements Is Contrary to Law and Public Policy ....................41 A. Retransmission Consent Fees and Disputes Do Not Drive the Rates Consumers Pay for MVPD Services ......................................................................41 B. Congress Did Not Intend for the Commission to Consider Market-Driven Variances in Retransmission Consent Fees Paid by MVPDs Operating in the Same Markets ...................................................................................................47 C. The Retransmission Consent Fees Paid by Small MVPDs Are Not Materially Higher than the Fees Paid by Larger MVPDs and Represent Great Value for Small MVPDs ..............................................................................49 D. Congress Specifically Intended to Permit Broadcasters to Negotiate for Various Forms of Compensation in Exchange for Carriage of their Signals and the Commission Should Not Adopt Rules that Contravene this Legislative Directive ..............................................................................................51 VI. Elimination of the Network Non-Duplication and Syndicated Exclusivity Rules Will