COpy Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 FILED/ACCEPTED In the Matter of ) ) Fox Networks Group, Inc. ) MB Docket No. la-SI JAN 23 2012 Petition for Waiver of Section 73.658(i) ) Federal Communications Commission Of the Commission's Rules ) Office of the Secretary ) PETITION FOR WAIVER OF THE NETWORK REPRESENTATION RULE AND REQUEST FOR EXPEDITED ACTION OF FOX NETWORKS GROUP, INC. Ellen S. Agress Antoinette Cook Bush Senior Vice President and Jared S. Sher Deputy General Counsel Joshua Gruenspecht News Corporation Skadden, Arps, Slate, Meagher & Flom 1211 Avenue of the Americas LLP New York, NY 10036 1440 New York Avenue, N.W. (212) 852-7204 Washington, D.C. 20005 (202) 371-7000 Maureen A. 0' Connell Senior Vice President, Regulatory and Its Attorneys Government Affairs News Corporation 444 N. Capitol Street, N.W. Washington, D.C. 20001 (202) 824-6502 January 23,2012 TABLE OF CONTENTS I. INTRODUCTION AND SUMMARY ................................................................................ 2 II. MUNDO FOX INTENDS TO INCREASE THE DIVERSITY OF SP ANISH­ LANGUAGE PROGRAMMING AND ENHANCE COMPETITION AMONG SPANISH-LANGUAGE NETWORKS AND STATIONS ............................................... .4 A. MundoFox Will Offer New, Different and Competitive Foreign-Language Programming in the Spanish-Language Network Marketplace ............................. .4 B. Emerging Spanish-Language Networks Must Overcome Both the Market Dominance ofUnivision and Telemundo and the Challenges Posed By Advertisers Undervaluing the Hispanic Audience .................................................. 6 III. THE FCC HISTORICALLY HAS WAIVED THE RULE TO FOSTER THE DEVELOPMENT OF EMERGING SPANISH-LANGUAGE NETWORKS ................... 8 IV. THERE EXISTS GOOD CAUSE TO EXPEDITIOUSLY GRANT A WAIVER OF THE RULE FOR THE BENEFIT OF MUNDO FOX AND ITS AFFILIATES ......... 10 A. A Waiver Grant Would Enable MundoFox to Offer Consumers a New Programming Service While Spurring Competition Among Networks and Stations, Without Any Countervailing Public Interest Harm ................................ 10 B. Granting the Waiver Before the May Upfronts Is Critical to Allowing MundoFox to Timely Launch its New Service and Compete With the Largest Spanish-Language Networks .................................................................... 15 V. CONCLUSION ................................................................................................................. 16 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554 In the Matter of ) ) Fox Networks Group, Inc. ) MB Docket No. Petition for Waiver of Section 73.658(i) Of the Commission's Rules ) ) To: The Chief, Media Bureau PETITION FOR WAIVER OF THE NETWORK REPRESENTATION RULE AND REQUEST FOR EXPEDITED ACTION Fox Networks Group, Inc. ("Fox") hereby respectfully requests, on behalf of MundoFox Broadcasting LLC and its expected affiliate station partners, a permanent waiver of Section 73.658(i)1 of the Commission's Rules in order to enable the launch and encourage the growth of MundoFox, a new Spanish-language broadcast network expected to be inaugurated later this year. 2 Fox, an entity with extensive experience selling television advertising, proposes to represent the new network and its affiliates in the sale of both network and spot advertising.3 In particular, Fox requests that this waiver be granted as soon as possible, but in no event later than April 1, 2012, which is necessary to ensure that MundoFox has adequate time to sign up new affiliates and prepare to sell affiliate spot advertising during the critical May "upfront" sales period. A timely grant of this request would spur competition among Spanish-language See 47 C.F.R. § 73.658(i). 2 MundoFox Broadcasting LLC is a joint venture of Fox International Channels (US), Inc. (a wholly-owned subsidiary of Fox) and RCN MF Holdings Inc. (a subsidiary ofRCN Televisi6n S.A., a leading Colombian broadcaster). For the sake of clarity, Fox emphasizes that it is not requesting a waiver with respect to broadcast stations affiliated with the English-language FOX network or MyNetworkTV. 