Vol. 77 Wednesday, No. 211 October 31, 2012

Part IV

Federal Communications Commission

47 CFR Parts 76 Program Access Rules; Final Rule and Proposed Rule

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66026 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

FEDERAL COMMUNICATIONS Summary of the Report and Order and United States Court of Appeals for the COMMISSION Order on Reconsideration DC Circuit (‘‘DC Circuit’’) noted changes I. Introduction in the marketplace since 1992 and 47 CFR Part 76 stated its expectation that if the market 1. In this Report and Order, we continued to evolve in this manner, ‘‘the [MB Docket Nos. 12–68; 07–18; 05–192; 07– decline to extend the exclusive contract Commission will soon be able to 29; FCC 12–123] prohibition section of the program conclude that the prohibition is no access rules beyond its October 5, 2012 longer necessary to preserve and protect Program Access Rules sunset date. This prohibition generally competition and diversity in the bans exclusive contracts for satellite distribution of video programming.’’ As AGENCY: Federal Communications cable programming or satellite broadcast discussed below, because the current Commission. programming between any cable market presents a mixed picture (with operator and any cable-affiliated ACTION: Final rule. the cable industry now less dominant at programming vendor in areas served by the national level than it was when the a cable operator.1 The prohibition SUMMARY: In this document, the exclusive contract prohibition was Commission declines to extend the applies only to programming that is enacted, but prevailing concerns about prohibition on exclusive contracts delivered via satellite; it does not apply cable dominance and concentration in to programming delivered via terrestrial various individual markets), we find involving satellite-delivered, cable- 2 affiliated programming beyond its facilities. Congress directed the that extending a preemptive ban on October 5, 2012 expiration date. Instead Commission to adopt this prohibition in exclusive contracts sweeps too broadly. of this prohibition, the Commission will 1992 when cable operators served more Rather, this mixed picture justifies a address exclusive contracts involving than 95 percent of all multichannel case-by-case approach in applying our satellite-delivered, cable-affiliated video subscribers and were affiliated program access rules (consistent with programming on a case-by-case basis in with over half of all national cable the case-by-case inquiries we undertake response to program access complaints. networks. In expectation that in the terrestrial programming and The Commission also affirms its competition in the video programming program carriage contexts), with special expanded discovery procedures for and distribution markets would account taken of the unique program access complaints. develop, Congress provided that the characteristics of Regional Sports exclusive contract prohibition would Network (‘‘RSN’’) programming. In DATES: Effective November 30, 2012. expire on October 5, 2002, unless the addition to allowing us to assess any Commission found that it ‘‘continue[d] ADDRESSES: Federal Communications harm to competition resulting from an Commission, 445 12th Street SW., to be necessary to preserve and protect exclusive contract, this case-by-case Washington, DC 20554. competition and diversity in the approach will also allow us to consider distribution of video programming.’’ On the potentially procompetitive benefits FOR FURTHER INFORMATION CONTACT: For two previous occasions, first in 2002 of exclusive contracts in individual additional information on this and again in 2007, the Commission cases, such as promoting investment in proceeding, contact David Konczal, renewed the prohibition for five years, new programming, particularly local [email protected], or Kathy with the latest extension expiring on programming, and permitting MVPDs to Berthot, [email protected], of the October 5, 2012, thus extending the differentiate their service offerings. Media Bureau, Policy Division, (202) prohibition for ten years beyond the Accordingly, consistent with Congress’s 418–2120. original term established by Congress. intention that the exclusive contract SUPPLEMENTARY INFORMATION: This is a 2. We find that a preemptive prohibition would not remain in place summary of the Commission’s Report prohibition on exclusive contracts is no indefinitely and its finding that and Order and Order on longer ‘‘necessary to preserve and exclusive contracts can have Reconsideration, FCC 12–123, adopted protect competition and diversity in the procompetitive benefits in some and released on October 5, 2012. The distribution of video programming’’ markets, we decline to extend the full text of this document is available for considering that a case-by-case process preemptive prohibition beyond its public inspection and copying during will remain in place after the October 5, 2012 sunset date. regular business hours in the FCC prohibition expires to assess the impact 3. We recognize that the potential for Reference Center, Federal of individual exclusive contracts. In anticompetitive conduct resulting from Communications Commission, 445 12th upholding the Commission’s last vertical integration between cable Street SW., CY–A257, Washington, DC extension of the prohibition in 2007, the operators and programmers remains a 20554. This document will also be concern. For example, in some markets, 1 An exclusive contract results in one cable available via ECFS (http://www.fcc.gov/ operator having access to a particular cable- vertical integration may result in cgb/ecfs/). (Documents will be available affiliated programming network or networks in a exclusive contracts between cable electronically in ASCII, Word 97, and/ given geographic area, to the exclusion of every operators and their affiliated or Adobe Acrobat.) The complete text other multichannel video programming distributor programmers that preclude competitors (‘‘MVPD’’) competing in that geographic area. may be purchased from the 2 The exclusive contact prohibition in section in the video distribution market from Commission’s copy contractor, 445 12th 628(c)(2)(D) pertains only to ‘‘satellite cable accessing critical programming needed Street, SW., Room CY–B402, programming’’ and ‘‘satellite broadcast to attract and retain subscribers and Washington, DC 20554. To request this programming.’’ See 47 U.S.C. 548(c)(2)(D). Both thus harm competition. While the terms are defined to include only programming document in accessible formats transmitted or retransmitted by satellite for amount of satellite-delivered, cable- (computer diskettes, large print, audio reception by cable operators. See 47 U.S.C. 548(i)(1) affiliated programming among the most recording, and Braille), send an email to (incorporating the definition of ‘‘satellite cable popular cable networks has declined [email protected] or call the Commission’s programming’’ as used in 47 U.S.C. 605); id. since 2007, some of that programming 548(i)(3). In this Order, we refer to ‘‘satellite cable may still be critical for MVPDs to Consumer and Governmental Affairs programming’’ and ‘‘satellite broadcast Bureau at (202) 418–0530 (voice), (202) programming’’ collectively as ‘‘satellite-delivered compete in the video distribution 418–0432 (TTY). programming.’’ market. Congress has provided the

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66027

Commission with the authority to indicates that existing affiliation prohibition, such conduct will remain a address exclusive contracts on a case- agreements between programmers and violation of the discrimination by-case basis. We thus conclude that, in MVPDs require programming covered provision in section 628(c)(2)(B) of the the context of present market by the agreement to be made available Act, unless the cable-affiliated conditions, such an individualized for the term of the existing agreement programmer can establish a legitimate assessment of exclusive contracts in despite the expiration of the exclusive business reason for the conduct in response to complaints is a more contract prohibition. This effectively response to a program access complaint appropriate regulatory approach than defers the period that exclusive challenging the conduct. Fourth, we the blunt tool of a prohibition that contracts will begin to be enforced and will continue to monitor the video preemptively bans all exclusive thus minimizes any potential disruption marketplace. If the expiration of the contracts between satellite-delivered, to consumers that could result from the exclusive contract prohibition, cable-affiliated programmers and cable expiration of the prohibition. Third, in combined with future changes in the operators. This case-by-case addition to claims under section 628(b) competitive landscape, result in harm to consideration of exclusive contracts of the Act, additional causes of action consumers or competition, we have involving satellite-delivered, cable- under section 628 will continue to statutory authority pursuant to section affiliated programming will mirror our apply after expiration of the exclusive 628(b) of the Act to take remedial action treatment of terrestrially delivered, contract prohibition, including claims by adopting rules to address such cable-affiliated programming, including alleging undue influence under section concerns. the establishment of a rebuttable 628(c)(2)(A) and claims alleging presumption that an exclusive contract discrimination under section 5. We also take related actions herein involving a cable-affiliated RSN has the 628(c)(2)(B). In particular, nothing in to amend our rules pertaining to purpose or effect prohibited in section our decision today will alter our subdistribution agreements, common 628(b) of the Act. As demonstrated by treatment of selective refusals to license, carriers, and Open Video Systems our recent actions on complaints whereby a satellite-delivered, cable- (‘‘OVS’’) to reflect the expiration of the involving withholding of terrestrially affiliated programmer refuses to license exclusive contract prohibition. Further, delivered, cable-affiliated programming, its content to a particular MVPD (such we modify merger conditions pertaining the Commission is committed to as a new entrant or satellite provider) to exclusive contracts adopted in the exercising its authority under section while simultaneously licensing its Liberty Media Order to conform to our 628 of the Act to require cable-affiliated content to other MVPDs competing in revised rules. In addition, we revise our programmers to license their the same geographic area. Even after the procedural rules to (i) provide for a 45- programming to competitors in expiration of the exclusive contract day answer period for all complaints appropriate cases.3 alleging a violation of section 628(b), 4. In addition to case-by-case terms, and conditions’’ for a carriage agreement regardless of whether the complaint adjudication, we expect that additional with one or more Comcast-controlled networks, an involves satellite-delivered or factors will mitigate the risk of any MVPD or bargaining agent may ‘‘submit [the] dispute to commercial arbitration.’’ Comcast/NBCU terrestrially delivered programming; and potentially adverse impact of the Order, 26 FCC Rcd at 4259–62, paragraphs 49–59 (ii) establish a six-month deadline expiration of the exclusive contract and 4358, Condition II. Each party is required to (calculated from the date of filing of the prohibition on consumers and submit a ‘‘final offer * * * in the form of a contract complaint) for the Media Bureau to act competition. First, approximately 30 for carriage’’ for a period of three years. Id. at 4365, Condition VII.A.13. The arbitrator must ‘‘choose the on a complaint alleging a denial of satellite-delivered, cable-affiliated, final offer of the party which most closely programming. national networks (accounting for 30 approximates the fair market value of the 6. In the Order on Reconsideration in percent of all such networks) and 14 programming carriage rights at issue.’’ Id. at 4366, MB Docket No. 07–29, we (i) affirm the satellite-delivered, cable-affiliated, Condition VII.B.4. Following the decision of the arbitrator, ‘‘the parties shall be bound by the final expanded discovery procedures for RSNs (accounting for over 40 percent of offer chosen by the arbitrator.’’ Id. at 4367, program access complaints adopted in all such RSNs) are subject to program Condition VII.B.11; see also id. at 4364, Condition access merger conditions adopted in the VII.A.1 (stating that the arbitration will ‘‘determine the 2007 Extension Order; (ii) modify the terms and conditions of a new agreement’’). By the standard protective order for use in Comcast/NBCU Order until January requiring Comcast-controlled networks to enter into 2018. These conditions require program access complaint proceedings arbitration with a requesting MVPD to determine to include a provision allowing a party Comcast/NBCU to make these networks the price, terms, and conditions of a new carriage available to competitors, even after the agreement, these conditions require Comcast- to object to the disclosure of controlled networks to make their programming confidential information based on expiration of the exclusive contract available to all requesting MVPDs and thus 4 concerns about the individual seeking prohibition. Second, the record preclude any Comcast-controlled network from enforcing an exclusive contract, including in access; and (iii) clarify that a party may 3 See Verizon v. MSG/Cablevision (Bureau Order), regions where Comcast does not operate its cable object to any request for documents that Order, 26 FCC Rcd 13145 (MB 2011), affirmed, systems. See id. at 4261, paragraph 55 (explaining are protected from disclosure by the Verizon v. MSG/Cablevision (Commission Order), that these conditions apply to the benefit of all attorney-client privilege, the work- Memorandum Opinion and Order, 26 FCC Rcd MVPDs, ‘‘not just those that compete directly with 15849 (2011); AT&T v. MSG/Cablevision (Bureau Comcast’’). Our decision to decline to extend the product doctrine, or other recognized Order), Order, 26 FCC Rcd 13206 (MB 2011), exclusive contract prohibition beyond its sunset protections from disclosure. affirmed, AT&T v. MSG/Cablevision (Commission date does not impact our analysis in the Comcast/ Order), Memorandum Opinion and Order, 26 FCC NBCU Order concluding that these conditions were II. Report and Order in MB Docket No. Rcd 15871 (2011), appeal pending sub nom. necessary to curb Comcast’s anticompetitive 12–68 et al. Cablevision Sys. Corp. et al. v. FCC, No. 11–4780 exclusionary program access strategies that might (2nd Cir.). In addition, where vertical integration result from the transaction. In that proceeding, A. Background occurs as a result of a transaction involving the based on an extensive factual record in the context transfer of Commission licenses, we have authority of an adjudication, the Commission found MVPDs 7. In areas served by a cable operator, under section 310(d) to impose conditions that would be ‘‘substantially harm[ed]’’ without address potential competitive harms that might Comcast-NBCU’s suite of local, regional, and section 628(c)(2)(D) generally prohibits result from such integration. See, e.g., Comcast/ national programming, and that an ‘‘anticompetitive exclusive contracts for satellite cable NBCU Order, Memorandum Opinion and Order, 26 exclusionary program access strategy would often programming or satellite broadcast FCC Rcd 4238 (2011). be profitable for Comcast.’’ Comcast/NBCU Order, programming between any cable 4 These conditions provide that, if ‘‘negotiations 26 FCC Rcd at 4254, paragraph 37 (footnotes fail to produce a mutually acceptable set of price, omitted) and 4257–58, paragraph 44. operator and any cable-affiliated

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66028 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

programming vendor.5 The exclusive contract prohibition will eventually 1. Expiration of the Exclusive Contract contract prohibition applies to all sunset.’’ Prohibition 9. On March 20, 2012, the satellite-delivered, cable-affiliated a. Standard of Review programming and preemptively bans all Commission adopted and released an exclusive contracts for such NPRM initiating a third review of the 11. Congress provided that the programming with cable operators, necessity of the exclusive contract exclusive contract prohibition would regardless of whether the withholding of prohibition. The NPRM presented data expire on October 5, 2002, unless the particular programming would impact on the current state of competition in Commission found that it continued to competition in the marketplace. As the video distribution market and the be ‘‘necessary’’ to preserve and protect competition and diversity in the mentioned above, the exclusive contract video programming market and invited distribution of video programming. The prohibition applies only to commenters to submit more recent data 6 Commission has previously determined programming that is delivered via or empirical analyses. The NPRM that the exclusive contract prohibition satellite; it does not apply to sought comment on whether current continues to be ‘‘necessary’’ if, in the programming that is delivered via conditions in the video marketplace support retaining, sunsetting, or absence of the prohibition, competition terrestrial facilities. Under the statute and diversity in the distribution of and our implementing rules, an relaxing the exclusive contract prohibition. No commenter challenged video programming would not be exclusive contract is permissible if a preserved and protected. The DC Circuit cable operator or cable-affiliated the accuracy of the data set forth in the NPRM. has upheld the Commission’s programmer obtains prior approval by interpretation of the term ‘‘necessary’’ demonstrating to the Commission that B. Discussion and has also ruled that the the contract serves the public interest. 10. For the reasons discussed below, Commission’s analysis of the Congress thus recognized that some we decline to extend the exclusive prohibition is appropriately focused on exclusive contracts may serve the public contract prohibition beyond its October harm to competition and consumers, not interest by providing offsetting benefits 5, 2012 sunset date. First, we review harm to competitors. to the video programming market or marketplace developments since 2007 12. The Commission has also assisting in the development of and conclude that, because the current explained that the sunset provision competition among MVPDs. market presents a mixed picture (with ‘‘creates a presumption that the rule will 8. Congress also provided that the the cable industry now less dominant at sunset’’ unless the Commission finds exclusive contract prohibition would the national level than it was when the that it continues to be necessary.7 sunset after ten years (on October 5, exclusive contract prohibition was Moreover, the Commission has 2002), unless the Commission found enacted, but prevailing concerns about explained that, because the exclusive that it ‘‘continue[d] to be necessary to cable dominance and concentration in contract prohibition has been in effect preserve and protect competition and various individual markets), a since 1992, ‘‘it is difficult to obtain diversity in the distribution of video preemptive ban on exclusive contracts specific factual evidence of the impact programming.’’ On two previous sweeps too broadly and is no longer on competition in the video distribution occasions, first in 2002 and again in ‘‘necessary to preserve and protect market if the prohibition were lifted.’’ 2007, the Commission found that the competition and diversity in the Accordingly, we rely on ‘‘economic prohibition remained necessary and distribution of video programming’’ theory and predictive judgment[s] in thus renewed it for an additional five- considering that a case-by-case process addition to specific factual evidence in year term on each occasion, with the will remain in place after the reaching our decision concerning the latest extension expiring on October 5, prohibition expires to assess the impact continued need for the exclusive 2012. In issuing the latest extension, the of individual exclusive contracts. contract prohibition.’’ Commission recognized that ‘‘Congress Second, we describe the case-by-case b. Analysis intended for the exclusive contract process that will remain after sunset of 13. In evaluating whether the prohibition to sunset at a point when the preemptive ban to address exclusive contract prohibition continues market conditions warrant’’ and competitive harms that may arise in to be necessary, the Commission has specifically ‘‘caution[ed] competitive connection with exclusive contracts, previously examined data on the status MVPDs to take any steps they deem including a 45-day period for answering of competition in the video appropriate to prepare for the eventual a section 628(b) complaint and the programming market and the video sunset of the prohibition, including establishment of a rebuttable distribution market. The Commission further investments in their own presumption that an exclusive contract presented extensive data in the NPRM programming.’’ The DC Circuit upheld involving a satellite-delivered, cable- on these issues, which presented a the Commission’s decision, affiliated RSN has the purpose or effect mixed picture, and invited commenters prohibited in section 628(b). We also characterizing the developments in the to submit more recent data or empirical explain how addressing exclusive marketplace as a ‘‘mixed picture’’ and analyses. While no commenter disputed contracts on a case-by-case basis deferring to the Commission’s analysis. the accuracy of the data presented in the comports with the First Amendment. The court expressed an expectation, NPRM, updated information in the Third, we describe necessary however, that at the next review ‘‘the record requires some modifications to Commission will weigh heavily amendments to our rules pertaining to these data. In the discussion below and Congress’s intention that the exclusive subdistribution agreements, common in Appendix E, we present the most carriers, and OVS and to merger recent data available on the market 5 In unserved areas, Congress adopted a per se conditions pertaining to exclusive shares of cable operators and other prohibition on exclusive contracts between cable arrangements adopted in the Liberty MVPDs in the video distribution market, operators and satellite-delivered, cable-affiliated Media Order to reflect the expiration of programmers. 47 U.S.C. 548(c)(2)(C). Unlike the exclusive contract prohibition in served areas, the the exclusive contract prohibition. 7 Commenters’ suggestion that vertically exclusive contract prohibition in unserved areas is integrated cable operators bear the burden of not subject to a sunset provision and is unaffected 6 See id. at 3424–30, paragraphs 21–29 and 3473– demonstrating that the prohibition is no longer by this Order. 87, Appendices A–C. necessary finds no basis in the statute.

