Broadcaster Use of New Satellite Market Modification Rules Remains To Be Seen

Whether many communities seek carriage of different broadcast signals under new satellite market modification rules the FCC adopted earlier this month remains to be seen, experts told us. The new rules "certainly give [broadcasters] more options and more ways to reach consumers," said Steve Ennin, president of communications analytics firm Centris Marketing Science. But Frank Jazzo of Fletcher Heald, who has represented a number of satellite and broadcast clients, said, "I wasn't aware of a lot of demand [for satellite market modifications]. I'm not sure how many changes we are going to see."

The order expands the cable market modification rule to apply to satellite market modifications, with a couple of caveats -- most notably, an exception if the market modification is “not technically or economically feasible.” One per se sign of such infeasibility is if the new community is outside the relevant spot beam carrying that station. The new rules also give particular weight to any market modification that would bring an in-state signal and require satellite operators to provide the station even if it can do so only to part of a community, rejecting what had been Dish arguments that such partial coverage would lead to customer confusion.

The satellite market modification also opens the door to county governments petitioning for satellite market modifications, as had been pushed by some state legislators. According to the order, that step goes to the heart of a key part of the Satellite Television Extension and Localism Act Reauthorization Act -- promoting consumer access to in-state programming. “We seek to empower orphan counties to eliminate certain legal barriers which may have deprived local residents of the cultural, sports, political and local news relevant to the state in which they reside,” the FCC said in the order.

Satellite subscribers more than cable customers suffer the problem of not receiving any in-state TV broadcast signals, the FCC said. “Cable customers rarely complain about this issue. This may be a product of the localized nature of cable systems as opposed to the national nature of satellite service." When the agency issued a notice of proposed rulemaking in March, FCC Chairman Tom Wheeler said the proposed rule changes would "make sure that arcane regulations don’t preclude satellite TV customers from accessing in-state coverage of news, emergency information, or their local sports teams."

Satellite market modification is primarily an issue for smaller stations in the bottom 100 markets, said Harold Wright, vice president and general manager, Virginia Broadcasting Corp., which runs WVIR-TV Charlottesville. WVIR is the de facto NBC broadcaster for the nearby Harrisonburg DMA, and is carried on cable in that market but not by any satellite operator, Wright said. "All that service we provide does nothing for us in terms of our rights because we have no rights. Thus far satellite has chosen not to [retransmit WVIR] because they're not required to add us to the offerings."

Virginia Broadcasting was one of the few filers in docket 15-71, which saw little support or opposition. Much of the traffic in docket 15-71 was from DirecTV on its proposals for draft forms to be used by broadcasters seeking a market modification and by direct broadcast satellite operators who have to turn one down, as well as its arguments for what would be valid reasons for rejecting such a modification request (see 1506010020). The FCC order puts the burden of demonstrating infeasibility on the satellite operator, with what the agency called “a detailed certification." Most of the DBS infeasibility claims likely will involve insufficient spot beam coverage, the FCC said, and a DBS certification showing that infeasibility will have to include a detailed explanation of the process the DBS operator used to determine the spot beam coverage of the area in question. DirecTV, Dish and the Satellite Industry Association declined to comment on the finalized rules.