1 broadcast networks and stations and, more importantly, offer underserved Hispanic audiences a distinct new programming option - all of which would further the Commission's core competition and diversity goals. I. INTRODUCTION AND SUMMARY A waiver of Section 73.658(i), also known as the Network Representation Rule ("the Rule"), is required in order to allow independently-owned broadcast stations to be represented in the sale of non-network spot advertising by a network organization, or an organization under common control with a network. MundoFox is under common control with Fox. 4 Accordingly, without a waiver, affiliates of the proposed new service would not be permitted to rely upon Fox for assistance in selling spot advertising, and MundoFox would face a potentially debilitating disadvantage in attempting to start a new network in competition with existing Spanish-language broadcast networks, including two well-established competitors that dominate the industry, each of which already holds a permanent waiver of the Rule. Fox requests a waiver permitting it to represent MundoFox affiliates so that MundoFox can push forward with its plans to bring diverse new programming to the Hispanic viewing market and to enhance competition among Spanish- language networks and stations. The Commission has the authority under Section 1.3 of its rules to issue a waiver of any rule for "good cause"s when "strict compliance [would be] inconsistent with the public interest.,,6 MundoFox Broadcasting LLC will be controlled jointly by Fox International Channels and RCN Television. 47 C.F.R. § 1.3. 6 AT&T Corp. v. FCC, 448 F.3d 426, 433 (D.C. Cir. 2006) (quoting Ne. Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990». See also WAIT Radio v. FCC, 418 F.2d 1153, 1157 (D.C. Cir. 1969) ("[A] general rule, deemed valid because its overall objectives are in the public interest, may not be in the 'public interest' if extended to an applicant who proposes a new service that will not undermine the policy, served by the rule, that has been adjudged in the public interest."). 2 Historically, the Commission has found that fostering the development of emerging foreign- language networks serves the public interest and justifies waiver of the Rule. Indeed, every Spanish-language network that has requested a waiver ofthe Rule to date has received one. 7 In order to compete on a level playing field with these existing networks, MundoFox and its affiliates also need the benefit of a waiver. Importantly, Fox asks that the FCC move expeditiously to grant this request as soon as possible, but in no event later than April 1,2012, so that MundoFox can initiate its new service as anticipated in September 2012, the time of the traditional launch of new Fall season programming on broadcast television. The upfront sales meetings represent a crucial opportunity for broadcast (and cable) networks to introduce their planned Fall programming to prospective advertisers and to secure advertising commitments for the subsequent broadcast season. This year, the upfront meetings are expected to take place during the week of May 14. Specifically: • MundoFox needs for the waiver to be granted by April 1 so that it quickly can complete the process of signing up new affiliates for the network. Although MundoFox already is trying to conclude deals with prospective affiliates, some stations likely will choose to await the outcome of this petition before deciding whether to go forward with this venture. For these affiliates, who are seeking help in the sale of non-network spot advertising, grant of the waiver is likely to be a key factor in determining whether to partner with MundoFox to launch the new service. MundoFox needs time between the grant of the waiver and the start of the upfront meetings to complete negotiations and finalize agreements with these affiliates, some of whom are in vital markets. Six existing networks have received waivers of the Rule to date. See Amendment of§ 73. 658(i) ofthe Commission's Rules, Concerning Network Representation of TV Stations in National Spot Sales; Request of Spanish International Network (SIN) for Waiver of§ 73. 658(i); Request of Telemundo Group, Inc. for Waiver of § 73. 658(i); Request ofLatin International Network Corporation for Waiver of§ 73. 658(i), 5 FCC Rcd 7280, 7281-82 (1990) ("First Network Representation Waiver Order") (granting waivers to Univision and Telemundo); Azteca Int'l Corp., 18 FCC Red 10662 (2003) ("Azteca Order") (granting waiver to Azteca America); Liberman Television LLC, 25 FCC Red 4725 (2010) ("Liberman Order") (granting waiver to Estrella TV); Mambo, LLC, Order, MB Dkt. No. 10-161, DA 11-2039 (ReI. Dec. 20,2011) ("Mambo Order") (granting waiver to GenTV); Spanish Broadcasting Sys., Inc., Order, MB Dkt. No. 10-89, DA 11-2041 (ReI. Dec. 20, 2011) ("SBS Order") (granting waiver to MegaTV) (collectively, "The Network Representation Waiver Orders"). 3 • By the start of the upfront sessions in mid-May, MundoFox will need to have a sufficient number of committed affiliates in major markets to make a credible presentation to would-be advertisers. Absent sufficient distribution, MundoFox will not be an appealing service capable of attracting advertisers. • If MundoFox is able to show at the upfronts that it has partners in major markets, then it will be able to spend the subsequent three months competing with other television