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66029

which differ only slightly from the data the number of subscribers controlled by in [REDACTED] DMAs and TWC passes presented in the NPRM, and continue to the vertically integrated cable operator more than 70 percent of television show a mixed picture. In addition, in increases. In past extension decisions, households in [REDACTED] DMAs.8 the discussion below and in Appendices the Commission has analyzed the These calculations employ data from F and G, we update the data presented aggregate market share of cable Nielsen on television households in in the NPRM on cable-affiliated operators on a national and regional each DMA and homes passed data networks to reflect (i) Comcast/NBCU’s basis to assess the profitability of provided by the cable operators. In the sale of its interest in A&E Television exclusivity. In the 2007 Extension 2007 Extension Order, the Commission Networks, LLC (‘‘A&E’’); and (ii) Order, the Commission found that the also noted that the collective market information in the record provided by cable industry’s share of MVPD share of MVPDs that compete with Cablevision, Comcast, and Time Warner subscribers nationwide had decreased incumbent cable operators in many Cable (‘‘TWC’’) regarding their since 2002 from 78 percent to DMAs where cable multiple system affiliation with RSNs and whether those approximately 67 percent, but that this operators (‘‘MSOs’’) have clusters is far RSNs are satellite-delivered or market share was still sufficient to make less than their collective nationwide terrestrially delivered. Appendices E exclusivity a profitable strategy. Here, market share. The same holds true through G are available at: http:// the record evidence indicates that the today. hraunfoss.fcc.gov/edocs_public/ cable industry’s share of MVPD 19. In addition to this data, we note attachmatch/FCC-12-123A1.pdf. subscribers nationwide has continued to that real-world evidence indicates that 14. Based on similar data and other decrease, from 67 percent in 2007 to in some markets cable-affiliated record evidence, the Commission in 57.4 percent today, which indicates that programmers may have an incentive to past extension decisions has analyzed vertically integrated cable operators as a enter into exclusive contracts that can whether, in the absence of the exclusive whole—and considered solely on a harm competition. As noted in the contract prohibition, cable-affiliated national basis—have a reduced previous extension decisions as well as programmers would have the incentive incentive to enter into exclusive in the 2010 Program Access Order, and the ability to harm competition and contracts, compared to 2007. vertically integrated cable operators diversity in the distribution of video 17. On a regional basis, however, have withheld from competitors certain programming by entering into exclusive there remain markets where cable terrestrially delivered networks, which contracts. We undertake the same operators have a substantial share of are not subject to the exclusive contract analysis here. Below, we consider the subscribers. In the 2007 Extension prohibition. Most recently, Cablevision ‘‘incentive’’ element followed by the Order, the Commission noted that the and MSG withheld the terrestrially ‘‘ability’’ element. cable industry’s share of MVPD delivered MSG HD and MSG+ HD RSNs subscribers in certain Designated Market from AT&T and Verizon. (i) Incentive Areas (‘‘DMAs’’) remained above or near 20. Because the record before us 15. In evaluating whether cable- the 78 percent level that the indicates that there may be certain affiliated programmers retain the Commission previously found in 2002 region-specific circumstances where incentive to enter into exclusive was sufficient to make exclusivity a vertically integrated cable operators may contracts, the Commission analyzes profitable strategy. Here, the record have an incentive to withhold satellite- whether there continues to be an indicates that the cable industry’s share delivered programming from economic rationale for exclusivity. The of MVPD subscribers in certain DMAs competitors,9 we believe that a case-by- Commission has explained that, if a remains above or near both the 67 case approach authorized under other vertically integrated cable operator percent level and the 78 percent level provisions of the Act—rather than a enters into an exclusive arrangement for that the Commission has previously preemptive ban on exclusive contracts— affiliated programming, it can recoup found to be sufficient to make will adequately address competitively profits lost at the upstream level (i.e., exclusivity a profitable strategy. harmful conduct in a more targeted, less lost licensing fees and advertising Although the number of DMAs in which burdensome manner. We disagree with revenues) by increasing the number of the cable industry’s share of MVPD commenters to the extent they imply subscribers of its downstream MVPD subscribers exceeds these benchmarks that Congress intended the prohibition division. The Commission has also has decreased since 2007, there are still to expire only once vertically integrated explained that, particularly where rival a considerable number of DMAs in cable operators no longer have any distributors are limited in their market which concerns about competition incentive to enter into exclusive shares, a cable-affiliated programmer remain. contracts. Such an interpretation will be able to recoup a substantial 18. Moreover, we note that data amount of the revenues foregone by submitted in the record by cable 8 We also received data from Cablevision showing pursuing exclusivity. In the 2007 operators indicate that clustering has [REDACTED] DMAs in which Cablevision passes Extension Order, the Commission increased since 2007. The Commission more than 70 percent of television households. 9 We also note that, in past extension decisions, concluded that vertically integrated has, in past orders, observed that the Commission has noted that increases in cable programmers retained the clustering may increase a cable horizontal consolidation among vertically incentive to enter into exclusive operator’s incentive to enter into integrated cable operators means they will reap a contracts for satellite-delivered exclusive contracts for regional greater portion of the gains from exclusivity, thereby increasing the incentive to enter into programming. programming. In the 2007 Extension exclusive contracts. Our most recent data indicates 16. As discussed below, the record Order, the Commission noted that that the percentage of MVPD subscribers receiving here shows a mixed picture, indicating Comcast passed more than 70 percent of their video programming from one of the four that vertically integrated cable television households in 30 Designated largest vertically integrated cable operators today is 42.7 percent, an increase from the 2002 Extension programmers may still have an Market Areas (DMAs) and TWC passed Order (34 percent), but a decrease from the 2007 incentive to enter into exclusive more than 70 percent of television Extension Order (54–56.75 percent). While the contracts for satellite-delivered households in 23 DMAs. Based on the record evidence demonstrates that the data programming in many markets. As the 2011 data provided by the cable pertaining to horizontal consolidation have remained consistent with 2002 levels, this factor is Commission explained previously, the operators, Comcast now passes more outweighed by other marketplace considerations profitability of exclusivity increases as than 70 percent of television households favoring elimination of the preemptive ban.

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66030 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

contradicts Congress’s recognition that controls (the ‘‘Comcast-controlled will have no vehicle to consider exclusive contracts do not always harm networks’’) 10 available to competitors. whether the prohibition remains competition and can have As set forth in Appendices F and G, we necessary after the Comcast merger procompetitive benefits in some cases. estimate that 30 satellite-delivered conditions expire. We reject these national networks and 14 satellite- claims. The Commission may exercise (ii) Ability delivered RSNs are Comcast-controlled its broad rulemaking authority under 21. In addition to an incentive to enter networks. Comcast/NBCU is subject to section 628(b) to adopt rules prohibiting into exclusive contracts, we also assess these conditions until January 2018. In certain exclusive contracts involving the ‘‘ability’’ of vertically integrated other words, even after the exclusive cable-affiliated programming if it cable operators to use exclusivity to contract prohibition expires, these becomes necessary after these merger harm competition and diversity in the Comcast-controlled networks could not conditions expire, based on an distribution of video programming. In be subject to an exclusive contract until assessment of the marketplace at that this regard, the Commission considers January 2018. For that reason, we find time. whether satellite-delivered, cable- it appropriate to exclude the Comcast- 25. Second, after the Commission affiliated programming remains controlled networks when assessing the released the NPRM, Comcast sold its programming for which there are no continued need for a preemptive ban.11 interest in A&E to A&E’s other owners good substitutes and are necessary for 24. Some commenters contend, (Disney and Hearst). As a result of this competition. In previous extension however, that the Commission must transaction, the regulatory status of the orders, the Commission found that there consider the Comcast-controlled 17 networks owned by A&E changed were no good substitutes for a networks as if they would be impacted from cable-affiliated to non-cable- significant amount of satellite-delivered, by a sunset of the exclusivity affiliated. As set forth in the NPRM, cable-affiliated programming, and that prohibition. They claim that, if the A&E-owned networks account for four such programming remained necessary Commission declines to extend the of the Top 20 national cable networks as for viable competition in the video prohibition based on an analysis of the ranked by average prime-time ratings distribution market. Accordingly, the market that ignores the Comcast- and three of the Top 20 national cable Commission concluded that cable- controlled networks, the Commission networks as ranked by subscribership. affiliated programmers retained ‘‘the Thus, the change in the regulatory status ability to favor their affiliated cable 10 As discussed in the NPRM, the program access of the A&E networks has reduced since operators over competitive MVPDs such merger conditions apply to ‘‘C–NBCU that competition and diversity in the Programmers.’’ Whether a network qualifies as a 2007 the number of satellite-delivered, ‘‘C–NBCU programmer’’ is a fact-specific distribution of video programming cable-affiliated networks among the Top determination. As described in the NPRM, with the 20 national cable networks ranked by would not be preserved and protected exception of the iN DEMAND networks, we assume absent the rule.’’ In reaching this that any network in which Comcast or NBCU holds subscribership and by average prime- conclusion, the Commission explained a 50 percent or greater interest is a ‘‘C–NBCU time ratings. Programmer’’ subject to these conditions. We refer 26. Third, in both the 2002 Extension that ‘‘[w]hat is most significant to our to these networks as ‘‘Comcast-controlled analysis is not the percentage of total networks.’’ We refer to other networks in which Order and the 2007 Extension Order, the available programming that is vertically Comcast or NBCU holds a less than 50 percent Commission found significant that the integrated with cable operators, but interest as ‘‘Comcast-affiliated networks,’’ which we subscription premium networks HBO assume for purposes of the estimates in this Order and Cinemax were cable-affiliated. The rather the popularity of the are not ‘‘C–NBCU Programmers’’ subject to the programming that is vertically program access merger conditions adopted in the Commission relied on comments integrated and how the inability of Comcast/NBCU Order, but are subject to the arguing that ‘‘first-run programming competitive MVPDs to access this program access rules, including the exclusive produced by HBO and other premium contract prohibition. No commenter opposed this networks [is] essential for a competitive programming will affect the proposed distinction between Comcast-controlled preservation and protection of and Comcast-affiliated networks as set forth in the MVPD to offer to potential subscribers competition in the video distribution NPRM. In addition, given Comcast’s previous in order to compete with the incumbent marketplace.’’ statements that it cannot control decisionmaking at cable operator.’’ In 2009, however, the iN DEMAND, the NPRM proposed to consider iN 22. We recognize that some DEMAND as Comcast-affiliated, but not Comcast- Commission approved a transaction commenters contend that the data in the controlled. No commenter opposed this resulting in the separation of TWC, a NPRM indicate little change since 2007 characterization, thus we consider the iN DEMAND cable operator, from Time Warner Inc., in the amount of satellite-delivered, networks to be Comcast-affiliated, but not Comcast- an owner of satellite-delivered, national controlled, for purposes of the estimates in this cable affiliated programming among the Order. Nothing in this Order should be read to state programming networks, including HBO most popular cable networks. These or imply any position as to whether any particular and Cinemax. As a result, HBO and claims, however, do not consider four network qualifies or does not qualify as a ‘‘C–NBCU Cinemax are no longer cable-affiliated. developments that impact significantly Programmer.’’ This transaction was also significant 11 Our decision here is consistent with the 2011 our determination as to whether a Program Carriage Order. In that order, the because it changed the regulatory status preemptive prohibition remains Commission found that the ‘‘number of cable- of other cable networks cited by the necessary under the terms of the statute. affiliated networks recently increased significantly Commission in the 2007 Extension 23. First, as explained in the NPRM, after the merger of Comcast and NBC Universal, Order (CNN, TBS, and TNT) from cable- thereby highlighting the continued need for an the Commission in 2011 granted the effective program carriage complaint regime.’’ In the affiliated to non-cable-affiliated. In application of Comcast, General Electric Comcast/NBCU Order, the Commission specifically declining to adopt a condition applying Company (‘‘GE’’), and NBCU to assign relied on the program carriage complaint process to the program access rules to Time and transfer control of broadcast, address concerns relating to program carriage Warner Inc. post-transaction, the resulting from the merger. Accordingly, the increase satellite, and other radio licenses from in vertical integration resulting from the Comcast/ Commission explained that the GE to Comcast. Reviewing that vertical NBCU transaction was a significant factor in the underlying premise of the program integration pursuant to section 310(d), 2011 Program Carriage Order. With respect to access rules would no longer apply the Commission approved the program access concerns, however, the Comcast/ because Time Warner Inc. (a non-cable- NBCU Order adopted specific conditions to address transaction with conditions, including a these concerns, thus allowing us to exclude the affiliated programmer) and TWC would program access condition requiring Comcast-controlled networks from consideration no longer have the incentive to Comcast/NBCU to make networks it here. discriminate in favor of each other.

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66031

27. Fourth, in the 2007 Extension 628(b); 13 (iii) 14 RSNs (13 percent) are satellite-delivered, cable-affiliated Order, the Commission relied on data cable-affiliated and satellite-delivered, programming among the most popular indicating that 46 percent of all RSNs but are also Comcast-controlled, and cable networks), we find that a broad, were cable-affiliated. These data, therefore subject to program access preemptive ban on exclusive contracts however, did not distinguish between merger conditions until January 2018 is no longer necessary to prevent cable- terrestrially delivered and satellite- that require Comcast to make these affiliated programmers from harming delivered RSNs. As discussed above, the networks available to competitors; 14 competition, considering that a case-by- exclusive contract prohibition applies and (iv) only 18 RSNs (17 percent) are case process will remain in place after only to programming that is delivered cable-affiliated, satellite-delivered, and the prohibition expires to assess the via satellite; it does not apply to not Comcast-controlled, and therefore impact of individual exclusive programming that is delivered via potentially impacted by the expiration contracts. We recognize that some terrestrial facilities. An exclusive of the exclusive contract prohibition.15 satellite-delivered, cable-affiliated contract involving a terrestrially 28. Based on the four developments programming, such as certain RSNs, delivered, cable-affiliated RSN is noted above, the record indicates a remains necessary for competition and permitted unless the Commission finds decrease since 2007 in the amount of has no good substitutes. However, we in response to a complaint that it satellite-delivered, cable-affiliated do not believe this warrants extension of violates section 628(b) of the Act. We, programming among the most popular a preemptive ban on exclusivity when a therefore, further refine our prior cable networks. In particular, the case-by-case approach can address number of Top 20 national cable analysis by distinguishing between competitively harmful exclusive networks as ranked by average prime cable-affiliated RSNs that are subject to contracts on a more targeted basis. time ratings that are cable-affiliated has the prohibition (i.e., RSNs delivered via fallen from seven in 2007 to one today 16 (iii) Conclusion satellite) and those that are not (i.e., and the number of Top 20 national cable 30. Based on the foregoing, we can no RSNs delivered via terrestrial means). networks as ranked by subscribership longer conclude that the exclusive To that end, the Media Bureau asked the that are cable-affiliated has fallen from contract prohibition remains necessary three cable operators that own the six in 2007 to three today.17 Moreover, to preserve and protect competition and greatest number of RSNs (Cablevision, while the Commission in 2007 found diversity in the distribution of video Comcast, and TWC) whether their RSNs that ‘‘popular subscription premium programming considering that a case-by- are satellite-delivered or terrestrially networks, such as HBO and Cinemax’’ case process will remain in place after delivered. The responses reveal that a were cable-affiliated, those networks are the prohibition expires to assess the little fewer than half (43 percent) of all no longer cable-affiliated today. In impact of individual exclusive cable-affiliated RSNs are terrestrially addition, while the Commission in 2007 contracts. While the record indicates delivered and therefore beyond the relied on data indicating that 46 percent that vertically integrated cable operators scope of the exclusive contract of all RSNs were satellite-delivered and may still have the ability and incentive prohibition.12 The remaining 57 percent cable-affiliated, this figure is only 17 to withhold satellite-delivered, cable- of cable-affiliated RSNs are satellite- percent today (not including Comcast- affiliated programming in some markets delivered, but over 43 percent of these controlled networks, which are subject with the effect of harming competition RSNs are Comcast-controlled and thus to program access merger conditions).18 and diversity, the record also subject to program access merger 29. In light of the mixed picture demonstrates a decline since 2007 in the conditions until January 2018. As set presented by the current MVPD market amount of satellite-delivered, cable- forth in Appendix G, the data (including the decline in the amount of affiliated programming among the most demonstrate the following regarding the popular cable networks. To be sure, 108 RSNs (both cable-affiliated and non- 13 Four of these 24 terrestrially delivered, cable- absent the prohibition, there may be cable-affiliated) available today: (i) 52 affiliated RSNs are Comcast-controlled RSNs and instances where cable operators enter therefore also subject to program access merger RSNs (48 percent) are not cable- conditions until January 2018 that require Comcast into exclusive contracts for satellite- affiliated; (ii) 24 RSNs (22 percent) are to make these networks available to competitors. delivered, cable-affiliated programming cable-affiliated but terrestrially 14 As discussed above, our decision to decline to that is necessary for competition and delivered and therefore subject to a extend the exclusive contract prohibition beyond its has no good substitutes. But Congress sunset date does not impact our analysis in the has provided the Commission with the case-by-case process under section Comcast/NBCU Order concluding that the program access merger conditions adopted therein were authority to address such contracts on a 12 The Media Bureau did not request information necessary to curb Comcast’s anticompetitive case-by-case basis after the expiration of from Bright House or Cox regarding whether their exclusionary program access strategies that might the prohibition. Specifically, sections affiliated RSNs are satellite-delivered or terrestrially result from the transaction. 628(b), 628(c)(1), and 628(d) of the Act 15 delivered. This includes the following four RSNs: Even with respect to these 18 RSNs, TWC has grant the Commission broad authority to Bright House Sports Network, Bright House Sports stated it will make its four RSNs featuring the Network HD, Cox Sports Television, and Cox Sports games of the Los Angles Lakers (Time Warner Cable prohibit ‘‘unfair acts’’ of cable operators Television HD. Moreover, Comcast and TWC did SportsNet, Time Warner Cable SportsNet HD, Time and their affiliated programmers that not provide information regarding whether the Warner Cable Deportes, and Time Warner Cable have the ‘‘purpose or effect’’ of following affiliated RSNs are satellite-delivered or Deportes HD) available to competing MVPDs. ‘‘hinder[ing] significantly or terrestrially delivered: Comcast SportsNet Houston, 16 This number increases to three if the Comcast- Comcast SportsNet Houston HD, Midco Sports controlled national networks are included. In the prevent[ing]’’ any MVPD from providing Network, Midco Sports Network HD, Time Warner early 1990s when the exclusive contract prohibition ‘‘satellite cable programming or satellite Cable SportsNet, Time Warner Cable SportsNet HD, was adopted, 12 of the Top 15 national cable broadcast programming to subscribers or Time Warner Cable Deportes, and Time Warner networks as ranked by average prime time ratings consumers.’’ In addition, the Cable Deportes HD. For purposes of this analysis, were cable-affiliated. and with the exception of Cox-4 and Cox-4 HD 17 This number increases to four if the Comcast- Commission has authority (i) pursuant (which the Commission has previously found are controlled national networks are included. In the to section 628(c)(2)(B) of the Act to terrestrially delivered), we assume that all cable- early 1990s when the exclusive contract prohibition prohibit discrimination in the prices, affiliated RSNs for which we do not have was adopted, 10 of the Top 25 national cable terms, and conditions for sale of information are satellite-delivered and therefore networks as ranked by subscribership were cable- subject to the exclusive contract prohibition. Thus, affiliated. satellite-delivered, cable-affiliated our estimate that 43 percent of cable-affiliated RSNs 18 This percentage increases to 30 percent if the programming among MVPDs; and (ii) are terrestrially delivered is conservative. Comcast-controlled RSNs are included. pursuant to section 628(c)(2)(A) of the

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66032 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

