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Further Notice of Proposed Rulemaking Federal Communications Commission FCC 14-29 Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Amendment of the Commission’s Rules Related to ) MB Docket No. 10-71 Retransmission Consent ) REPORT AND ORDER AND FURTHER NOTICE OF PROPOSED RULEMAKING Adopted: March 31, 2014 Released: March 31, 2014 Comment Date: (30 days after date of publication in the Federal Register) Reply Comment Date: (60 days after date of publication in the Federal Register) By the Commission: Chairman Wheeler and Commissioners Clyburn, Rosenworcel, Pai and O’Rielly issuing separate statements. TABLE OF CONTENTS Heading Paragraph # I. INTRODUCTION.................................................................................................................................. 1 II. BACKGROUND.................................................................................................................................... 2 III. DISCUSSION ........................................................................................................................................ 6 A. Need for the Prohibition on Joint Negotiation................................................................................. 9 B. Elements of the Prohibition on Joint Negotiation.......................................................................... 24 C. Prohibited Practices ....................................................................................................................... 27 D. Authority to Adopt the Prohibition on Joint Negotiation .............................................................. 29 E. Effect on Existing Agreements ...................................................................................................... 34 IV. FURTHER NOTICE OF PROPOSED RULEMAKING..................................................................... 40 A. Background.................................................................................................................................... 41 1. Network Non-Duplication....................................................................................................... 42 2. Syndicated Exclusivity............................................................................................................ 47 3. The Compulsory Copyright License ....................................................................................... 53 4. Petitions for Rulemaking......................................................................................................... 54 B. Discussion...................................................................................................................................... 55 1. Legal Authority ....................................................................................................................... 56 2. Assessing the Continued Need for Network Non-Duplication and Syndicated Exclusivity Rules..................................................................................................................... 58 3. Impact of Eliminating Network Non-Duplication and Syndicated Exclusivity Rules............ 64 V. PROCEDURAL MATTERS................................................................................................................ 74 A. Regulatory Flexibility Act ............................................................................................................. 74 B. Paperwork Reduction Act.............................................................................................................. 76 C. Congressional Review Act............................................................................................................. 77 D. Ex Parte Rules................................................................................................................................ 78 E. Filing Requirements....................................................................................................................... 79 F. Additional Information .................................................................................................................. 82 VI. ORDERING CLAUSES....................................................................................................................... 83 Federal Communications Commission FCC 14-29 APPENDIX A - Final Rules APPENDIX B - Final Regulatory Flexibility Analysis for the Order APPENDIX C - Initial Regulatory Flexibility Analysis for the FNPRM I. INTRODUCTION 1. In this Report and Order (“Order”), we revise our “retransmission consent” rules, which govern carriage negotiations between broadcast television stations and multichannel video programming distributors (“MVPDs”),1 to provide that joint negotiation by stations that are ranked among the top four stations in a market as measured by audience share (“Top Four” stations) and are not commonly owned constitutes a violation of the statutory duty to negotiate retransmission consent in good faith.2 In March 2010, 14 MVPDs and public interest groups filed a rulemaking petition arguing that changes in the marketplace, and the increasingly contentious nature of retransmission consent negotiations, justify revisions to the Commission’s rules governing retransmission consent.3 The Commission initiated this proceeding4 and a robust record developed. Our action today addresses MVPDs’ argument that competing broadcast television stations (“broadcast stations” or “stations”) obtain undue bargaining leverage by negotiating together when they are not commonly owned. It is our intention that this action will facilitate the fair and effective completion of retransmission consent negotiations.5 In addition, in the Further Notice of Proposed Rulemaking (“FNPRM”), we seek comment on whether to modify or eliminate the Commission’s network non-duplication and syndicated exclusivity rules in light of changes in the video marketplace since these rules were first adopted more than forty years ago.6 II. BACKGROUND 2. Congress created the retransmission consent regime in 1992. It stated that it intended “to establish a marketplace for the disposition of the rights to retransmit broadcast signals,” but not “to dictate the outcome of the ensuing marketplace negotiations.”7 In recent years, the marketplace has changed in 1 The Communications Act of 1934, as amended (the “Act”), prohibits MVPDs from retransmitting a broadcast television station’s signal without the station’s consent. 47 U.S.C. § 325(b)(1)(A). 2 See infra Section III. The statutory duty to negotiate retransmission consent in good faith applies to both broadcasters and MVPDs. See 47 U.S.C. § 325(b)(3)(C). 3 Time Warner Cable Inc. et al. Petition for Rulemaking to Amend the Commission’s Rules Governing Retransmission Consent, MB Docket No. 10-71 (filed Mar. 9, 2010) (the “Petition”). Petitioners include: American Cable Association; Bright House Networks, LLC; Cablevision Systems Corp.; Charter Communications, Inc.; DIRECTV, Inc.; DISH Network LLC; Insight Communications Company, Inc.; Mediacom Communications Corp.; New America Foundation; OPASTCO; Public Knowledge; Suddenlink Communications; Time Warner Cable Inc.; and Verizon. The Media Bureau sought comment on the Petition. See Media Bureau Seeks Comment on a Petition for Rulemaking to Amend the Commission’s Rules Governing Retransmission Consent, Public Notice, 25 FCC Rcd 3334 (MB, 2010) (“PN”). 4 Amendment of the Commission’s Rules Related to Retransmission Consent, Notice of Proposed Rulemaking, 26 FCC Rcd 2718 (2011) (“NPRM”). 5 The NPRM sought comment on additional issues related to retransmission consent, including strengthening the per se good faith negotiation standards in other specific ways, clarifying the totality of the circumstances good faith negotiation standard, revising the notice requirements related to dropping carriage of a television station, and application of the sweeps prohibition to retransmission consent disputes. See NPRM, 26 FCC Rcd at 2727-40, ¶¶ 17-41. This Order addresses only joint negotiation, and the FNPRM addresses the exclusivity rules, and the record remains open on the other issues discussed in the NPRM. See infra n. 46. We realize that the views of both broadcasters and MVPDs may have evolved since we last sought comment in 2011 and they are free to provide additional comment on the remaining issues to the extent they so desire. 6 See infra Section IV. 7 See S. Rep. No. 92, 102nd Cong., 1st Sess. (1991), reprinted in 1992 U.S.C.C.A.N. 1133, 1169. 2 Federal Communications Commission FCC 14-29 two significant ways. First, broadcasters have increasingly sought and received monetary compensation in exchange for retransmission consent.8 Second, while consumers seeking to purchase video programming service typically formerly had only one option – a cable operator – today consumers may choose among several MVPDs. In addition to MVPD services, today’s consumers also access video programming on the Internet.9 Against this backdrop, the petitioners filed the Petition, asking the Commission to impose mandatory interim carriage while retransmission consent disputes are pending, and to impose dispute resolution mechanisms.10 After stating that the Commission did “not believe that [it has] authority to require either interim carriage requirements or mandatory binding dispute resolution procedures” in light of “the statutory mandate in Section 325 and the restrictions imposed by the [Administrative Dispute Resolution Act],” the NPRM sought comment “on other ways the Commission
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