Broadcasters Say Exclusivity Rules Repeal Could Hurt Localism

Market inefficiency and a dearth of local TV content would be likely outcomes if the FCC axes network nonduplication and syndicated exclusivity rules, broadcasters said in filings in docket 10-71. Broadcasters have been resisting Chairman Tom Wheeler's goal of repealing nondupe and syndex rules (see 1508270036).

Repeal of syndex and nondupe "will exacerbate the 'David and Goliath' problems already present in the video marketplace between small TV broadcast stations" and major multichannel video programming distributors (MVPDs), Commonwealth Broadcasting CEO Steven Newberry told Media Bureau staff, according to an ex parte letter filed Monday. Elimination of those rules would harm the hundreds of small owners of one or two TV stations, because the burden of enforcing their exclusivity rights through courts will mean more money spent on lawsuits and less on reporter salaries or equipment, Newberry said. He also said the rules are effective from a cost-benefit standpoint, ensuring "a robust local broadcasting system" yet taking up negligible FCC time and staffing. While cable operators are looking forward to being able to import distant, cheaper signals that carry the same network and syndicated programming, there is no evidence those savings would benefit customers, he said.

The alternative without those rules means "messy court cases with multiple parties and attendant costs to companies and the taxpayers," Klarn DePalma, general manager of WFSB (CBS) Hartford, told Media Bureau staffers, according to an ex parte letter filed Friday. The syndex and nondupe rules "are part of a complex web" that also includes compulsory copyright, retransmission consent and satellite exclusivity, and removing any one part "of a complicated regulatory and statutory scheme undermines the checks and balances that Congress has created," DePalma said. The rules also are a backbone of localism because stations pay for exclusivity from content owners so they then build local operations that produce local news, sports and other information, and widespread importation could mean local emergency information -- such as about hazardous weather conditions -- suffers, he said. MVPDs would have an incentive "to damage lower-ranked broadcast television stations so that local advertising would go to their interconnects or local sales teams," DePalma said.

Media General executives raised similar concerns about local content in an ex parte letter about meetings between such executives as Chief Operating Officer Deborah McDermott and General Counsel Andrew Carington and Commissioners Ajit Pai and Mignon Clyburn and Wheeler aide Maria Kirby. Minus exclusivity rules, Media General stations -- particularly those in small markets -- "would lack the resources to provide the same level of local coverage, severely undermining the FCC's core public interest goal of localism," it said. The lack of FCC complaints and litigation indicates the rules' efficacy, said the broadcaster. "The certainty of enforcement under the simple, bright-line exclusivity rules acts as a deterrent among various industry players."

Any end to exclusivity rules should be paired with rules blocking networks from interfering with affiliates' out-of-market retrans negotiations, the American Cable Association said in an ex parte letter posted Monday. If the FCC does repeal the exclusivity rules, broadcast networks -- perhaps working with local affiliates -- may try to expand their affiliates' zones of exclusivity, thus still making out-of-market stations unavailable, ACA said. That could end up stopping stations -- such as significantly viewed ones and stations that serve "orphan counties" -- from exporting their signals to nearby cable operators, "and consumers will lose access to vital weather information, in-state news and relevant political advertising that they may not receive from their in-market station," ACA said.

While the FCC might want to end using its processes to enforce privately negotiated exclusivity rights, it should preserve "the ability of willing broadcasters to negotiate with MVPDs for distant signals that best satisfy consumer needs by preventing network interference," ACA said. That should mean declaring as a per se good-faith violation any agreements that limit the ability of a station to grant retrans consent to an MVPD, though the FCC alternately could clarify that such broadcast network interference in retrans consent violates existing good-faith standards, ACA said. At a minimum, the FCC should make clear that the prohibition against a negotiating entity refusing to designate a representative who can make binding representations on retrans includes situations where a station has given a network a veto or pre-approval power over retrans agreements with MVPDs.

The ACA proposals don't have broadcast industry support, said a broadcast ally. They "show the urgent need to repeal the cable compulsory license and transition broadcasters to a pure copyright environment for their negotiations with all distributors who would like to retransmit the broadcasters' programs," emailed Preston Padden, executive director, Expanding Opportunities for Broadcasters Coalition.