Act to prohibit a cable operator from delivered, cable-affiliated RSNs types of exclusive contracts involving engaging in undue or improper demonstrates the adequacy of a case-by- cable-affiliated programming.20 influence over the decision of its case process. c. Additional Factors Weighing in Favor affiliated, satellite-delivered 32. Some commenters note that of Expiration of the Exclusive Contract programmer to enter into an exclusive Congress has already established a case- Prohibition contract. The Commission is committed by-case approach for assessing exclusive to using this statutory authority to 34. We find additional factors also contracts involving satellite-delivered, require cable-affiliated programmers to weigh in favor of our decision to decline license programming to competitors in cable-affiliated programming. to extend the prohibition beyond its appropriate cases, as demonstrated by Specifically, pursuant to section sunset date. First, as both Congress and our recent actions on complaints 628(c)(4), a cable operator or a satellite- the Commission have specifically involving terrestrially delivered, cable- delivered, cable-affiliated programmer recognized, exclusive contracts may affiliated RSNs. As demonstrated in may submit a ‘‘Petition for Exclusivity’’ result in the procompetitive benefit of those proceedings, a case-by-case to the Commission for approval to increasing investment in programming approach allows for an individualized enforce or enter into an exclusive in some cases, thereby promoting assessment of exclusive contracts based contract by demonstrating that the competition and diversity in the video on the facts presented in each case. contract serves the public interest. Some programming market. Vertically 31. As some commenters note, commenters claim that the Commission integrated cable operators and cable- however, the Commission in previous could streamline this procedure rather affiliated programmers note that extension decisions characterized a than requiring MVPDs to pursue expiration of the prohibition will case-by-case process for addressing complaints. We reject this contention. provide cable operators with an exclusive contracts as an inadequate Given the decline during the past five incentive to increase their investment in substitute for the ‘‘particularized years in the amount of satellite- programming ventures, particularly protection’’ afforded by the exclusive delivered, cable-affiliated programming local and regional programming. They contract prohibition. But the among the most popular cable networks, also claim that exclusivity is critical to Commission reached that conclusion on we find no basis to continue to programmers for the following reasons: a much different factual record. Here, preemptively ban exclusive contracts (i) A new service with limited interest based on the decline during the past five and to place the burden on cable may be able to gain carriage only if it years in the amount of satellite- operators or their affiliated programmers can provide a distributor with exclusive delivered, cable-affiliated programming to demonstrate that an exclusive carriage; (ii) exclusivity may be critical among the most popular cable networks, contract serves the public interest before for a niche network that targets a particular audience; (iii) a programmer we can no longer conclude that a case- entering into or enforcing the contract. may wish to enter into an exclusive by-case process is insufficient to protect Indeed, relying on the Petition for arrangement to reduce or share the risks MVPDs from the potential Exclusivity process to avoid the anticompetitive impact of exclusive with a cable operator; and (iv) expiration of the prohibition would contracts or that a preemptive ban exclusivity enhances the incentive of mean that the prohibition would never continues to be warranted.19 Moreover, the cable operator to market and expire, contrary to Congress’s direction. our recent actions addressing publicize the network. Moreover, complaints involving terrestrially 33. We recognize the possibility that expiration of the exclusive contract the expiration of the exclusive contract prohibition may also encourage other 19 The Commission’s conclusions in the Comcast/ prohibition may result in cable MVPDs or non-MVPD-affiliated NBCU Order do not require a different result. In that operators acquiring additional programmers to create programming to proceeding, based on an extensive factual record in counteract any exclusives involving the context of an adjudication, the Commission programming, including ‘‘must have’’ found that the ‘‘record evidence supports a finding programming, and then entering into cable operators, thereby leading to more that without Comcast-NBCU’s suite of RSN, local exclusive contracts for such competition and diversity in the video and regional broadcast and national cable programming. We also recognize the programming market. The Commission programming, other MVPDs likely would lose recognized this benefit in the 2010 significant numbers of subscribers to Comcast, possibility that some existing satellite- substantially harming those MVPDs that compete delivered, cable-affiliated programming Program Access Order, explaining that, with Comcast in video distribution.’’ Comcast/ may increase in popularity in the future. NBCU Order, 26 FCC Rcd at 4254, paragraph 37 The record, however, provides no basis 20 Some commenters also speculate that cable (footnotes omitted). Moreover, the Commission operators will enter into exclusive contracts found that ‘‘this anticompetitive exclusionary on which to predict the likelihood of covering a bundle of cable-affiliated networks, program access strategy would often be profitable these developments or their impact on which has a more harmful impact on competitors for Comcast.’’ Id. at 4257–58, paragraph 44. The competition. Indeed, such than an exclusive contract involving a single Commission’s findings with respect to that network. Should this occur, however, the transaction, which involved the nation’s largest developments seem contrary to current Commission will be able to address these situations cable operator both in terms of subscribers and market trends, as discussed above. post-sunset pursuant to the provisions of section number of cable networks owned, do not compel Given this, extending the prohibition 628 that do not sunset. The Commission’s the same conclusion with respect to all other conclusions in the Comcast/NBCU Order do not vertically integrated cable operators. Indeed, the based simply on the chance of a reversal require a different result. In that proceeding, the Commission specifically noted that ‘‘[a]ll in industry trends would be at odds Commission found that the ‘‘evidence suggests that adjudicatory findings are fact specific and based on with Congress’ inclusion of a sunset the overall bundle of NBCU cable networks is the evidence in the record in a specific matter.’’ Id. provision. Moreover, even if a critical programming that MVPDs need to offer a at 4258, paragraph 45. Moreover, consistent with competitive service that is attractive to consumers the case-by-case approach we describe herein, the marketplace reversal were to occur, the even if no individual network in the bundle were Commission explained that ‘‘[a]n assessment of the Commission has the tools in place to considered ‘marquee’ programming.’’ Comcast/ consequences of foreclosure of the programming at address these developments, either on a NBCU Order, 26 FCC Rcd at Appendix B, 4395–96, issue in a particular transaction must be made on paragraph 46. As discussed above, this conclusion a case-by-case basis, considering whether the case-by-case basis in response to was based on an extensive factual record in the foreclosure to rival MVPDs of access to the specific complaints, which include a rebuttable context of an adjudication involving the nation’s programming networks offered by the parties to the presumption of ‘‘significant hindrance’’ largest cable operator, both in terms of subscribers transaction likely would result in the loss of for RSNs, or by adopting rules pursuant and number of cable networks owned, and does not subscribers to MVPDs having access.’’ Id. at 4258, compel the same conclusion with respect to all paragraph 45 n. 109. to section 628(b) that prohibit certain other vertically integrated cable operators.

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66033

‘‘[i]f particular programming is its sunset date and relying instead on a to MVPDs for the duration of the term replicable, our policies should case-by-case process is consistent with of the affiliation agreements despite the encourage MVPDs or others to create our First Amendment obligations and expiration of the exclusive contract competing programming, rather than promotes the goals of Executive Order prohibition. In response, no commenter relying on the efforts of others, thereby 13579 and the Commission’s plan claimed that expiration of the exclusive encouraging investment and innovation adopted consistent with the Executive contract prohibition would allow cable- in programming and adding to the Order, whereby the Commission affiliated programmers to immediately diversity of programming in the analyzes rules that may be outmoded, terminate existing agreements. Rather, marketplace.’’ ineffective, insufficient, or excessively one commenter noted that programmers 35. Some MVPDs question the burdensome and determines whether have contractual commitments to potential for procompetitive benefits any such regulations should be continue to provide their programming resulting from exclusive contracts modified, streamlined, or repealed. In to MVPDs despite the expiration of the involving satellite-delivered, cable- today’s marketplace, a nuanced, exclusive contract prohibition. Thus, affiliated programming, noting that narrower, case-by-case approach that enforcement of exclusive contracts in exclusive contracts involving non-cable- meets the statutory objectives is more the near term will be limited, thereby affiliated programmers are rare and that appropriate than the blunt regulatory effectively deferring the period that the Commission previously noted an tool of a prohibition that preemptively exclusive contracts will begin to be increase in programming networks over bans all exclusive contracts and places enforced. time despite the exclusive contract the burden on the proponent of d. Impact of the Expiration of the prohibition. Nevertheless, Congress exclusivity to demonstrate how the Exclusive Contract Prohibition on specifically recognized the benefits of exclusive contract serves the public Competition and Consumers exclusive contracts in some cases, as interest before entering into or enforcing demonstrated by its mandate that the the contract. 40. Some commenters claim that Commission allow the exclusive 38. Fourth, our action here promotes declining to extend the exclusive contract prohibition to expire when it is regulatory parity by treating satellite- contract prohibition beyond its sunset no longer ‘‘necessary’’ to preserve and delivered and terrestrially delivered date and relying instead on a case-by- protect competition and diversity in the programming similarly. Specifically, we case process will harm competition, video distribution market. will now consider all exclusive consumers, and MVPDs. We find these 36. Second, the Commission has contracts involving cable-affiliated claims unpersuasive. First, they claim recognized that exclusive contracts may programming on a case-by-case basis in that a case-by-case complaint process is result in the procompetitive benefit of response to complaints, regardless of burdensome and time-consuming, allowing MVPDs to differentiate their whether the programming is satellite- especially for smaller MVPDs. These service offerings.21 To be sure, the issue delivered or terrestrially delivered. claims are based on the length of time of whether the procompetitive benefits Nothing in the record here establishes needed to resolve complaints involving of product differentiation outweigh the any basis for continuing to apply a terrestrially delivered RSNs, such as the anticompetitive harms is a fact-specific preemptive prohibition to exclusive recent Verizon v. MSG/Cablevision and determination best handled on a case- contracts involving satellite-delivered, AT&T v. MSG/Cablevision cases. In by-case basis. But, at least in some cable-affiliated programming while those decisions, however, the Media markets, it is possible that consumers assessing exclusive contracts involving Bureau specifically noted certain will benefit from increased competition terrestrially delivered, cable-affiliated atypical circumstances that resulted in a in the video distribution market when programming on a case-by-case basis. delay in resolution of the complaints. MVPDs differentiate their service Achieving parity in treatment between We do not expect that complaints offerings and thereby invite competitive these two types of programming will challenging exclusive contracts countermeasures from their rivals.22 remove any uncertainty and confusion involving satellite-delivered, cable- 37. Third, declining to extend the surrounding which regulatory approach affiliated programming will present exclusive contract prohibition beyond (preemptive prohibition or case-by-case) similarly atypical circumstances. In any applies. In addition, parity in regulatory event, for the reasons discussed below, 21 Some commenters claim that exclusivity will treatment will help to ensure that we establish a six-month deadline harm consumers because no consumer could access business reasons, rather than regulatory (calculated from the date of filing of the the full range of programming available without having to subscribe to more than one service. This distinctions, drive the decision whether complaint) for the Media Bureau to act argument, however, is not specific to cable- to deliver programming by satellite or on a complaint alleging a denial of affiliated programming. Rather, it is an argument terrestrial means. programming. Some commenters also against any type of exclusive programming 39. Fifth, we expect that any claim that a complainant will not have arrangement, including those involving non-cable- affiliated programming that is not covered by the enforcement of exclusive contracts in access to the programming subject to the exclusive contract prohibition. Moreover, despite the near term will be limited by the exclusive contract during the pendency this alleged drawback of exclusivity, Congress has terms of existing affiliation agreements. of the complaint, thereby harming the specifically found that exclusive contracts may In the NPRM, the Commission sought complainant’s ability to attract and have countervailing procompetitive benefits in comment on which of two alternative retain subscribers. As the Commission some cases. 22 The Commission in the 2007 Extension Order scenarios would occur after the explained in the 2010 Program Access found that the ability of MVPDs to engage in expiration of the exclusive contract Order, however, a complainant may competitive countermeasures did not mitigate the prohibition: (i) existing affiliation seek a standstill of an existing impact of being unable to offer essential agreements allow programmers to programming contract during the programming, as demonstrated by the material adverse impact on competition in the video terminate or modify their existing pendency of a complaint. Moreover, to distribution market resulting from withholding of agreements immediately on the effective the extent MVPDs are concerned about RSNs in San Diego and Philadelphia. For the date of the sunset and to instead enter the costs of pursuing a complaint, they reasons discussed herein, given market into exclusive contracts with cable may seek to join with other MVPDs in developments since 2007, we find no basis to assume that the anticompetitive impact of exclusive operators; or (ii) existing affiliation pursuing a complaint to share those arrangements always outweighs the procompetitive agreements require programmers to costs. An exclusive contract results in benefits. continue to provide their programming one cable operator having access to a

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66034 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

particular cable-affiliated programming prospect of a complaint alleging non- enforcement of exclusive contracts in network or networks in a given price discrimination in violation of the near term will be limited by the geographic area, to the exclusion of section 628(c)(2)(B).23 terms of existing affiliation agreements; every other MVPD competing in that 43. Fourth, DISH claims that (iii) even after the expiration of the geographic area. Accordingly, unlike a expiration of the exclusive contract exclusive contract prohibition, a selective refusal to license where a prohibition will result in increased satellite-delivered, cable-affiliated cable-affiliated programmer withholds programming costs for MVPDs by programmer’s refusal to license its programming from one rival MVPD, an providing cable-affiliated programmers content to a particular MVPD (such as exclusive contract impacts every MVPD with increased leverage in negotiations a small, rural, or new entrant MVPD), competing in the geographic area based on threats to provide a competing while simultaneously licensing its subject to the exclusive contract. For cable operator with exclusivity. As with content to other MVPDs competing in example, if a satellite-delivered, cable- certain other concerns mentioned above, the same geographic area, will continue affiliated RSN enters into an exclusive this concern is not specific to cable- to be a violation of the discrimination contract with an incumbent cable affiliated programming and argues provision in section 628(c)(2)(B), unless operator for each franchise area within against any type of exclusive the programmer can establish a a DMA, there are at least two DBS programming arrangement. In addition, ‘‘legitimate business reason’’ for the operators as well as potentially several DISH provides no evidence that non- conduct in response to a program access telcos and cable overbuilders that will cable-affiliated programmers have used complaint challenging the conduct; and be impacted by the exclusive contract such threats in programming (iv) if the expiration of the exclusive and that can seek to join as negotiations. Moreover, as mentioned contract prohibition results in harm to complainants in challenging the above, Congress specifically recognized consumers or competition on a broad contract. the procompetitive benefits of scale, we have statutory authority 41. Second, some commenters claim exclusivity in some cases. DISH offers pursuant to section 628(b) of the Act to that expiration of the exclusive contract no basis to conclude that this singular take remedial action by adopting rules, prohibition will hinder the deployment concern about increased programming including a prohibition on certain types of broadband. They note that the costs outweighs the potential of exclusive contracts involving cable- Commission in the 2010 Program procompetitive benefits of exclusivity affiliated programming, to address these Access Order explained that a wireline envisioned by Congress. concerns. firm’s decision to deploy broadband is 44. As the preceding analysis makes 45. We acknowledge that a case-by linked to its ability to offer video and clear, the benefits of our decision to case approach will result in certain that unfair acts involving terrestrially decline to extend the exclusive contract costs by requiring affected parties and delivered, cable-affiliated programming prohibition beyond its sunset date will the Commission to expend time and that impede the ability of MVPDs to outweigh any potential costs. We resources litigating and resolving provide video service can also impede believe that the case-by-case approach complaints. We find, however, that the ability of MVPDs to provide for considering exclusive contracts— certain factors will help to minimize broadband services. The Commission, which will allow the Commission to these costs. Below, we establish a however, did not address this concern consider the unique facts and rebuttable presumption that an by adopting a preemptive ban on circumstances of each case—will be exclusive contract involving a satellite- exclusive contracts and other allegedly sufficient to protect MVPDs, including delivered, cable-affiliated RSN has the unfair acts involving terrestrially purpose or effect set forth in section small, rural, and new entrant MVPDs, in delivered, cable-affiliated programming. 628(b). This presumption will reduce their efforts to compete and will Rather, the Commission adopted a case- costs by eliminating the need for minimize the alleged costs of allowing by-case approach for addressing these litigants and the Commission to the exclusive contract prohibition to allegedly unfair acts, which is precisely undertake repetitive examinations of sunset. We also expect that the the approach we rely on here. As in the Commission precedent and empirical following additional factors will further 2010 Program Access Order, we believe evidence on RSNs. In addition, as noted reduce these alleged costs: (i) A that a case-by-case process will protect above, the costs of pursuing a complaint significant percentage of satellite- MVPDs from the potential can be shared by joining with other delivered, cable-affiliated programming anticompetitive impact of exclusive MVPDs. With these additional measures contracts, including the impact on is subject until January 2018 to program to ease the burdens of litigating broadband deployment. access merger conditions adopted in the complaints, we believe that the costs of 42. Third, although some commenters Comcast/NBCU Order, which require the case-by-case approach are claim that expiration of the exclusive Comcast/NBCU to make these networks outweighed by the significant benefits of contract prohibition will have a available to competitors even after the our decision to decline to extend the particularly adverse impact on new expiration of the exclusive contract exclusive contract prohibition beyond 24 entrants in the video distribution prohibition; (ii) we expect that any its sunset date. market, including small and rural 23 MVPDs, we note that the expiration of Some commenters claim that the emergence e. Alternatives to Expiration of the since 2007 of distributors of video programming Exclusive Contract Prohibition the exclusive contract prohibition does over the Internet justifies extension of the exclusive not impact the ability of MVPDs to contract prohibition, claiming that vertically 46. In the NPRM, the Commission challenge selective refusals to license. integrated cable operators have an enhanced sought comment on two ways to relax Specifically, to the extent that these incentive to withhold programming from potential the exclusive contract prohibition as new sources of competition. Even assuming that concerns are based on fear that cable- these distributors qualify as MVPDs entitled to the alternatives to a complete expiration. affiliated programmers will single out benefits of the program access rules, however, this For the reasons discussed below, we certain MVPDs (such as a satellite type of selective refusal to license would be provider or a new entrant with a small addressed pursuant to the discrimination provision Comcast/NBCU Order concluding that the program in section 628(c)(2)(B). subscriber base) and withhold access merger conditions adopted therein were 24 As discussed above, our decision to decline to necessary to curb Comcast’s anticompetitive programming from them, as discussed extend the exclusive contract prohibition beyond its exclusionary program access strategies that might below, such programmers will face the sunset date does not impact our analysis in the result from the transaction.

