Exclusivity Rule Could Fall as Wheeler Circulates Set of Proposed Orders

The exclusivity rule and some broadcaster/pay-TV negotiating tactics could be going by the wayside, as some had expected (see 1508110026). FCC Chairman Tom Wheeler said Wednesday his office is circulating a set of draft orders tackling retransmission consent rules. The aim is "to bring governance up to date with the practical realities of today’s media landscape and will ensure that consumers remain well-served by our media policies," Wheeler said in a blog post announcing the retrans proposals and other possible rule changes affecting everything from AM radio to station contests. It also, if adopted, would set up a system for market modification for DBS and let local governments, local broadcasters and satellite providers request such market changes.

In FCC sights is the exclusivity rule that blocks a multichannel video programming distributor for running a nonlocal station when the local one is blacked out due to retrans consent issues. Eliminating that "would take 50-year old rules off our books that have been rendered unnecessary by today’s marketplace," Wheeler said.

"It is good to get outdated and unnecessary rules off the books," but the exclusivity rules proposal won't eliminate network exclusivity, said Thomas Larsen, Mediacom senior vice president-government and public relations, in an email Wednesday. "In today’s world, network exclusivity is controlled largely by the networks in their agreements with the affiliates. If the network prevents one of its affiliates from exporting their signal into a neighboring market, then the elimination of the network non-duplication rule will not help consumers caught in retrans blackout."

Protesting such an exclusivity change, NAB in a statement Wednesday called those rules "a linchpin of the local broadcast business model and said they help sustain viewer access not only to high-quality network entertainment programming, but also to local news and lifeline information." The proposed order "would threaten the vibrancy of our uniquely free and local broadcast system," said the association. "NAB strongly opposes this order that would ultimately cause harm to consumers and their reliance on localism. It is curious that the FCC keeps relying on the rationale that it is taking such pro pay-TV actions because the rules are decades-old, but refuses to even review or remove broadcast ownership rules that were imposed under market circumstances that clearly no longer exist."

Wheeler said he's also circulating a proposed review of the “totality of the circumstances test" in retrans negotiations. The NPRM likely will include a variety of actions on which the FCC will ask for feedback on whether they constitute good- or bad-faith negotiating, said a broadcast attorney. Blocking of streaming content almost surely will be one, as well a cooling-off period that requires a signal be still on the air after expiration of a retrans agreement, said the lawyer. That cooling-off idea could face particularly strong opposition from broadcasters, who see it as a violation of copyright law, said the attorney. Other items that could be subject to the bad-faith question include the idea of requiring cable companies to give more advance notice about signals potentially being blacked out, or cable companies having to let people out of contracts or offer refunds during blackouts, the attorney said.

The Satellite Television Extension and Localism Act Reauthorization Act, which became law Dec. 4, gave the FCC nine months to start a rulemaking "to review its totality of the circumstances test for good faith negotiations under clauses 12 (ii) and (iii) of section 325(b)(3)(C) of the Communications Act." Almost since STELAR passage, cable companies and broadcasters have been submitting numerous filings in docket 10-71, weighing in on various good- and bad-faith questions.

The proposed rule changes also would alter the contest rule, letting broadcasters put the material terms of station-run contests online instead of having to broadcast them. That idea was subject to an NPRM released last year that received unanimous support (see 1502200035). It also would incorporate some items from the FCC's AM revitalization NPRM launched in 2013 (see 1504240059).

The draft AM order and contest rules proposals aren't expected to generate strong opposition, industry and FCC officials said. Proposed rule changes designed to help radio already enjoy bipartisan support from Commissioners Mignon Clyburn and Ajit Pai, Wheeler noted. The item on circulation includes a Further NPRM and a notice of inquiry, he said. “This comprehensive set of actions modernize our rules to keep them in line with the public interest in an ever-changing marketplace, and will help to ensure the continued vitality of AM radio.”