Broadcasters Swarm FCC To Urge Keeping of Exclusivity Rules

A long line of local broadcasters is lobbying the FCC to preserve the exclusivity rules that Chairman Tom Wheeler indicated he hopes to eliminate (see 1509040016). ITTA said their demise needs to be paired with prohibitions on measures that would act "as an end run around repeal of the rules."

"Even a cursory examination reveals that the rules continue to serve an important purpose and in fact have become more important as competing programming sources increasingly rely on their own program exclusivity to compete for audiences and advertisers," various Texas TV stations and Texas Association of Broadcasters President Oscar Rodriguez told FCC officials, including Commissioners Mignon Clyburn and Jessica Rosenworcel, according to a filing posted Thursday in docket 10-71. Minus exclusivity rules, "enforcing a station's program exclusivity against cable signal importation contractually is simply impossible," the Texans said. "Burdening courts, TV stations and cable operators with the cost of building a new body of precedent in what will be a novel area of law is inefficient in the extreme for government, and a diversion of station resources from serving the public."

Eliminating network nonduplication and syndicated exclusivity rules would mean more importation of distant signals by cable operators, said an array of Colorado, Georgia, Indiana, Kansas, Nebraska and Tennessee TV stations in separate meetings with Commissioners Michael O'Rielly and Ajit Pai, according to a filing posted Thursday. Eliminating the rules would mean "massive and increasingly consolidated cable operators will have much more flexibility to move the signal of one station into multiple different markets, increasing their leverage in retransmission consent negotiations and marginalizing their primary competitor for the sale of local broadcasting," the broadcasters said.

More than 60 broadcasters and state broadcasting association representatives from 25 states have met with FCC officials over the past week and a half, NAB said Thursday.

The possible exclusivity rules elimination is part of "a wholesale shift in longstanding Commission and Congressional policy, which supports and fosters local broadcasting," NAB said in a filing posted Thursday. "The public has yet to hear a meaningful rationale as to why the rules should be discarded." Despite being "simply old," NAB said, "the rules are more relevant than ever today, given the unparalleled MVPD consolidation and the sheer size and market power of many of the companies in the pay TV business." Multichannel video programming distributors have backed eliminating network non-dupe and syndex.

Broadcasters and their allies have argued that consideration of exclusivity rules must be done in the context of the compulsory license rules remaining in place. It was an argument brought up again by CBS in an ex parte filing posted Thursday and by Preston Padden in a filing posted Wednesday in which he said the FCC should urge Congress to repeal the cable and satellite compulsory licenses. The exclusivity rules "were adopted to ameliorate the capacity of these government granted compulsory licenses to abrogate exclusive rights negotiated in the marketplace," said Padden, executive director of Expanding Opportunities for Broadcasters Coalition.

But the exclusivity rules "have a distorting effect on marketplace negotiations," ITTA said Thursday in an ex parte on meetings between President Genny Morelli and staff from Wheeler's and Pai's offices. "By ensuring that the local station is the sole supplier of network and syndicated programming, the exclusivity rules shield broadcasters from competition, allow broadcasters to demand exorbitant retransmission consent fees through take-it-or-leave-it negotiation tactics, and enable broadcasters to block availability of programming even if negotiations fail." Eliminating those rules "does not by itself go far enough" because the FCC also needs to block such behaviors as network/affiliate arrangements that would limit an MVPD's ability to import a distant signal, said the group of midsize telcos. Repeal of the exclusivity rules would likely mean more broadcasters relinquishing their retransmission consent rights to third parties, it said. "The right to grant retransmission consent and negotiate carriage with MVPDs in a market should rest exclusively with independent local broadcasters, free from outside intrusion."

Repeal of the rules wouldn't hurt localism or mean a rise in distant signal carriage because MVPDs still have an incentive to reach agreements with local stations for their local content, ITTA said: "Greater competition among broadcasters would incentivize them to respond to conditions in local markets by improving the quality of local programming, benefiting the public interest."