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66035

decline to adopt these approaches. First, play in individual cases can dictate the 2. Case-by-Case Complaint Process the Commission sought comment on extent to which withholding of an RSN 50. For the reasons discussed above, establishing a process whereby a cable impacts competition, such as whether rather than continue the current operator or satellite-delivered, cable- the teams carried by the RSN are new approach of a preemptive prohibition on affiliated programmer can file a Petition and without an established following. exclusive contracts between cable for Sunset seeking to remove the Moreover, as discussed above, if we operators and satellite-delivered, cable- exclusive contract prohibition on a were to adopt a preemptive prohibition affiliated programmers, we will consider market-by-market basis based on the for exclusive contracts involving these exclusive contracts instead on a extent of competition in the market. satellite-delivered, cable-affiliated case-by-case basis in response to Both vertically integrated cable RSNs, the prohibition would impact complaints alleging a violation of operators and their MVPD competitors only 18 out of the 56 cable-affiliated section 628(b). Moreover, additional oppose this approach. Given the lack of RSNs available today. The remaining causes of action under section 628 will any record support for a market-by- cable-affiliated RSNs are either continue to apply after expiration of the market sunset process, we decline to terrestrially delivered (and thus subject exclusive contract prohibition, adopt it. to a case-by-case complaint process) or including claims alleging undue 47. Second, the Commission sought Comcast-controlled (and thus subject to influence under section 628(c)(2)(A) 27 comment on whether to retain an program access merger conditions that and claims alleging discrimination exclusive contract prohibition for require Comcast to make these networks under section 628(c)(2)(B). satellite-delivered, cable-affiliated RSNs available to competitors).25 We find no and other satellite-delivered, cable- basis in the record to single out these 18 a. Section 628(b) Complaints affiliated ‘‘must have’’ programming. In RSNs for a preemptive prohibition on (i) Procedures for Challenging Exclusive the 2010 Program Access Order, the exclusive contracts. To be sure, as Contracts Involving Satellite-Delivered, Commission rejected suggestions that it discussed below, we find, as the Cable-Affiliated Programming Pursuant adopt a preemptive prohibition on Commission found in the 2010 Program to Section 628(b) exclusive contracts involving Access Order, that the weight of the terrestrially delivered, cable-affiliated 51. The Commission in the 2010 existing precedent and categorical Program Access Order adopted a case- RSNs. The Commission explained that, evidence concerning RSNs is sufficient previously in the Adelphia Order, it by-case complaint process to address to establish a rebuttable presumption unfair acts involving terrestrially analyzed the impact of the withholding that an exclusive contract involving a of three terrestrially delivered, cable- delivered, cable-affiliated programming cable-affiliated RSN has the purpose or that allegedly violate section 628(b). As affiliated RSNs on the market shares of effect prohibited in section 628(b) of the DBS operators. While the Commission detailed below, we are extending these Act. But, consistent with our previous rules and policies to section 628(b) found a significant impact on predicted holding, we continue to believe that, DBS market share in two cases, it found complaints challenging exclusive ‘‘[r]ather than adopting a general contracts involving satellite-delivered, no statistically significant impact in a conclusion about the effect of these third case. While the Commission found cable-affiliated programming. unfair acts, * * * case-by-case 52. Under the case-by-case process for this evidence sufficient to support a consideration of the impact on rebuttable presumption of ‘‘significant complaints alleging that an exclusive competition in the video distribution contract involving satellite-delivered, hindrance,’’ it rejected the claim that the market is necessary to address whether ‘‘empirical evidence concerning RSNs is cable-affiliated programming violates unfair practices significantly hinder so uniform that it supports a per se rule section 628(b), the complainant will competition in particular cases.’’ that an unfair act involving a have the burden to establish that the 49. We also decline to retain a terrestrially delivered, cable-affiliated exclusive contract at issue is ‘‘unfair’’ preemptive prohibition for any other RSN always significantly hinders or based on the facts and circumstances categories of satellite-delivered, cable- prevents the MVPD from providing presented. The Commission has held affiliated programming. Several satellite cable programming or satellite previously that determining whether commenters offer examples of networks broadcast programming.’’ challenged conduct is ‘‘unfair’’ requires 48. Based on the record here, we find and programming that they consider to ‘‘balancing the anticompetitive harms of no basis to reach a different conclusion be ‘‘must have’’ programming. These the challenged conduct against the for satellite-delivered, cable-affiliated commenters, however, fail to provide procompetitive benefits.’’ In addition, RSNs. We note that, since the 2010 empirical data supporting their the complainant will have the burden of Program Access Order, the Commission positions, nor do they offer a rational proving that the exclusive contract has has found that the withholding of two and workable definition of such the ‘‘purpose or effect’’ of ‘‘significantly additional terrestrially delivered, cable- programming that can be applied hindering or preventing’’ the affiliated RSNs (MSG HD and MSG+ objectively. Accordingly, we conclude HD) ‘‘significantly hindered’’ two that there is insufficient evidence in the read to state or imply that a complainant could not MVPDs (Verizon and AT&T). record to support retention of a show that withholding of certain programming Commenters also put forth surveys and preemptive prohibition for any results in significant hindrance under section 628(b) based on the facts presented in a complaint other evidence, including evidence categories of satellite-delivered, cable- 26 proceeding. previously submitted in program access affiliated programming. 27 The NPRM sought comment on whether, in the complaint proceedings, to support their event of the expiration of the exclusive contract claims regarding the uniform nature of 25 As discussed above, our decision to decline to prohibition, a cable operator can ‘‘unduly extend the exclusive contract prohibition beyond its influence’’ a satellite-delivered, cable-affiliated RSNs as critical for competition. But sunset date does not impact our analysis in the programmer to enter into an exclusive contract only this additional evidence fails to refute Comcast/NBCU Order concluding that the program if the underlying contract violates section 628(b) or the Commission’s previous findings that access merger conditions adopted therein were section 628(c)(2)(B). Because the record on this withholding of a cable-affiliated RSN necessary to curb Comcast’s anticompetitive issue is not well developed, we decline to address exclusionary program access strategies that might this issue at this time as a rulemaking matter, but does not always have a significant result from the transaction. leave open the possibility to consider such claims competitive impact. As the Adelphia 26 This lack of record evidence supporting in the context of an appropriate adjudicatory Order demonstrates, unique factors at retention of a preemptive prohibition should not be matter.

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66036 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

complainant from providing satellite the withheld programming.29 We will some markets.31 Accordingly, we cable programming or satellite broadcast assess the reliability of any evidence believe that the record justifies the programming. As noted in the 2010 presented, such as the regression establishment of a rebuttable Program Access Order, it is not our analysis, survey data, or other empirical presumption that an exclusive contract intent to remove incentives for MVPDs data, on a case-by-case basis. The involving a satellite-delivered, cable- to improve their program offerings in discovery process will enable parties to affiliated RSN has the purpose or effect order to differentiate themselves in the obtain additional evidence to assist in set forth in section 628(b).32 marketplace as long as their efforts to do making these showings. 55. For purposes of this rebuttable so do not have the purpose or effect of 54. We also establish a rebuttable presumption, we will define the term significantly hindering or preventing an presumption that an exclusive contract ‘‘RSN’’ in the same way the Commission MVPD from providing satellite cable involving a satellite-delivered, cable- defined that term in the 2010 Program programming or satellite broadcast affiliated RSN has the ‘‘purpose or Access Order and in previous merger programming. In this regard, as effect’’ of ‘‘significantly hindering or proceedings that have adopted program previously noted in the 2010 Program preventing’’ the complainant from access conditions: Access Order, it is highly unlikely that providing satellite cable programming Any non-broadcast video programming an unfair act involving local news and or satellite broadcast programming, as service that (1) provides live or same-day local community or educational set forth in section 628(b). The record in distribution within a limited geographic programming will have the prescribed this proceeding supports the conclusion region of sporting events of a sports team that that RSNs are non-replicable and, in is a member of Major League Baseball, the purpose or effect under section 628(b). National Basketball Association, the National As the Commission noted, local news many cases, critically important to consumers. We note that in the 2010 Football League, the National Hockey League, and local community or educational NASCAR, NCAA Division I Football, NCAA Program Access Order the Commission programming is readily replicable by Division I Basketball, Liga de Be´isbol adopted a similar rebuttable competitive MVPDs and exclusivity has Profesional de Puerto Rico, Baloncesto presumption for terrestrially delivered, played an important role in the growth Superior Nacional de Puerto Rico, Liga cable-affiliated RSNs, relying on Mayor de Fu´ tbol Nacional de Puerto Rico, and viability of local cable news Commission precedent and record and the Puerto Rico Islanders of the United networks. evidence that demonstrated that RSNs Soccer League’s First Division, and (2) in any 53. The Commission has not adopted are likely to be both non-replicable and year, carries a minimum of either 100 hours specific evidentiary requirements with highly valued by consumers. The DC of programming that meets the criteria of respect to proof that the defendant’s subheading 1, or 10% of the regular season Circuit upheld the Commission’s games of at least one sports team that meets alleged activities have the ‘‘purpose or decision to establish this rebuttable the criteria of subheading 1. effect’’ of ‘‘significantly hindering or presumption under both First A complainant will have the burden of preventing’’ the complainant from Amendment and APA review. The same showing that the network at issue providing satellite cable programming analysis and findings from the 2010 or satellite broadcast programming. satisfies this definition. Program Access Order supporting a 56. Given consumers’ growing Rather, the evidence required to satisfy rebuttable presumption for terrestrially preference for HD programming, we will this burden will vary based on the facts delivered, cable-affiliated RSNs apply analyze the HD version of a network and circumstances of each case and may equally to satellite-delivered, cable- separately from the standard definition depend on, among other things, whether affiliated RSNs. Indeed, commenters in (‘‘SD’’) version of the network for the complainant is a new entrant or an this proceeding have not provided any purposes of determining whether an established competitor and whether the evidence or suggested any basis for exclusive contract involving satellite- programming the complainant seeks to having a rebuttable presumption of delivered, cable-affiliated programming access is new or existing ‘‘significant hindrance’’ for terrestrially has the purpose or effect set forth in programming.28 Illustrative examples of delivered, cable-affiliated RSNs, but not section 628(b). The Commission has evidence that a complainant may for satellite-delivered, cable-affiliated 30 recognized that consumers are provide include: (i) An appropriately RSNs. Moreover, real-world evidence increasingly demanding HD crafted regression analysis that of withholding of RSNs, as well as the programming and do not view the SD estimates what the complainant’s data in our record showing the increase version of a particular network to be an market share in the MVPD market of regional clusters, demonstrate that acceptable substitute for the HD version would be if it had access to the cable-affiliated programmers may still due to the different technical programming and how that compares to have an incentive to enter into exclusive characteristics and sometimes different its actual market share; or (ii) contracts for satellite-delivered RSNs in content of these versions. The DC statistically reliable survey data Circuit upheld under both First indicating the likelihood that customers 29 We recognize that not all potential complainants will have the resources to perform a Amendment and APA review the would choose not to subscribe to or not Commission’s decision in the 2010 to switch to an MVPD that did not carry regression analysis or market survey and reiterate that these examples are illustrative only. Program Access Order to analyze the 30 To be sure, some vertically integrated cable HD and SD versions of a network 28 Comcast maintains that section 628(b) cannot operators and cable-affiliated programmers claim separately when evaluating section be read to mean that every exclusive contract that there is no basis to presume that exclusive involving satellite-delivered, cable-affiliated contracts for any RSNs significantly hinder MVPDs programming would violate the ‘‘hinder from providing a competing video service, noting 31 See supra paragraphs 18–20. significantly or prevent’’ prong of section 628(b) that certain MVPDs do not carry one or more RSNs 32 A defendant may overcome this presumption because the contract would ‘‘prevent’’ an MVPD in certain markets and that DBS operators’ by establishing that the exclusive contract does not from providing the particular satellite-delivered collective market share in Philadelphia (where they have the purpose or effect of significantly hindering programming subject to the exclusive contract. We do not carry a Comcast-affiliated RSN) is higher or preventing the MVPD from providing satellite agree. As the Commission and the DC Circuit have than in some other markets where DBS operators cable programming or satellite broadcast explained previously, the ‘‘hinder significantly or carry some or all of the applicable RSNs. We find programming. As the Commission and the DC prevent’’ prong of section 628(b) focuses on how the that this evidence fails to refute the existing Circuit have explained, ‘‘a rebuttable presumption withholding at issue impacts the MVPD’s ability to precedent and evidence concerning the importance does not shift the burden of proof to defendants; provide a competing video service, not particular of RSNs, including the rigorous empirical analysis rather, it requires defendants to come forward with video programming. set forth in the Adelphia Order. evidence that rebuts or meets the presumption.’’

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66037

628(b) complaints involving terrestrially 20 days after service, the Commission establishes that a selective refusal to delivered programming. The same allows a defendant to a complaint license is a violation of the analysis and findings from the 2010 involving terrestrially delivered discrimination provision in section Program Access Order pertaining to the programming 45 days after service to 628(c)(2)(B), unless the programmer can distinction between HD and SD versions file an answer. The Commission establish a ‘‘legitimate business reason’’ of a network apply here. Thus, in determined that additional time is for the conduct. Thus, if a satellite- considering a complaint regarding an appropriate because, unlike complaints delivered, cable-affiliated programmer exclusive contract involving a satellite- alleging a violation of the prohibitions discriminates against an MVPD in this delivered, cable-affiliated HD network, set forth in section 628(c), a complaint manner, the expiration of the exclusive the mere fact that the complainant offers alleging a violation of section 628(b) contract prohibition does not limit the the SD version of the network to entails additional factual inquiries, existing right of an MVPD to file a subscribers will not alone be sufficient including whether the allegedly ‘‘unfair complaint challenging the selective to refute a claim under section 628(b). act’’ at issue has the purpose or effect refusal to license as a form of non-price In cases involving an RSN, there will be set forth in section 628(b). Although one a rebuttable presumption that an discrimination in violation of section commenter expresses concern that a 45- 36 exclusive contract involving the HD day answer period will lead to delays in 628(c)(2)(B). version of the RSN results in resolving complaints, we conclude that 61. As described in the NPRM, an ‘‘significant hindrance’’ even if the the same 45-day answer period should exclusive ‘‘arrangement’’ exists when a complainant offers the SD version of the apply in all complaint proceedings satellite-delivered, cable-affiliated RSN to subscribers. alleging a violation of section 628(b) programmer unilaterally refuses to 57. We decline to establish a because all such complaints will license its programming to all MVPDs rebuttable presumption of ‘‘significant involve the factual issue of whether the competing in a geographic area except hindrance’’ for any categories of challenged conduct has the purpose or for one (such as its affiliated cable satellite-delivered, cable-affiliated effect set forth in section 628(b). To the operator), without any exclusive programming other than RSNs.33 extent a complaint alleges a violation of contract with the MVPD. While the Several commenters offer examples of both section 628(b) and section 628(c), networks and programming that they expiration of the exclusive contract the longer (45-day) answer period will prohibition in section 628(c)(2)(D) will consider to be ‘‘must have’’ apply. programming. These commenters, generally permit ‘‘exclusive contracts’’ however, fail to provide empirical data b. Section 628(c)(2)(B) Discrimination between cable operators and satellite- supporting their positions, nor do they Complaints delivered, cable-affiliated programmers,37 it does not permit the offer a rational and workable definition 59. Price and non-price of such programming that can be discrimination complaints under unilateral action of the programmer applied objectively. Accordingly, we section 628(c)(2)(B) of the Act will also described here, unless the programmer conclude that there is insufficient continue to protect MVPDs in their can establish a ‘‘legitimate business evidence in the record to support efforts to compete following expiration reason’’ for the conduct. Accordingly, adoption of a rebuttable presumption for of the exclusive contract prohibition. the expiration of the exclusive contract any other categories of satellite- With respect to non-price prohibition does not limit the existing delivered, cable-affiliated discrimination, the sunset of the right of an MVPD to challenge the 34 programming. exclusive contract prohibition does not unilateral action of a satellite-delivered, (ii) 45-Day Answer Period impact the ability of MVPDs to cable-affiliated programmer to refuse to license its programming to all MVPDs in 58. We amend our rules to provide for challenge selective refusals to license the same 45-day answer period for all under section 628(c)(2)(B), which does a market except for one as a form of complaints alleging a violation of not contain a sunset provision. In non-price discrimination in violation of 38 section 628(b), regardless of whether the addition, the statute and our precedent section 628(c)(2)(B). complaint involves satellite-delivered or provide that an exclusive terrestrially delivered programming. ‘‘arrangement’’ (as opposed to an 36 Complaints alleging a violation of section While our current program access exclusive ‘‘contract’’) may violate 628(c)(2)(B) do not require a showing of harm to the 35 complainant. procedural rules require a defendant to section 628(c)(2)(B) of the Act. 37 Section 628(c)(2)(D) of the Act prohibits a complaint involving satellite-delivered 60. As described in the NPRM, a selective refusal to license occurs when ‘‘exclusive contracts * * * between a cable programming to file an answer within operator and a satellite cable programming vendor a satellite-delivered, cable-affiliated in which a cable operator has an attributable 33 The Commission also sought comment in the programmer singles out a particular interest.’’ 47 U.S.C. 548(c)(2)(D). This language NPRM on whether to establish a rebuttable MVPD (such as a satellite provider or a presumes that an agreement exists between the presumption that, once a complainant succeeds in small, rural, or new entrant MVPD) for cable operator and the satellite-delivered, cable- demonstrating an exclusive contract involving a differential treatment by refusing to affiliated programmer that would provide the cable satellite-delivered, cable-affiliated programming operator with exclusivity. license its content to the MVPD while network violates section 628(b) or section 38 This scenario assumes that a satellite-delivered, 628(c)(2)(B), any other exclusive contract involving simultaneously licensing its content to cable-affiliated programmer licenses its the same network violates section 628(b) or section other MVPDs competing in the same programming to one MVPD in a geographic area, to 628(c)(2)(B). While we have received a few ex parte the exclusion of all other MVPDs competing in that submissions on this issue, we do not believe the geographic area. Commission precedent record on this issue is sufficiently developed and geographic area. Conversely, as discussed above, a thus decline to adopt this rebuttable presumption 35 The Commission also sought comment in the selective refusal to license assumes that a satellite- at this time. NPRM on whether an exclusive contract can be delivered, cable-affiliated programmer licenses its 34 This lack of record evidence supporting a challenged post-sunset as an unreasonable refusal programming to more than one MVPD competing in rebuttable presumption for this programming to license in violation of section 628(c)(2)(B). The a geographic area, but refuses to license its should not be read to state or imply that a record on this issue, however, is not well programming to one or more other MVPDs complainant could not show that withholding of developed. Accordingly, we defer consideration of competing in the same geographic area. In either such programming results in significant hindrance this issue. We will instead assess this issue based scenario, an aggrieved MVPD can challenge this under section 628(b) based on the facts presented on the facts presented in an individual conduct as a form of non-price discrimination in in a complaint proceeding. adjudication. violation of section 628(c)(2)(B).

