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