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66038 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

c. Deadline for Media Bureau Action on allow for the Media Bureau to review may be instances where this Complaints Alleging a Denial of the record and draft and release a programming is necessary for Programming decision while also providing for the competition and has no good 62. We adopt a six-month deadline ‘‘expedited review’’ required by substitutes. In rejecting a First (calculated from the date of filing of the Congress and ensuring fairness to all Amendment challenge to the case-by- 41 complaint) for the Media Bureau to act parties. case approach adopted by the on a complaint alleging a denial of d. Petitions for Exclusivity Commission for considering unfair acts programming. This deadline will apply involving terrestrially delivered, cable- 64. We retain our exclusivity petition regardless of whether the programming affiliated programming, the D.C. Circuit process, whereby a cable operator or subject to the exclusive contract is in Cablevision II stated that ‘‘[t]he satellite-delivered, cable-affiliated terrestrially delivered or satellite- Commission has no obligation to programmer may file a Petition for delivered. As noted above, some establish that vertically integrated cable Exclusivity seeking a Commission commenters claim that a case-by-case companies retain a stranglehold on ruling that an exclusive contract complaint process is burdensome and competition nationally or that all involving satellite-delivered, cable- time-consuming. We believe that withholding of terrestrially delivered affiliated programming serves the public codifying a specific deadline in our programming negatively affects interest. To be sure, post-sunset, there is rules for the Media Bureau to act on a competition.’’ Rather, the Commission no requirement for a cable operator or complaint alleging a denial of ‘‘need only show that vertically a satellite-delivered, cable-affiliated programming will help to resolve integrated cable operators remain programmer to seek prior approval for disputes quickly and efficiently, provide dominant in some video distribution an exclusive contract. However, should certainty to all parties to the complaint, markets, that the withholding of highly a cable operator or satellite-delivered, and fulfill our statutory mandate to desirable terrestrially delivered cable cable-affiliated programmer elect to ‘‘provide for expedited review’’ of programming, like RSNs, inhibits pursue a Petition for Exclusivity, grant program access complaints. competition in those markets, and that 63. A complainant alleging a denial of of such a petition will immunize the providing other MVPDs access to such programming may bring a claim contract from potential complaints programming will ‘promot[e] * * * fair pursuant to section 628(b) or section alleging a violation of section competition in the video marketplace.’’’ 628(c) or both. For complaints brought 628(c)(2)(B), as required by the terms of Given the clear evidence in the record pursuant to section 628(b), an initial 60- section 628(c)(2)(B)(iv). that cable operators remain dominant in day pleading cycle applies. For e. First Amendment some regional markets and in some complaints brought pursuant to section 65. We conclude that addressing cases may enter into exclusive contracts 628(c), an initial 35-day pleading cycle for satellite-delivered, cable-affiliated 39 complaints challenging exclusive applies. After the close of the pleading contracts for satellite-delivered, cable- programming that is necessary for cycle, the parties may elect to engage in affiliated programming on a case-by- competition and has no good discovery and then file post-discovery substitutes, we find that the case-by- 40 case basis comports with the First pleadings. Although the length of the Amendment. As explained below, the case approach adopted in this Order discovery process will necessarily vary case-by-case process we adopt for serves an important governmental on a case-by-case basis, given our exclusive contracts involving satellite- interest. experience in other complaint delivered, cable-affiliated programming 67. Our decision to address exclusive proceedings, we expect that parties will satisfies intermediate scrutiny. contracts involving satellite-delivered, agree on the scope of discovery and 66. Although we conclude herein that cable-affiliated programming on a case- complete discovery and post-discovery changes in the video programming by-case basis is not based on briefing within approximately 60 days. market warrant the expiration of the programming content but rather is When combined with the initial 60-day broad, prophylactic exclusive contract intended to address the impact on pleading cycle (in a section 628(b) prohibition, regulation of exclusive competition in the video distribution complaint) or 35-day pleading cycle (in contracts involving satellite-delivered, market. Because the regulations we a section 628(c) complaint), this would cable-affiliated programming on a case- adopt herein respond to concerns about provide the Media Bureau with the by-case basis is still necessary to competition, not content, they are complete record on which to base its preserve and promote competition and content-neutral and unrelated to the decision approximately four months (in diversity in the video distribution suppression of free speech. Similarly, a section 628(b) complaint) or three market. Cable operators continue to our decision to adopt a rebuttable months (in a section 628(c) complaint) control 57.4 percent of MVPD presumption that an exclusive contract after the filing of the complaint. Thus, subscribers nationwide and have an involving a satellite-delivered, cable- based on these assumptions, the Media overwhelming share of subscribers in affiliated RSN has the prohibited Bureau would have approximately two many regional markets, in the 80 purpose or effect set forth in section months (in a section 628(b) denial of percent range in some cases. Moreover, 628(b) is based not on content but on programming complaint) or three there is evidence that cable prices have the existing precedent and record months (in a section 628(c) denial of risen in excess of inflation. In addition, evidence before us regarding the programming complaint) to reach a as discussed above, the record indicates importance of RSNs for competition. As decision once the record closes. We that vertically integrated cable operators the DC Circuit explained in upholding believe this timeframe is sufficient to may still have an incentive and ability a similar rebuttable presumption for to enter into exclusive contracts for terrestrially delivered, cable-affiliated 39 As stated above, to the extent a complaint satellite-delivered, cable-affiliated alleges a violation of both section 628(b) and RSNs, the ‘‘clear and undisputed section 628(c), the longer (45-day) answer period programming in some cases, and there evidence shows that the Commission will apply. established presumptions for RSN 40 In light of the expedited timeframe for the 41 We will allow the Media Bureau to extend programming due to that programming’s Media Bureau’s decision adopted herein, we these deadlines under exceptional circumstances, emphasize that complainants should not raise new such as where the parties jointly agree to toll the economic characteristics, not to its matters in a reply. deadline. communicative impact.’’

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66039

68. Finally, we conclude that any significant impact of RSN programming satellite-delivered, common carrier- incidental restriction on speech which withholding, the Commission’s affiliated programmer and a common may result from our decision to adopt a presumptions represent a narrowly carrier or its affiliate that provides video case-by-case process to address tailored effort to further the important programming by any means directly to exclusive contracts involving satellite- governmental interest of increasing a subscriber will expire. Similarly, the delivered, cable-affiliated programming competition in video programming.’’ exclusive contract prohibition in served ‘‘is no greater than is essential to the areas will expire as to exclusive C. Subdistribution Agreements furtherance’’ of Congress’ interest in contracts (i) between a satellite- promoting competition in the video 69. Consistent with our decision to delivered, OVS-affiliated programmer distribution market. The court in decline to extend the exclusive contract and an OVS or its affiliate that provides Cablevision II explained that, ‘‘[b]y prohibition beyond its sunset date, we video programming on its OVS; and (ii) imposing liability only when eliminate the restrictions on exclusive between a satellite-delivered, cable- complainants demonstrate that a subdistribution agreements in served affiliated programmer and an OVS video company’s unfair act has the ‘purpose or areas between cable operators and programming provider in which a cable effect’ of ‘hinder[ing] significantly or satellite-delivered, cable-affiliated operator has an attributable interest. * * * prevent[ing] the provision of programmers. The Commission’s rules Instead, we will rely on the protections satellite programming, * * * the define a subdistribution agreement as provided by the case-by-case complaint Commission’s terrestrial programming ‘‘an arrangement by which a local cable process described above. We also rules specifically target activities where operator is given the right by a satellite conform the rules pertaining to the governmental interest is greatest.’’ cable programming vendor or a satellite exclusive subdistribution agreements Similarly, the tailored case-by-case broadcast programming vendor to involving common carriers and OVS to process for addressing exclusive distribute the vendor’s programming to the rules adopted herein for cable contracts involving satellite-delivered, competing multichannel video operators by eliminating the restrictions cable-affiliated programming targets programming distributors.’’ Based on on such agreements in served areas. In activities where the governmental the exclusive contract prohibition, the addition, as proposed in the NPRM, we interest is greatest by limiting liability to Commission adopted certain restrictions conform § 76.1507 as it pertains to cases where a complainant on exclusive subdistribution agreements exclusive subdistribution agreements demonstrates that an exclusive contract in the 1993 Program Access Order to involving OVS in unserved areas to the is an ‘‘unfair act’’ that has the ‘‘purpose ‘‘address any incentives for a amendments previously adopted in the or effect’’ of ‘‘significantly hindering or subdistributor to refuse to sell to a 1994 Program Access Order. preventing’’ the provision of satellite competing MVPD that may be inherent in such rights’’ and to ensure E. Liberty Media Order Merger programming in violation of section Conditions 628(b).42 Moreover, with respect to the ‘‘appropriate safeguards to limit the rebuttable presumption for satellite- potential for anticompetitive behavior.’’ 71. We modify the exclusivity delivered, cable-affiliated RSNs adopted Because we have concluded that the conditions adopted in the Liberty Media herein, the DC Circuit has explained exclusive contract prohibition in served Order, which prohibit certain regarding a similar rebuttable areas is no longer necessary to preserve programmers affiliated with Liberty presumption for terrestrially delivered, and protect competition and diversity in Media and DIRECTV from entering into cable-affiliated RSNs that ‘‘[g]iven the video distribution market, we exclusive contracts. DIRECTV, the only record evidence demonstrating the conclude that the restrictions on commenter to address this issue, states exclusive subdistribution agreements in that if the Commission declines to 42 Some vertically integrated cable operators served areas are likewise no longer extend the exclusive contract suggest that the program access rules are necessary and we accordingly eliminate prohibition beyond its sunset date, underinclusive because they apply to cable- them. In addition, as proposed in the conforming modifications to the affiliated programmers but not other MVPD- NPRM, we conform § 76.1002(c)(3) as it exclusivity conditions in the Liberty affiliated or unaffiliated programmers. As an initial Media Order would be appropriate.43 matter, we note that the issue of whether to extend pertains to exclusive subdistribution certain program access rules to programmers agreements in unserved areas to the We agree. The merger conditions affiliated with non-cable MVPDs is pending before amendments previously adopted in the adopted in the Liberty Media Order the Commission. With respect to unaffiliated 1994 Program Access Order. provide that ‘‘if the program access rules programmers, the Commission in the 2007 are modified these commitments shall Extension Order found no record evidence to D. Common Carriers and Open Video be modified, as the Commission deems conclude that exclusive arrangements involving Systems unaffiliated programmers have harmed competition appropriate, to conform to any revised in the video distribution market, and commenters 70. The Commission’s rules contain rules adopted by the Commission.’’ 44 offer no evidence in the record of this proceeding provisions pertaining to exclusive Consistent with our decision not to that would cause us to revisit this conclusion. In any event, the DC Circuit in Cablevision II rejected contracts involving common carriers or extend the exclusive contract claims that the program access rules were OVS and their affiliated programmers in underinclusive, explaining that these rules ‘‘focus served areas that mirror the rules 43 The Commission also sought comment on the on vertically integrated cable companies due to applicable to exclusive contracts impact of an expiration of the exclusive contract their ‘‘special characteristics’’ and their unique involving cable operators and their prohibition on merger conditions applicable to ability to impact competition.’’ Cablevision II, 649 TWC adopted in the Adelphia Order. These F.3d at 713 (citing Time Warner, 93 F.3d at 978 affiliated programmers in served areas. conditions, however, expired in July 2012, after (quoting Turner Broad. Sys., 512 U.S. at 660–61, We conclude that the amendments release of the NPRM and before adoption of this 114 S.Ct. 2445)). Moreover, the court explained that adopted herein to the rules pertaining to Order. ‘‘[w]ere the Commission to persist in regulating exclusive contracts between cable 44 In contrast to the Liberty Media Order, there is only the conduct of cable operators in the face of no provision in the Comcast/NBCU Order requiring evidence that exclusive dealing arrangements operators and satellite-delivered, cable- the conditions adopted therein to be modified to involving other MVPDs have similar negative affiliated programmers in served areas conform to changes the Commission makes to the impacts on competition, then our analysis would will apply equally to common carriers program access rules. See Comcast/NBCU Order, 26 necessarily change. But nothing in the present and OVS. Thus, with respect to common FCC Rcd at 4381, Appendix A, Condition XX). record suggests such unjustified discrimination.’’ Accordingly, the conditions adopted in the Id. The same conclusion applies based on the carriers, the prohibition on exclusive Comcast/NBCU Order will not be affected by the record in this proceeding. contracts in served areas between a rule changes adopted in this proceeding.

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66040 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

prohibition beyond its sunset date, we violating section 628(b) of the Act and prohibited from access to confidential modify the exclusivity conditions in the § 76.1001(a) of the Commission’s rules.48 material. Liberty Media Order to provide that 72. To the extent that any 74. Fox filed a petition for exclusive contracts will not be subject to programming covered under such an reconsideration of the 2007 Extension a preemptive prohibition. No exclusive contract is cable-affiliated, the Order, arguing that the Commission’s commenter opposed this proposal as set exclusive contract may also be assessed decision to permit party-to-party forth in the NPRM. Because our rules on a case-by-case basis in response to a discovery constituted an unexplained will allow an exclusive contract program access complaint alleging a departure from agency policy in involving cable-affiliated programming violation of section 628(b) or, contravention of the Administrative to be challenged on a case-by-case basis potentially, section 628(c)(2)(B) of the Procedure Act. AT&T and DISH filed post-sunset, however, we further modify Act.49 oppositions to Fox’s petition for these conditions to provide that an reconsideration, and Time Warner Inc. III. Order on Reconsideration in MB filed a reply in support of Fox’s petition. exclusive contract involving Docket No. 07–29 programming covered by these B. Discussion A. Background conditions may be challenged as 75. We reject Fox’s argument that the violating section 628(b) of the Act and 73. For the reasons discussed below, Commission failed to adequately § 76.1001(a) of the Commission’s we grant in part and deny in part a explain its decision to permit party-to- rules.45 Specifically, we modify Petition for Reconsideration of the 2007 party discovery. Fox asserts that the Conditions III.1 and III.2 in the Liberty Extension Order filed by Fox Commission departed without Media Order to state as follows: Entertainment Group, Inc. (‘‘Fox’’) explanation from the 1998 Program pertaining to the Commission’s program Condition III.1: Liberty Media shall Access Order, where the Commission continue to make its existing or future access discovery procedures. In the declined to permit party-directed national and regional programming services 2007 Extension Order, the Commission discovery out of concern that it could available to all MVPDs on nondiscriminatory revised these procedures to ‘‘ensure that result in disputes over the production of terms and conditions. Notwithstanding the the Commission has the information documents and lengthen resolution foregoing, Liberty Media may enter into an necessary to expeditiously resolve times for program access complaints. exclusive contract for any of these services program access complaints.’’ The We disagree. The Commission carefully with any MVPD, provided that the exclusive Commission codified its requirement weighed commenters’ arguments in contract may be challenged as violating that a respondent must attach to its support of and in opposition to section 628(b) of the Act and § 76.1001(a) of answer all documents that it expressly expanded discovery and concluded that the Commission’s rules.46 references or relies upon in defending a ‘‘expanded discovery will improve the Condition III.2: DIRECTV may enter into an program access claim. In addition, the quality and efficiency of the exclusive contract with any Affiliated Commission expanded the discovery Commission’s resolution of program Program Rights Holder,47 provided that the procedures to permit party-to-party access complaints.’’ In this regard, a exclusive contract may be challenged as discovery. Under the expanded number of non-incumbent MVPDs discovery procedures, parties to a raised concerns that documents 45 As discussed above, we defer consideration of program access complaint may serve necessary for complainants to establish whether an exclusive contract can be challenged requests for discovery directly on discrimination, including programmers’ post-sunset as an unreasonable refusal to license in opposing parties and file a copy of the carriage contracts, are not made violation of section 628(c)(2)(B). We will instead request with the Commission. The available in complaint proceedings. The assess this issue based on the facts presented in an individual adjudication. We also note that ‘‘Liberty respondent has the opportunity to object Commission agreed with these Media RSNs,’’ as defined in the Liberty Media to any request for documents that are commenters ‘‘that the availability of Order, will continue to be subject to the arbitration not in its control or relevant to the programmers’ carriage contracts, subject condition set forth in the Liberty Media Order until dispute, and the obligation to produce to confidential treatment, [is] essential February 27, 2014, unless the arbitration condition is modified earlier in response to a petition. the documents is suspended until the for determining whether the 46 See Revision of the Commission’s Program Commission rules on the objection. programmer is discriminating in price, Access Rules, et al., Report and Order and Order on Recognizing that the expanded terms and conditions.’’ The Commission Reconsideration, FCC 12–123, at paragraphs 72–73 discovery approach requires the thus found that ‘‘it would be (2012) (‘‘2012 Program Access Order’’). The term unreasonable for a respondent not to ‘‘Liberty Media’’ as used in this Appendix includes submission of confidential and any entity or program rights holder in which competitively sensitive information, the produce all the documents requested by Liberty Media or John Malone holds an attributable Commission also revised the standard the complainant or ordered by the interest. Thus, the term ‘‘Liberty Media’’ includes protective order for use in program Commission, provided that such Discovery Communications. Liberty Media and documents are in its control and DIRECTV are prohibited from acquiring an access complaint proceedings to ensure attributable interest in any non-broadcast national that confidential business information is relevant to the dispute.’’ As DISH notes or regional programming service while these not improperly used for competitive in its opposition, the record in this conditions are in effect if the programming service business purposes. Specifically, the proceeding reflected ongoing concerns is not obligated to abide by such conditions. Commission modified the language of from MVPDs about the availability of 47 The term ‘‘Affiliated Program Rights Holder’’ includes (i) any program rights holder in which the protective order to reflect that any relevant documents. Moreover, DISH Liberty Media or DIRECTV holds a non-controlling counsel or other persons, including in- states that the Commission also had ‘‘an ‘attributable interest’ (as determined by the FCC’s house counsel, that are involved in additional ten years of experience with program access attribution rules) or in which any ‘‘competitive decision-making’’ are the program access complaint process officer or director of Liberty Media, DIRECTV, or of any other entity controlled by John Malone holds and discovery rules from which to an attributable interest; and (ii) any program rights 48 See 2012 Program Access Order, FCC 12–123, determine that the existing discovery holder in which an entity or person that holds an at paragraphs 72–73. rules were insufficient.’’ Accordingly, attributable interest also holds a non-controlling 49 In addition, regardless of whether the the Commission reasonably concluded attributable interest in Liberty Media or DIRECTV, programming is cable-affiliated, the Commission provided that Liberty Media or DIRECTV has actual has not foreclosed a challenge under section 628(b) that party-directed discovery will knowledge of such entity’s or person’s attributable to an exclusive contract with a cable operator facilitate the expeditious resolution of interest in such program rights holder. involving non-cable-affiliated programming. program access complaints by ensuring

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66041

that all relevant documents are available issues on their own, the Commission days’ notice to the submitting party to Commission staff and the parties, has quickly resolved these issues. prior to accessing any protected without the need for the Commission to 78. Fox also argues that the expanded documents to provide the submitting take action to order the production of discovery process fails to adequately party the opportunity to object. If the such documents. The modifications to protect highly confidential and submitting party objects, the individual the discovery rules were thus competitively sensitive documents and will not be provided access to the appropriate and adequately supported. urges the Commission, if it continues to protected documents until the 76. Contrary to Fox’s arguments, the allow party-directed discovery, to revise Commission rules on the objection. We Commission also considered concerns the standard protective order to provide decline, however, to modify the raised by commenters that party- more stringent protection of highly standard protective order at this time to controlled discovery could give rise to confidential information. Fox permit parties to limit access to certain overly broad discovery requests and acknowledges that the Commission ‘‘highly confidential’’ information to ‘‘fishing expeditions’’ for confidential revised the standard protective order to outside counsel only. Whether certain and competitively-sensitive prohibit access to confidential categories of confidential information information, which could lead to information to individuals who are require an enhanced level of protection, disputes over discovery and prolong involved in competitive decision- and therefore should be restricted to resolution of program access making, but asserts that there is complaints. The Commission adopted currently no mechanism for ensuring outside counsel, depends on the facts several safeguards to address these compliance with this requirement in presented in an individual adjudication. concerns. For example, the Commission advance. According to Fox, any ex post Moreover, because protective orders determined that parties should have the facto sanction imposed by the commonly restrict copying of only a opportunity to object to any request for Commission for violating a protective subset of ‘‘highly confidential’’ documents that are not in their control order could likely never mitigate the documents that are particularly or relevant to the dispute and that the damage to a programmer’s business if sensitive, we also decline to modify the obligation to produce the documents confidential information falls into the standard protective order to provide would be suspended until the hands of a competitor. Fox argues that parties the right to prohibit copying of Commission rules on the objection. the Commission should therefore revise certain documents. Rather, as with the Moreover, the Commission modified the the protective order to permit parties to issue of whether certain categories of standard protective order to further object if they have concerns about the confidential information require an limit the individuals who may access individuals who seek access to enhanced level of protection, the issue competitively sensitive documents, confidential information. Under Fox’s of whether to preclude copying of thereby ensuring that confidential proposal, an individual seeking access certain documents depends on the facts business information is not improperly to confidential information would be presented in an individual adjudication. used for competitive business purposes. required to provide at least five business 80. Fox further argues that the The Commission emphasized that it has days’ notice to a programmer prior to Commission should expand the rights of full authority to impose sanctions for accessing any protected documents to a discovery target to object to the scope violations of its protective orders, give the programmer the opportunity to of a request for documents. Fox states including but not limited to suspension object. If there is an objection, access that the 2007 Extension Order provides or disbarment of attorneys from practice would not be provided until the that recipients of a discovery request before the Commission, forfeitures, Commission rules on the objection. Fox may object ‘‘to any request for cease and desist orders, and denial of also asserts that the Commission should documents that are not in its control or further access to confidential revise the standard protective order to relevant to the dispute,’’ and asserts that information in Commission permit parties to limit access to certain this narrow basis for an objection would proceedings. Further, the Commission highly confidential information to preclude opposing a demand for cautioned that it intends to vigorously outside counsel, and to provide parties materials that are subject to the enforce any transgressions of the the right to prohibit copying of highly attorney-client or attorney work product provisions of its protective orders. sensitive documents. 77. We are unpersuaded by Fox’s 79. We modify the standard protective privileges or that represent confidential assertion that, notwithstanding these order as requested by Fox to include a exchanges between programmers and safeguards, expanded discovery ‘‘is right to object provision. We note that their accountants or experts. We clarify virtually certain to lengthen parties are free to negotiate their own that the language referenced by Fox, significantly the time it takes for the protective orders to include a right to which is codified in § 76.1003(j) of the Commission to resolve program access object provision and any other Commission’s rules, was not intended to complaints’’ because the Commission protections they deem necessary, and preclude the right to assert the attorney- will have to address each disputed have done so successfully in program client privilege or the attorney work discovery demand. Because each party access complaint proceedings that have product privilege for materials subject to to a program access dispute must been initiated since the 2007 Extension a discovery request in a program access respond to discovery requests from the Order. Nevertheless, a right to object complaint proceeding. We amend this other party, the parties have mutual provision is commonly included in rule to reflect this clarification. The incentives to avoid overbroad requests protective orders, and we agree that work product privilege may also extend and to come to an agreement on the adding a right to object provision to the to confidential exchanges between scope of discovery. Indeed, in program standard protective order will further programmers and their accountants or access complaint proceedings that have ensure that confidential information is experts if these materials are prepared gone to discovery since the expanded not improperly used for competitive in anticipation of litigation. We note discovery rules have been in effect, the business purposes. Thus, under the that the adjudicator in a program access parties have generally settled discovery revised standard protective order, an complaint proceeding may order the disputes without Commission individual seeking access to production of documents for which a intervention and, to the extent that they confidential information will be privilege is asserted for in camera have been unable to resolve discrete required to provide at least five business inspection to determine whether the

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66042 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

attorney-client or work product satellite; it does not apply to broadcast programming. The privileges apply. programming delivered via terrestrial Commission will analyze the HD 81. Finally, Fox asserts that the facilities. In section 628(c)(5) of the Act, version of a network separately from the Commission should consider imposing Congress provided that the exclusive SD version of the network in evaluating sanctions against program access contract prohibition would cease to be whether an exclusive contract involving complainants that make frivolous effective on October 5, 2002, unless the satellite-delivered programming has the discovery requests for information that Commission found that it ‘‘continues to purpose or effect set forth in section is clearly not relevant or that is outside be necessary to preserve and protect 628(b). In cases involving an RSN, there the scope of the complaint proceeding. competition and diversity in the will be a rebuttable presumption that an As discussed above, we think it is distribution of video programming.’’ On exclusive contract involving the HD unlikely that parties will use discovery two previous occasions, first in 2002 version of the RSN results in significant to engage in ‘‘fishing expeditions.’’ We and again in 2007, the Commission hindrance even if the complainant offers will, however, take appropriate action if renewed the prohibition for five years, the SD version of the RSN to we find that any party to a program with the latest extension expiring on subscribers. In addition to claims under access complaint proceeding is abusing October 5, 2012. The NPRM initiated the section 628(b) of the Act, additional the discovery process. third review of the necessity of the causes of action under section 628 will exclusive contract prohibition. continue to apply after expiration of the IV. Procedural Matters 85. The Report and Order concludes exclusive contract prohibition, A. Final Regulatory Flexibility Act that the exclusive contract prohibition is including claims alleging undue Analysis no longer necessary to preserve and influence under section 628(c)(2)(A) and protect competition and diversity in the claims alleging discrimination under 82. As required by the Regulatory distribution of video programming section 628(c)(2)(B). Flexibility Act of 1980 (‘‘RFA’’), the considering that a case-by-case process 87. The Report and Order retains the Commission has prepared a Final will remain in place after the exclusivity petition process, whereby a Regulatory Flexibility Analysis prohibition expires to assess the impact cable operator or satellite-delivered, (‘‘FRFA’’) relating to this Report and of individual exclusive contracts. cable-affiliated programmer may file a Order in MB Docket No. 12–68 et al. and Accordingly, the Commission declines Petition for Exclusivity seeking Order on Reconsideration in MB Docket to extend the exclusive contract Commission approval for an exclusive No. 07–29. prohibition beyond its October 5, 2012 contract involving satellite-delivered, 83. As required by the RFA, an Initial sunset date. Post-sunset, the cable-affiliated programming by Regulatory Flexibility Analysis Commission will rely on existing demonstrating that the contract serves (‘‘IRFA’’) was incorporated in the Notice protections provided by the program the public interest. Grant of a Petition of Proposed Rulemaking (‘‘NPRM’’) in access rules to protect multichannel for Exclusivity will immunize an MB Docket Nos. 12–68, 07–18, and 05– video programming distributors exclusive contract from potential 192. The Commission sought written (‘‘MVPDs’’) in their efforts to compete in complaints alleging a violation of public comment on the proposals in the the video distribution market, including section 628(c)(2)(B) of the Act, as NPRM, including comment on the IRFA. the case-by-case consideration of required by the terms of section The Organization for the Promotion and exclusive contracts pursuant to section 628(c)(2)(B)(iv). Advancement of Small 628(b) of the Act. 88. Finally, the Report and Order Telecommunications Companies and 86. The Report and Order extends the adopts a 45-day answer period for the National Telecommunications case-by-case complaint process complaints alleging a violation of Cooperative Association (collectively, previously adopted to address section section 628(b); establishes a six-month ‘‘OPASTCO/NTCA’’) filed comments 628(b) complaints involving terrestrially deadline (calculated from the date of directed toward the IRFA and these delivered, cable-affiliated programming filing of the complaint) for the Media comments are discussed below. This to section 628(b) complaints challenging Bureau to act on a complaint alleging a Final Regulatory Flexibility Analysis exclusive contracts involving satellite denial of programming; eliminates (‘‘FRFA’’) conforms to the RFA. delivered, cable-affiliated programming. restrictions on subdistribution Need for, and Objectives of, the Report Under this case-by-case process, the agreements involving satellite-delivered, and Order complainant will have the burden of cable-affiliated programming in served proving that the exclusive contract (i) is areas; determines that the rules 84. In areas served by a cable ‘‘unfair’’ based on the facts and applicable post-sunset to exclusive operator, section 628(c)(2)(D) of the circumstances presented; and (ii) has contracts between cable operators and Communications Act of 1934, as the ‘‘purpose or effect’’ of ‘‘significantly satellite-delivered, cable-affiliated amended (the ‘‘Act’’), generally hindering or preventing’’ the MVPD programmers will apply equally to prohibits exclusive contracts for satellite from providing satellite cable common carriers and Open Video cable programming or satellite broadcast programming or satellite broadcast Systems; and modifies the exclusivity programming between any cable programming in violation of section conditions set forth in the Liberty Media operator and any cable-affiliated 628(b). There will be a rebuttable Order to conform those conditions to programming vendor (the ‘‘exclusive presumption that an exclusive contract the Commission’s decision to decline to contract prohibition’’). The exclusive involving a satellite-delivered, cable- extend the exclusive contract contract prohibition applies to all affiliated Regional Sports Network prohibition beyond its October 5, 2012 satellite-delivered, cable-affiliated (‘‘RSN’’) has the purpose or effect set sunset date. programming and preemptively bans all forth in section 628(b). A defendant may 89. The Order on Reconsideration in exclusive contracts for such overcome this presumption by MB Docket No. 07–29 (i) affirms the programming with cable operators, demonstrating that the exclusive expanded discovery procedures for regardless of the popularity of the contract does not have the purpose or program access complaints adopted in programming at issue. The exclusive effect of significantly hindering or the 2007 Extension Order; (ii) modifies contract prohibition applies only to preventing the MVPD from providing the standard protective order for use in programming that is delivered via satellite cable programming or satellite program access complaint proceedings

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66043

to include a provision allowing a party the same geographic area, will continue 94. Wired Telecommunications to object to the disclosure of to be a violation of the discrimination Carriers. The 2007 North American confidential information based on provision in section 628(c)(2)(B), unless Industry Classification System concerns about the individual seeking the programmer can establish a (‘‘NAICS’’) defines ‘‘Wired access; and (iii) clarifies that a party ‘‘legitimate business reason’’ for the Telecommunications Carriers’’ as may object to any request for documents conduct in response to a program access follows: ‘‘This industry comprises that are protected from disclosure by the complaint challenging the conduct; and establishments primarily engaged in attorney-client privilege, the work- (iv) if the expiration of the exclusive operating and/or providing access to product doctrine, or other recognized contract prohibition results in harm to transmission facilities and infrastructure protections from disclosure. consumers or competition, the that they own and/or lease for the transmission of voice, data, text, sound, Summary of Significant Issues Raised by Commission has statutory authority and video using wired Public Comments in Response to the pursuant to section 628(b) of the Act to telecommunications networks. IRFA take remedial action by adopting rules, including a prohibition on certain types Transmission facilities may be based on 90. OPASTCO/NTCA filed comments of exclusive contracts involving cable- a single technology or a combination of specifically directed toward the IRFA. affiliated programming, to address these technologies. Establishments in this In addition, several other commenters concerns. industry use the wired addressed the effects of the expiration of 92. Moreover, the Report and Order telecommunications network facilities the exclusive contract prohibition on notes that certain factors will help to that they operate to provide a variety of small businesses in their comments. minimize the costs of the complaint services, such as wired telephony OPASTCO/NTCA argues that expiration process. The Report and Order services, including VoIP services; wired of the exclusive contract prohibition establishes a rebuttable presumption (cable) audio and video programming would have a particularly harmful that an exclusive contract involving a distribution; and wired broadband impact on small and rural MVPDs, satellite-delivered, cable-affiliated RSN Internet services. By exception, which lack the resources to produce establishments providing satellite alternative programming or engage in has the purpose or effect set forth in section 628(b). This presumption will television distribution services using effective counter-measures. Therefore, facilities and infrastructure that they OPASTCO/NTCA argues, ‘‘it is reduce costs by eliminating the need for litigants and the Commission to operate are included in this industry.’’ particularly imperative to extend the The SBA has developed a small exclusive contract prohibition to avoid undertake repetitive examinations of Commission precedent and empirical business size standard for wireline firms the disproportionate consequences that within the broad economic census evidence on RSNs. Moreover, the Report the rule’s expiration would impose on category, ‘‘Wired Telecommunications and Order establishes a six-month the markets served by small MVPDs.’’ Carriers.’’ Under this category, the SBA deadline (calculated from the date of Several commenters also argue that deems a wireline business to be small if filing of the complaint) for the Media small MVPDs do not have the resources it has 1,500 or fewer employees. Census Bureau to act on a complaint alleging a to litigate complaints involving Bureau data for 2007, which now denial of programming. In addition, to exclusive contracts on a case-by-case supersede data from the 2002 Census, the extent that MVPDs are concerned basis. show that there were 3,188 firms in this with the costs of pursuing a program 91. The Report and Order concludes category that operated for the entire access complaint, they may seek to join that the case-by-case approach for year. Of this total, 3,144 had considering exclusive contracts will be with other MVPDs in pursuing a employment of 999 or fewer, and 44 sufficient to protect MVPDs, including complaint. firms had employment of 1,000 small, rural, and new entrant MVPDs, in Description and Estimate of the Number employees or more. Thus under this their efforts to compete. The Report and of Small Entities to Which Rules Will category and the associated small Order also finds that the following Apply business size standard, the majority of additional factors will mitigate the risk these firms can be considered small. of any potentially adverse impact of the 93. The RFA directs agencies to 95. Cable Television Distribution expiration of the exclusive contract provide a description of, and, where Services. Since 2007, these services prohibition: (i) A significant percentage feasible, an estimate of, the number of have been defined within the broad of satellite-delivered, cable-affiliated small entities that may be affected by economic census category of Wired programming is subject until January the rules adopted herein. The RFA Telecommunications Carriers; that 2018 to program access merger generally defines the term ‘‘small category is defined above. The SBA has conditions adopted in the Comcast/ entity’’ as having the same meaning as developed a small business size NBCU Order, which require Comcast/ the terms ‘‘small business,’’ ‘‘small standard for this category, which is: All NBCU to make these networks available organization,’’ and ‘‘small governmental such firms having 1,500 or fewer to competitors even after the expiration jurisdiction.’’ In addition, the term employees. Census Bureau data for of the exclusive contract prohibition; (ii) ‘‘small business’’ has the same meaning 2007, which now supersede data from the Commission expects that any as the term ‘‘small business concern’’ the 2002 Census, show that there were enforcement of exclusive contracts in under the Small Business Act. A ‘‘small 3,188 firms in this category that the near term will be limited by the business concern’’ is one which: (1) Is operated for the entire year. Of this terms of existing affiliation agreements; independently owned and operated; (2) total, 3,144 had employment of 999 or (iii) even after the expiration of the is not dominant in its field of operation; fewer, and 44 firms had employment of exclusive contract prohibition, a and (3) satisfies any additional criteria 1,000 employees or more. Thus under satellite-delivered, cable-affiliated established by the Small Business this category and the associated small programmer’s refusal to license its Administration (SBA). Below, we business size standard, the majority of content to a particular MVPD (such as provide a description of such small these firms can be considered small. a small, rural, or new entrant MVPD), entities, as well as an estimate of the 96. Cable Companies and Systems. while simultaneously licensing its number of such small entities, where The Commission has also developed its content to other MVPDs competing in feasible. own small business size standards, for

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66044 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

the purpose of cable rate regulation. these firms can be considered small. 2007, which now supersede data from Under the Commission’s rules, a ‘‘small Currently, only two entities provide the 2002 Census, show that there were cable company’’ is one serving 400,000 DBS service, which requires a great 3,188 firms in this category that or fewer subscribers nationwide. investment of capital for operation: operated for the entire year. Of this Industry data indicate that all but ten DIRECTV and DISH Network). Each total, 3,144 had employment of 999 or cable operators nationwide are small currently offers subscription services. fewer, and 44 firms had employment of under this size standard. In addition, DIRECTV and DISH Network each 1,000 employees or more. Thus, under under the Commission’s rules, a ‘‘small report annual revenues that are in this category and the associated small system’’ is a cable system serving 15,000 excess of the threshold for a small business size standard, the majority of or fewer subscribers. Industry data business. Because DBS service requires these firms can be considered small. indicate that, of 6,101 systems significant capital, we believe it is 101. Broadband Radio Service and nationwide, 4,410 systems have under unlikely that a small entity as defined Educational Broadband Service. 10,000 subscribers, and an additional by the SBA would have the financial Broadband Radio Service systems, 258 systems have 10,000–19,999 wherewithal to become a DBS service previously referred to as Multipoint subscribers. Thus, under this standard, provider. Distribution Service (MDS) and most cable systems are small. 99. Satellite Master Antenna Multichannel Multipoint Distribution 97. Cable System Operators. The Television (SMATV) Systems, also Service (MMDS) systems, and ‘‘wireless Communications Act of 1934, as known as Private Cable Operators cable,’’ transmit video programming to amended, also contains a size standard (PCOs). SMATV systems or PCOs are subscribers and provide two-way high for small cable system operators, which video distribution facilities that use speed data operations using the is ‘‘a cable operator that, directly or closed transmission paths without using microwave frequencies of the through an affiliate, serves in the any public right-of-way. They acquire Broadband Radio Service (BRS) and aggregate fewer than 1 percent of all video programming and distribute it via Educational Broadband Service (EBS) subscribers in the United States and is terrestrial wiring in urban and suburban (previously referred to as the not affiliated with any entity or entities multiple dwelling units such as Instructional Television Fixed Service whose gross annual revenues in the apartments and condominiums, and (ITFS)). In connection with the 1996 aggregate exceed $250,000,000.’’ The commercial multiple tenant units such BRS auction, the Commission Commission has determined that an as hotels and office buildings. SMATV established a small business size operator serving fewer than 677,000 systems or PCOs are now included in subscribers shall be deemed a small the SBA’s broad economic census standard as an entity that had annual operator if its annual revenues, when category, ‘‘Wired Telecommunications average gross revenues of no more than combined with the total annual Carriers,’’ which was developed for $40 million in the previous three revenues of all its affiliates, do not small wireline firms. Under this calendar years. The BRS auctions exceed $250 million in the aggregate. category, the SBA deems a wireline resulted in 67 successful bidders Industry data indicate that all but nine business to be small if it has 1,500 or obtaining licensing opportunities for cable operators nationwide are small fewer employees. Census Bureau data 493 Basic Trading Areas (BTAs). Of the under this subscriber size standard. We for 2007, which now supersede data 67 auction winners, 61 met the note that the Commission neither from the 2002 Census, show that there definition of a small business. BRS also requests nor collects information on were 3,188 firms in this category that includes licensees of stations authorized whether cable system operators are operated for the entire year. Of this prior to the auction. At this time, we affiliated with entities whose gross total, 3,144 had employment of 999 or estimate that of the 61 small business annual revenues exceed $250 million, fewer, and 44 firms had employment of BRS auction winners, 48 remain small and therefore we are unable to estimate 1,000 employees or more. Thus, under business licensees. In addition to the 48 more accurately the number of cable this category and the associated small small businesses that hold BTA system operators that would qualify as business size standard, the majority of authorizations, there are approximately small under this size standard. these firms can be considered small. 392 incumbent BRS licensees that are 98. Direct Broadcast Satellite (‘‘DBS’’) 100. Home Satellite Dish (‘‘HSD’’) considered small entities. After adding Service. DBS service is a nationally Service. HSD or the large dish segment the number of small business auction distributed subscription service that of the satellite industry is the original licensees to the number of incumbent delivers video and audio programming satellite-to-home service offered to licensees not already counted, we find via satellite to a small parabolic ‘‘dish’’ consumers, and involves the home that there are currently approximately antenna at the subscriber’s location. reception of signals transmitted by 440 BRS licensees that are defined as DBS, by exception, is now included in satellites operating generally in the C- small businesses under either the SBA the SBA’s broad economic census band frequency. Unlike DBS, which or the Commission’s rules. In 2009, the category, ‘‘Wired Telecommunications uses small dishes, HSD antennas are Commission conducted Auction 86, the Carriers,’’ which was developed for between four and eight feet in diameter sale of 78 licenses in the BRS areas. The small wireline firms. Under this and can receive a wide range of Commission offered three levels of category, the SBA deems a wireline unscrambled (free) programming and bidding credits: (i) A bidder with business to be small if it has 1,500 or scrambled programming purchased from attributed average annual gross revenues fewer employees. Census Bureau data program packagers that are licensed to that exceed $15 million and do not for 2007, which now supersede data facilitate subscribers’ receipt of video exceed $40 million for the preceding from the 2002 Census, show that there programming. Because HSD provides three years (small business) received a were 3,188 firms in this category that subscription services, HSD falls within 15 percent discount on its winning bid; operated for the entire year. Of this the SBA-recognized definition of Wired (ii) a bidder with attributed average total, 3,144 had employment of 999 or Telecommunications Carriers. The SBA annual gross revenues that exceed $3 fewer, and 44 firms had employment of has developed a small business size million and do not exceed $15 million 1,000 employees or more. Thus under standard for this category, which is: all for the preceding three years (very small this category and the associated small such firms having 1,500 or fewer business) received a 25 percent discount business size standard, the majority of employees. Census Bureau data for on its winning bid; and (iii) a bidder

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66045

with attributed average annual gross licensees. The Commission has not yet Boston, Washington, DC, and other revenues that do not exceed $3 million defined a small business with respect to areas. RCN has sufficient revenues to for the preceding three years microwave services. For purposes of the assure that they do not qualify as a (entrepreneur) received a 35 percent IRFA, we will use the SBA’s definition small business entity. The Commission discount on its winning bid. Auction 86 applicable to Wireless does not have financial or employment concluded in 2009 with the sale of 61 Telecommunications Carriers (except information regarding the other entities licenses. Of the ten winning bidders, satellite)—i.e., an entity with no more authorized to provide OVS, some of two bidders that claimed small business than 1,500 persons. Under the present which may not yet be operational. Thus, status won 4 licenses; one bidder that and prior categories, the SBA has up to 41 of the OVS operators may claimed very small business status won deemed a wireless business to be small qualify as small entities. three licenses; and two bidders that if it has 1,500 or fewer employees. For 105. Cable and Other Subscription claimed entrepreneur status won six the category of Wireless Programming. The Census Bureau licenses. Telecommunications Carriers (except defines this category as follows: ‘‘This 102. In addition, the SBA’s Cable Satellite), Census data for 2007, which industry comprises establishments Television Distribution Services small supersede data contained in the 2002 primarily engaged in operating studios business size standard is applicable to Census, show that there were 1,383 and facilities for the broadcasting of EBS. There are presently 2,032 EBS firms that operated that year. Of those programs on a subscription or fee basis licensees. All but 100 of these licenses 1,383, 1,368 had fewer than 1000 * * *. These establishments produce are held by educational institutions. employees, and 15 firms had 1000 programming in their own facilities or Educational institutions are included in employees or more. Thus under this acquire programming from external this analysis as small entities. Thus, we category and the associated small sources. The programming material is estimate that at least 1,932 licensees are business size standard, the majority of usually delivered to a third party, such small businesses. Since 2007, Cable firms can be considered small. We note as cable systems or direct-to-home Television Distribution Services have that the number of firms does not satellite systems, for transmission to been defined within the broad economic necessarily track the number of viewers.’’ The SBA has developed a census category of Wired licensees. We estimate that virtually all small business size standard for this Telecommunications Carriers; that of the Fixed Microwave licensees category, which is: all such firms having category is defined as follows: ‘‘This (excluding broadcast auxiliary $15 million dollars or less in annual industry comprises establishments licensees) would qualify as small revenues. To gauge small business primarily engaged in operating and/or entities under the SBA definition. prevalence in the Cable and Other providing access to transmission Subscription Programming industries, facilities and infrastructure that they 104. Open Video Systems. The open the Commission relies on data currently own and/or lease for the transmission of video system (‘‘OVS’’) framework was available from the U.S. Census for the voice, data, text, sound, and video using established in 1996, and is one of four year 2007. Census Bureau data for 2007, wired telecommunications networks. statutorily recognized options for the which now supersede data from the Transmission facilities may be based on provision of video programming 2002 Census, show that there were 396 a single technology or a combination of services by local exchange carriers. The firms in this category that operated for technologies.’’ The SBA has developed OVS framework provides opportunities the entire year. Of that number, 325 a small business size standard for this for the distribution of video operated with annual revenues of category, which is: all such firms having programming other than through cable 1,500 or fewer employees. Census systems. Because OVS operators provide $9,999,999 dollars or less. Seventy-one Bureau data for 2007, which now subscription services, OVS falls within (71) operated with annual revenues of supersede data from the 2002 Census, the SBA small business size standard between $10 million and $100 million show that there were 3,188 firms in this covering cable services, which is or more. Thus, under this category and category that operated for the entire ‘‘Wired Telecommunications Carriers.’’ associated small business size standard, year. Of this total, 3,144 had The SBA has developed a small the majority of firms can be considered employment of 999 or fewer, and 44 business size standard for this category, small. firms had employment of 1,000 which is: all such firms having 1,500 or 106. Small Incumbent Local Exchange employees or more. Thus, under this fewer employees. Census Bureau data Carriers. We have included small category and the associated small for 2007, which now supersede data incumbent local exchange carriers in business size standard, the majority of from the 2002 Census, show that there this present RFA analysis. A ‘‘small these firms can be considered small. were 3,188 firms in this category that business’’ under the RFA is one that, 103. Fixed Microwave Services. operated for the entire year. Of this inter alia, meets the pertinent small Microwave services include common total, 3,144 had employment of 999 or business size standard (e.g., a telephone carrier, private-operational fixed, and fewer, and 44 firms had employment of communications business having 1,500 broadcast auxiliary radio services. They 1,000 employees or more. Thus, under or fewer employees), and ‘‘is not also include the Local Multipoint this category and the associated small dominant in its field of operation.’’ The Distribution Service (LMDS), the Digital business size standard, the majority of SBA’s Office of Advocacy contends that, Electronic Message Service (DEMS), and these firms can be considered small. In for RFA purposes, small incumbent the 24 GHz Service, where licensees can addition, we note that the Commission local exchange carriers are not dominant choose between common carrier and has certified approximately 42 OVS in their field of operation because any non-common carrier status. At present, operators, with some now providing such dominance is not ‘‘national’’ in there are approximately 31,428 common service. Broadband service providers scope. We have therefore included small carrier fixed licensees and 79,732 (‘‘BSPs’’) are currently the only incumbent local exchange carriers in private operational-fixed licensees and significant holders of OVS certifications this RFA analysis, although we broadcast auxiliary radio licensees in or local OVS franchises. Affiliates of emphasize that this RFA action has no the microwave services. There are Residential Communications Network, effect on Commission analyses and approximately 120 LMDS licensees, Inc. (‘‘RCN’’) received approval to determinations in other, non-RFA three DEMS licensees, and three 24 GHz operate OVS systems in New York City, contexts.

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66046 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

107. Incumbent Local Exchange available regarding how many of these compete in the video distribution Carriers (‘‘LECs’’). Neither the firms produce and/or distribute market. An MVPD will have the option Commission nor the SBA has developed programming for cable television. The to file a complaint with the Commission a small business size standard SBA has developed a small business alleging that an exclusive contract specifically for incumbent local size standard for this category, which is: between a cable operator and a satellite- exchange services. The appropriate size all such firms having $29.5 million delivered, cable-affiliated programmer standard under SBA rules is for the dollars or less in annual revenues. To involving satellite-delivered, cable- category Wired Telecommunications gauge small business prevalence in the affiliated programming violates section Carriers. Under that size standard, such Motion Picture and Video Production 628(b) of the Act. The Report and Order a business is small if it has 1,500 or industries, the Commission relies on extends the case-by-case complaint fewer employees. Census Bureau data data currently available from the U.S. process previously adopted by the for 2007, which now supersede data Census for the year 2007. Census Bureau Commission to address unfair acts from the 2002 Census, show that there data for 2007, which now supersede involving terrestrially delivered, cable- were 3,188 firms in this category that data from the 2002 Census, show that affiliated programming that allegedly operated for the entire year. Of this there were 9,095 firms in this category violate section 628(b) to section 628(b) total, 3,144 had employment of 999 or that operated for the entire year. Of complaints challenging exclusive fewer, and 44 firms had employment of these, 8995 had annual receipts of contracts involving satellite-delivered, 1,000 employees or more. According to $24,999,999 or less, and 100 had annual cable-affiliated programming. In Commission data, 1,307 carriers receipts ranging from not less that addition to claims under section 628(b) reported that they were incumbent local $25,000,000 to $100,000,000 or more. of the Act, additional causes of action exchange service providers. Of these Thus, under this category and under section 628 will continue to 1,307 carriers, an estimated 1,006 have associated small business size standard, apply after expiration of the exclusive 1,500 or fewer employees and 301 have the majority of firms can be considered contract prohibition, including claims more than 1,500 employees. Thus, small. alleging undue influence under section under this category and the associated 110. Motion Picture and Video 628(c)(2)(A) and claims alleging small business size standard, the Distribution. The Census Bureau defines discrimination under section majority of these firms can be this category as follows: ‘‘This industry 628(c)(2)(B). The Report and Order also considered small. comprises establishments primarily adopts a 45-day answer period in 108. Competitive Local Exchange engaged in acquiring distribution rights complaint proceedings alleging a Carriers, Competitive Access Providers and distributing film and video violation of section 628(b) and (CAPs), ‘‘Shared-Tenant Service productions to motion picture theaters, establishes a six-month deadline Providers,’’ and ‘‘Other Local Service television networks and stations, and (calculated from the date of filing of the Providers.’’ Neither the Commission nor exhibitors.’’ We note that firms in this complaint) for the Media Bureau to act the SBA has developed a small business category may be engaged in various on a complaint alleging a denial of size standard specifically for these industries, including cable programming. Moreover, the Order on service providers. The appropriate size programming. Specific figures are not Reconsideration (i) modifies the standard under SBA rules is for the available regarding how many of these standard protective order for use in category Wired Telecommunications firms produce and/or distribute program access complaint proceedings Carriers. Under that size standard, such programming for cable television. The to include a provision allowing a party a business is small if it has 1,500 or SBA has developed a small business to object to the disclosure of fewer employees. Census Bureau data size standard for this category, which is: confidential information based on for 2007, which now supersede data all such firms having $29.5 million concerns about the individual seeking from the 2002 Census, show that there dollars or less in annual revenues. To access; and (ii) clarifies that a party may were 3,188 firms in this category that gauge small business prevalence in the object to any request for documents that operated for the entire year. Of this Motion Picture and Video Distribution are protected from disclosure by the total, 3,144 had employment of 999 or industries, the Commission relies on attorney-client privilege, the work- fewer, and 44 firms had employment of data currently available from the U.S. product doctrine, or other recognized 1,000 employees or more. Thus, under Census for the year 2007. Census Bureau protections from disclosure. this category and the associated small data for 2007, which now supersede business size standard, the majority of data from the 2002 Census, show that Steps Taken To Minimize Significant these firms can be considered small. there were 450 firms in this category Impact on Small Entities and Significant Consequently, the Commission that operated for the entire year. Of Alternatives Considered estimates that most providers of these, 434 had annual receipts of 112. The RFA requires an agency to competitive local exchange service, $24,999,999 or less, and 16 had annual describe any significant alternatives that competitive access providers, ‘‘Shared- receipts ranging from not less that it has considered in developing its Tenant Service Providers,’’ and ‘‘Other $25,000,000 to $100,000,000 or more. approach, which may include the Local Service Providers’’ are small Thus, under this category and following four alternatives (among entities. associated small business size standard, others): ‘‘(1) the establishment of 109. Motion Picture and Video the majority of firms can be considered differing compliance or reporting Production. The Census Bureau defines small. requirements or timetables that take into this category as follows: ‘‘This industry account the resources available to small comprises establishments primarily Description of Reporting, entities; (2) the clarification, engaged in producing, or producing and Recordkeeping, and Other Compliance consolidation, or simplification of distributing motion pictures, videos, Requirements compliance and reporting requirements television programs, or television 111. Following the expiration of the under the rule for such small entities; commercials.’’ We note that firms in this exclusive contract prohibition, the (3) the use of performance rather than category may be engaged in various Commission will rely on existing design standards; and (4) an exemption industries, including cable protections in the program access rules from coverage of the rule, or any part programming. Specific figures are not to protect MVPDs in their efforts to thereof, for such small entities.’’ The

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66047

NPRM invited comment on issues that party may object to any request for 121. It is further ordered that, had the potential to have significant documents that are protected from pursuant to the authority found in impact on some small entities. disclosure by the attorney-client sections 4(i), 4(j), 303(r), and 628 of the 113. In the Report and Order, the privilege, the work-product doctrine, or Communications Act of 1934, as Commission declines to extend the other recognized protections from amended, 47 U.S.C. 154(i), 154(j), exclusive contract prohibition beyond disclosure. Small entities may benefit 303(r), and 548, the Commission’s rules its October 5, 2012 sunset date. The from having the right to object to the Are Hereby Amended as set forth in Commission will instead rely on disclosure of confidential information. Appendix C. existing protections in the program Report to Congress 122. It is further ordered that the rules access rules to protect MVPDs, adopted herein Will Become Effective including small entities, in their efforts 117. The Commission will send a November 30, 2012. to compete in the video distribution copy of the Report and Order in MB 123. It is further ordered that, market. Small MVPDs will have the Docket Nos. 12–68, 07–18, and 05–192, pursuant to sections 4(i), 4(j), 309, and option to file a complaint alleging that and Order on Reconsideration in MB 310(d) of the Communications Act of an exclusive contract between a cable Docket No. 07–29, including this FRFA, 1934, as amended, 47 U.S.C. 154(i), operator and a satellite-delivered, cable- in a report to be sent to Congress and 154(j), 309, and 310(d), the conditions affiliated programmer involving the Government Accountability Office previously adopted in the Liberty Media satellite-delivered, cable-affiliated pursuant to the Congressional Review Order Are Hereby Modified as set forth programming violates section 628(b) of Act. In addition, the Commission will in paragraph 72 of the Report and Order the Act. In addition to claims under send a copy of the Report and Order in (FCC 12–123) in MB Docket Nos. 12–68, section 628(b) of the Act, additional MB Docket Nos. 12–68, 07–18, and 05– 07–18, and 05–192 effective 30 days causes of action under section 628 will 192, and Order on Reconsideration in after the date of publication in the continue to apply after expiration of the MB Docket No. 07–29, including this Federal Register. exclusive contract prohibition, FRFA, to the Chief Counsel for including claims alleging undue Advocacy of the SBA. A copy of the 124. It is further ordered that, influence under section 628(c)(2)(A) and Report and Order in MB Docket Nos. pursuant to the authority contained in claims alleging discrimination under 12–68, 07–18, and 05–192, the Order on section 405 of the Communications Act section 628(c)(2)(B). Reconsideration in MB Docket No. 07– of 1934, as amended, 47 U.S.C. 405, and 114. The Report and Order notes that 29, and FRFA (or summaries thereof) § 1.429 of the Commission’s rules, 47 certain factors will help to minimize the will also be published in the Federal CFR 1.429, the Petition for costs of the complaint process. The Register. Reconsideration of Fox Entertainment Report and Order establishes a Group, Inc. in MB Docket No. 07–29 Is rebuttable presumption that an B. Final Paperwork Reduction Act of Granted in part and Denied in part as exclusive contract involving a satellite- 1995 Analysis described herein. delivered, cable-affiliated RSN has the purpose or effect set forth in section 118. This Report and Order in MB 125. It is further ordered that the 628(b). This presumption will reduce Docket No. 12–68 et al. and Order on Commission’s Consumer and costs by eliminating the need for Reconsideration in MB Docket No. 07– Governmental Affairs Bureau, Reference litigants and the Commission to 29 has been analyzed with respect to the Information Center, Shall Send a copy undertake repetitive examinations of Paperwork Reduction Act of 1995 of this Report and Order in MB Docket Commission precedent and empirical (‘‘PRA’’), and does not contain any new Nos. 12–68, 07–18, and 05–192 and evidence on RSNs. Moreover, the Report or modified information collection Order on Reconsideration in MB Docket and Order establishes a six-month requirements. In addition, therefore, it No. 07–29, including the Final deadline (calculated from the date of does not contain any new or modified Regulatory Flexibility Analysis, to the filing of the complaint) for the Media ‘‘information collection burden for Chief Counsel for Advocacy of the Small Bureau to act on a complaint alleging a small business concerns with fewer than Business Administration. denial of programming. To the extent 25 employees,’’ pursuant to the Small 126. It is further ordered that the that MVPDs are concerned with the Business Paperwork Relief Act of 2002. Commission Shall Send a copy of this costs of pursuing a program access C. Congressional Review Act Report and Order in MB Docket Nos. complaint, they may seek to join with 12–68, 07–18, and 05–192 and Order on other MVPDs in pursuing a complaint. 119. The Commission will send a Reconsideration in MB Docket No. 07– 115. Finally, the Report and Order copy of this Report and Order in MB 29 in a report to be sent to Congress and revises the procedural rules for program Docket No. 12–68 et al. and Order on the Government Accountability Office access complaints to adopt a 45-day Reconsideration in MB Docket No. 07– pursuant to the Congressional Review answer period for complaints alleging a 29 in a report to be sent to Congress and Act, see 5 U.S.C. 801(a)(1)(A). violation of section 628(b). The standard the Government Accountability Office, answer period for other program access pursuant to the Congressional Review List of Subjects in 47 CFR Part 76 complaints is only 20 days. Small Act. Administrative practice and entities may benefit from a lengthier 45- V. Ordering Clauses procedure, Cable television. day period within which to file an answer. 120. It is ordered that, pursuant to the Federal Communications Commission. 116. The Order on Reconsideration (i) authority found in sections 4(i), 4(j), Marlene H. Dortch, modifies the standard protective order 303(r), and 628 of the Communications Secretary. for use in program access complaint Act of 1934, as amended, 47 U.S.C. Final Rules proceedings to include a provision 154(i), 154(j), 303(r), and 548, the Report allowing a party to object to the and Order in MB Docket Nos. 12–68, For the reasons discussed in the disclosure of confidential information 07–18, and 05–192 and Order on preamble, Part 76 of Title 47 of the Code based on concerns about the individual Reconsideration in MB Docket No. 07– of Federal Regulations is amended as seeking access; and (ii) clarifies that a 29 Is Adopted. follows:

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66048 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

PART 76—MULTICHANNEL VIDEO complaints alleging that an exclusive (m) Deadline for Media Bureau Action AND CABLE TELEVISION SERVICE contract with respect to areas served by on Complaints Alleging a Denial of a cable operator violates section Programming. For complaints alleging a ■ 1. The authority citation for Part 76 628(c)(2)(B) of the Communications Act denial of programming, the Chief, Media continues to read as follows: of 1934, as amended, and paragraph (b) Bureau shall release a decision resolving Authority: 47 U.S.C. 151, 152, 153, 154, of this section. the complaint within six (6) months 301, 302, 302a, 303, 303a, 307, 308, 309, 312, * * * * * from the date the complaint is filed. 315, 317, 325, 339, 340, 341, 503, 521, 522, ■ ■ 531, 532, 534, 535, 536, 537, 543, 544, 544a, 3. Section 76.1003 is amended by 4. Section 76.1004 is amended by 545, 548, 549, 552, 554, 556, 558, 560, 561, revising paragraphs (e)(1) and (j) and revising paragraph (b) to read as follows: 571, 572, 573. adding paragraph (m) to read as follows: § 76.1004 Applicability of program access ■ 2. Section 76.1002 is amended by § 76.1003 Program access proceedings. rules to common carriers and affiliates. removing and reserving paragraph (c)(2), * * * * * * * * * * revising paragraphs (c)(3)(i) and (c)(3)(ii) (e) * * * (b) Sections 76.1002(c)(1) through (3) shall be applied to a common carrier or introductory text, (c)(4) introductory (1) Except as otherwise provided or its affiliate that provides video text, and (c)(5) introductory text, and directed by the Commission, any cable programming by any means directly to removing paragraph (c)(6). operator, satellite cable programming subscribers as follows: No common The revisions read as follows: vendor or satellite broadcast carrier or its affiliate that provides video programming vendor upon which a § 76.1002 Specific unfair practices programming directly to subscribers prohibited. program access complaint is served shall engage in any practice or activity under this section shall answer within * * * * * or enter into any understanding or twenty (20) days of service of the (c) * * * arrangement, including exclusive complaint, provided that the answer (3) * * * contracts, with a satellite cable shall be filed within forty-five (45) days (i) Unserved areas. No cable operator programming vendor or satellite of service of the complaint if the shall enter into any subdistribution broadcast programming vendor for complaint alleges a violation of section agreement or arrangement for satellite satellite cable programming or satellite 628(b) of the Communications Act of cable programming or satellite broadcast broadcast programming that prevents a 1934, as amended, or § 76.1001(a). To programming with a satellite cable multichannel video programming the extent that a cable operator, satellite programming vendor in which a cable distributor from obtaining such cable programming vendor or satellite operator has an attributable interest or a programming from any satellite cable broadcast programming vendor satellite broadcast programming vendor programming vendor in which a expressly references and relies upon a in which a cable operator has an common carrier or its affiliate has an document or documents in asserting a attributable interest for distribution to attributable interest, or any satellite defense or responding to a material persons in areas not served by a cable broadcasting vendor in which a allegation, such document or documents operator as of October 5, 1992 unless common carrier or its affiliate has an shall be included as part of the answer. such agreement or arrangement attributable interest for distribution to complies with the limitations set forth * * * * * persons in areas not served by a cable in paragraph (c)(3)(ii) of this section. (ii) (j) Discovery. In addition to the operator as of October 5, 1992. Limitations on subdistribution general pleading and discovery rules ■ agreements in unserved areas. No cable contained in § 76.7, parties to a program 5. Section 76.1507 is amended by operator engaged in subdistribution of access complaint may serve requests for removing and reserving paragraph (a)(2) satellite cable programming or satellite discovery directly on opposing parties, and revising paragraphs (a)(3), and (b) to broadcast programming may require a and file a copy of the request with the read as follows: competing multichannel video Commission. The respondent shall have § 76.1507 Competitive access to satellite programming distributor to the opportunity to object to any request cable programming. * * * * * for documents that are not in its control (a) * * * (4) Public interest determination. In or relevant to the dispute or protected (3) Section 76.1002(c)(3)(i) and (ii) determining whether an exclusive from disclosure by the attorney-client shall only restrict the conduct of an contract is in the public interest for privilege, the work-product doctrine, or open video system operator, its affiliate purposes of paragraph (c)(5) of this other recognized protections from that provides video programming on its section, the Commission will consider disclosure. Such request shall be heard, open video system and a satellite cable each of the following factors with and determination made, by the programming vendor in which an open respect to the effect of such contract on Commission. Until the objection is ruled video system operator has an the distribution of video programming upon, the obligation to produce the attributable interest, as follows: No open in areas that are served by a cable disputed material is suspended. Any video system operator shall enter into operator: party who fails to timely provide any subdistribution agreement or * * * * * discovery requested by the opposing arrangement for satellite cable (5) Commission approval required. party to which it has not raised an programming or satellite broadcast Any cable operator, satellite cable objection as described above, or who programming with a satellite cable programming vendor in which a cable fails to respond to a Commission order programming vendor in which an open operator has an attributable interest, or for discovery material, may be deemed video system operator has an satellite broadcast programming vendor in default and an order may be entered attributable interest or a satellite in which a cable operator has an in accordance with the allegations broadcast programming vendor in attributable interest must submit a contained in the complaint, or the which an open video system operator ‘‘Petition for Exclusivity’’ to the complaint may be dismissed with has an attributable interest for Commission and receive approval from prejudice. distribution to persons in areas not the Commission to preclude the filing of * * * * * served by a cable operator as of October

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66049

5, 1992 unless such agreement or of Exemption 4 of the Freedom of access to Confidential Information only if arrangement complies with the Information Act, 5 U.S.C. 552(b)(4) and (ii) they have signed, as part of their employment limitations set forth in information submitted to the Commission by contract, a non-disclosure agreement the § 76.1002(c)(3)(ii). the Submitting Party that has been so scope of which includes the Confidential designated by the Submitting Party and Information, or if they execute the attached (b) No open video system which the Submitting Party has determined Declaration. programming provider in which a cable in good faith falls within the terms of 7. Disclosure. Subject to the requirements operator has an attributable interest Commission orders designating the items for of Paragraph 9, Confidential Information may shall engage in any practice or activity treatment as Confidential Information. be reviewed by counsel to the Reviewing or enter into any understanding or Confidential Information includes additional Parties, or if a Reviewing Party has no arrangement, including exclusive copies of, notes, and information derived counsel, to a person designated by the contracts, with a satellite cable from Confidential Information. Reviewing Party. Subject to the requirements programming vendor or satellite d. Declaration. ‘‘Declaration’’ means of Paragraph 9, counsel to a Reviewing Party Attachment A to this Protective Order. or such other person designated by the broadcast programming vendor for e. Reviewing Party. ‘‘Reviewing Party’’ Reviewing Party may disclose Confidential satellite cable programming or satellite means a person or entity participating in this Information to other Authorized broadcast programming that prevents a proceeding or considering in good faith filing Representatives only after advising such multichannel video programming a document in this proceeding. Authorized Representatives of the terms and distributor from obtaining such f. Submitting Party. ‘‘Submitting Party’’ obligations of the Order and provided that programming from any satellite cable means a person or entity that seeks the Authorized Representatives have signed programming vendor in which a cable confidential treatment of Confidential the Declaration and served it appropriately in operator has an attributable interest, or Information pursuant to this Protective accordance with paragraph 9, and the any satellite broadcasting vendor in Order. Authorized Representatives are of the type of 3. Claim of Confidentiality. The Submitting persons listed in subparagraphs 8.a., b., and which a cable operator has an Party may designate information as c. attributable interest for distribution to ‘‘Confidential Information’’ consistent with 8. Authorized Representatives shall be person in areas not served by a cable the definition of that term in Paragraph 2.c limited to: operator as of October 5, 1992. of this Protective Order. The Commission a. Subject to Paragraph 8.d, counsel for the The following Appendix will not may, sua sponte or upon petition, pursuant Reviewing Parties to this proceeding, appear in the Code of Federal to 47 CFR 0.459 and 0.461, determine that all including in-house counsel, actively engaged Regulations (CFR): or part of the information claimed as in the conduct of this proceeding and their ‘‘Confidential Information’’ is not entitled to associated attorneys, paralegals, clerical staff Appendix such treatment. and other employees, to the extent Standard Protective Order and Declaration 4. Procedures for Claiming Information is reasonably necessary to render professional for Use in Section 628 Program Access Confidential. Confidential Information services in this proceeding; Proceedings Before the Federal submitted to the Commission shall be filed b. Subject to Paragraph 8.d, specified Communications Commission Washington, under seal and shall bear on the front page persons, including employees of the DC 20554 in bold print, ‘‘CONTAINS CONFIDENTIAL Reviewing Parties, requested by counsel to INFORMATION—DO NOT RELEASE.’’ furnish technical or other expert advice or In the Matter of ) Confidential Information shall be segregated service, or otherwise engaged to prepare [Name of Proceeding] ) by the Submitting Party from all non- material for the express purpose of Docket No. confidential information submitted to the formulating filings in this proceeding; and PROTECTIVE ORDER Commission. To the extent a document c. Subject to Paragraph 8.d., any person 1. This Protective Order is intended to contains both Confidential Information and designated by the Commission in the public facilitate and expedite the review of non-confidential information, the Submitting interest, upon such terms as the Commission documents filed in this proceeding or Party shall designate the specific portions of may deem proper; except that, obtained from a person in the course of the document claimed to contain d. Disclosure shall be prohibited to any discovery that contain trade secrets and Confidential Information and shall, where persons in a position to use the Confidential privileged or confidential commercial or feasible, also submit a redacted version not Information for competitive commercial or financial information. It establishes the containing Confidential Information. By business purposes, including persons manner in which ‘‘Confidential Information,’’ designating information as Confidential involved in competitive decision-making, as that term is defined herein, is to be treated. Information, a Submitting Party signifies that which includes, but is not limited to, persons The Order is not intended to constitute a it has determined in good faith that the whose activities, association or relationship resolution of the merits concerning whether information should be subject to protection with the Reviewing Parties or other any Confidential Information would be under FOIA, the Commission’s implementing Authorized Representatives involve released publicly by the Commission upon a rules, and this Protective Order. rendering advice or participating in any or all proper request under the Freedom of 5. Storage of Confidential Information at of the Reviewing Parties’, Authorized Information Act (‘‘FOIA’’) or other applicable the Commission. The Secretary of the Representatives’ or any other person’s law or regulation, including 47 CFR 0.442. Commission or other Commission staff to business decisions that are or will be made 2. Definitions. whom Confidential Information is submitted in light of similar or corresponding a. Authorized Representative. ‘‘Authorized shall place the Confidential Information in a information about a competitor. Representative’’ shall have the meaning set non-public file. Confidential Information 9. Procedures for Obtaining Access to forth in Paragraph 7. shall be segregated in the files of the Confidential Information. In all cases where b. Commission. ‘‘Commission’’ means the Commission, and shall be withheld from access to Confidential Information is Federal Communications Commission or any inspection by any person not bound by the permitted pursuant to paragraph 7, before arm of the Commission acting pursuant to terms of this Protective Order, unless such reviewing or having access to any delegated authority. Confidential Information is released from the Confidential Information, each person c. Confidential Information. ‘‘Confidential restrictions of this Order either through seeking such access shall execute the Information’’ means (i) information agreement of the parties, or pursuant to the Declaration in Attachment A and file it with submitted to the Commission by the order of the Commission or a court having the Commission and serve it upon the Submitting Party that has been so designated jurisdiction. Submitting Party through their counsel, so by the Submitting Party and which the 6. Commission Access to Confidential that the Declaration is received by the Submitting Party has determined in good Information. Confidential Information shall Submitting Party at least five (5) business faith constitutes trade secrets and be made available to Commission staff and days prior to such person’s reviewing or commercial or financial information which is Commission consultants. Consultants under having access to Confidential Information. privileged or confidential within the meaning contract to the Commission may obtain Each Submitting Party shall have an

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with 66050 Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations

opportunity to object to the disclosure of its a separate letter referencing this Protective retain two copies of pleadings submitted on Confidential Information to any such person. Order; behalf of the Reviewing Party. Any Any objection must be filed at the c. Each page of any Party’s filing that confidential information contained in any Commission and served on counsel for such contains or discloses Confidential copies of pleadings retained by counsel to a person within three (3) business days after Information subject to this Order must be Reviewing Party or in materials that have receipt of that person’s Declaration. Until any clearly marked: ‘‘Confidential Information been destroyed pursuant to this paragraph such objection is resolved by the Commission included pursuant to Protective Order, [cite shall be protected from disclosure or use and, if appropriate, any court of competent proceeding];’’ and indefinitely in accordance with Paragraphs jurisdiction prior to any disclosure, and d. The confidential portion(s) of the 11 and 12 of this Protective Order unless unless such objection is resolved in favor of pleading, to the extent they are required to such Confidential Information is released the person seeking access, persons subject to be served, shall be served upon the Secretary from the restrictions of this Order either an objection from a Submitting Party shall of the Commission, the Submitting Party, and through agreement of the parties, or pursuant not have access to Confidential Information. those Reviewing Parties that have signed the to the order of the Commission or a court If there is no objection or once such objection attached Declaration. Such confidential having jurisdiction. is resolved, the Submitting Party shall make portions shall be served under seal, and shall 16. No Waiver of Confidentiality. such material available for review as set forth not be placed in the Commission’s Public Disclosure of Confidential Information as in Paragraph 10. File unless the Commission directs otherwise provided herein shall not be deemed a 10. Inspection of Confidential Information. (with notice to the Submitting Party and an waiver by the Submitting Party of any Confidential Information shall be maintained opportunity to comment on such proposed privilege or entitlement to confidential by a Submitting Party for inspection at two disclosure). A Submitting Party or a treatment of such Confidential Information. or more locations, at least one of which shall Reviewing Party filing a pleading containing Reviewing Parties, by viewing these be in Washington, D.C. Inspection shall be Confidential Information shall also file a materials: (a) agree not to assert any such carried out by Authorized Representatives redacted copy of the pleading containing no waiver; (b) agree not to use information upon reasonable notice not to exceed one Confidential Information, which copy shall derived from any confidential materials to business day during normal business hours. be placed in the Commission’s public files. seek disclosure in any other proceeding; and 11. Copies of Confidential Information. A Submitting Party or a Reviewing Party may (c) agree that accidental disclosure of The Submitting Party shall provide a copy of provide courtesy copies of pleadings Confidential Information shall not be deemed the Confidential Material to Authorized containing Confidential Information to a waiver of the privilege. Representatives upon request and may charge Commission staff so long as the notations 17. Additional Rights Preserved. The entry a reasonable copying fee not to exceed required by this Paragraph 13 are not of this Protective Order is without prejudice twenty five cents per page. Authorized removed. to the rights of the Submitting Party to apply Representatives may make additional copies 14. Violations of Protective Order. Should for additional or different protection where it of Confidential Information but only to the a Reviewing Party that has properly obtained is deemed necessary or to the rights of extent required and solely for the preparation access to Confidential Information under this Reviewing Parties to request further or and use in this proceeding. Authorized Protective Order violate any of its terms, it renewed disclosure of Confidential Representatives must maintain a written shall immediately convey that fact to the Information. record of any additional copies made and Commission and to the Submitting Party. 18. Effect of Protective Order. This provide this record to the Submitting Party Further, should such violation consist of Protective Order constitutes an Order of the upon reasonable request. The original copy improper disclosure or use of Confidential Commission and an agreement between the and all other copies of the Confidential Information, the violating party shall take all Reviewing Party, executing the attached Information shall remain in the care and necessary steps to remedy the improper Declaration, and the Submitting Party. control of Authorized Representatives at all disclosure or use. The Violating Party shall 19. Authority. This Protective Order is times. Authorized Representatives having also immediately notify the Commission and issued pursuant to sections 4(i) and 4(j) of the custody of any Confidential Information shall the Submitting Party, in writing, of the Communications Act as amended, 47 U.S.C. keep the documents properly and fully identity of each party known or reasonably 154(i), (j); 47 CFR 0.457(d) and 76.1003(k); secured from access by unauthorized persons suspected to have obtained the Confidential and section 4 of the Freedom of Information at all times. Information through any such disclosure. Act, 5 U.S.C. 552(b)(4). 12. Use of Confidential Information. The Commission retains its full authority to Attachment A to Standard Protective Order Confidential Information shall not be used by fashion appropriate sanctions for violations any person granted access under this of this Protective Order, including but not DECLARATION Protective Order for any purpose other than limited to suspension or disbarment of In the Matter of ) for use in this proceeding (including any attorneys from practice before the [Name of Proceeding] ) subsequent administrative or judicial Commission, forfeitures, cease and desist Docket No. review), shall not be used for competitive orders, and denial of further access to I, llll, hereby declare under penalty business purposes, and shall not be used or Confidential Information in this or any other of perjury that I have read the Protective disclosed except in accordance with this Commission proceeding. Nothing in this Order that has been entered by the Order. This shall not preclude the use of any Protective Order shall limit any other rights Commission in this proceeding, and that I material or information that is in the public and remedies available to the Submitting agree to be bound by its terms pertaining to domain or has been developed Party at law or equity against any party using the treatment of Confidential Information independently by any other person who has Confidential Information in a manner not submitted by parties to this proceeding. I not had access to the Confidential authorized by this Protective Order. understand that the Confidential Information Information nor otherwise learned of its 15. Termination of Proceeding. Within two shall not be disclosed to anyone except in contents. weeks after final resolution of this accordance with the terms of the Protective 13. Pleadings Using Confidential proceeding (which includes any Order and shall be used only for purposes of Information. Submitting Parties and administrative or judicial appeals), the proceedings in this matter. I acknowledge Reviewing Parties may, in any pleadings that Authorized Representatives of Reviewing that a violation of the Protective Order is a they file in this proceeding, reference the Parties shall, at the direction of the violation of an order of the Federal Confidential Information, but only if they Submitting Party, destroy or return to the Communications Commission. I acknowledge comply with the following procedures: Submitting Party all Confidential Information that this Protective Order is also a binding a. Any portions of the pleadings that as well as all copies and derivative materials agreement with the Submitting Party. I am contain or disclose Confidential Information made, and shall certify in a writing served on not in a position to use the Confidential must be physically segregated from the the Commission and the Submitting Party Information for competitive commercial or remainder of the pleadings and filed under that no material whatsoever derived from business purposes, including competitive seal; such Confidential Information has been decision-making, and my activities, b. The portions containing or disclosing retained by any person having access thereto, association or relationship with the Confidential Information must be covered by except that counsel to a Reviewing Party may Reviewing Parties, Authorized

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with Federal Register / Vol. 77, No. 211 / Wednesday, October 31, 2012 / Rules and Regulations 66051

Representatives, or other persons does not in light of similar or corresponding (employer) lllllllllllllll involve rendering advice or participating in information about a competitor. (address) llllllllllllllll any or all of the Reviewing Parties’, (signed) lllllllllllllllll (phone) lllllllllllllllll llllllllllllllllll Authorized Representatives’ or other persons’ (printed name) lllllllllllll (date) business decisions that are or will be made (representing) llllllllllllll [FR Doc. 2012–26456 Filed 10–30–12; 8:45 am] (title) llllllllllllllllll BILLING CODE 6712–01–P

VerDate Mar<15>2010 18:25 Oct 30, 2012 Jkt 229001 PO 00000 Frm 00027 Fmt 4701 Sfmt 9990 E:\FR\FM\31OCR4.SGM 31OCR4 srobinson on DSK4SPTVN1PROD with