The Time Has Come to End Outdated Broadcasting Exclusivity Rules

Last month, Chairman Wheeler circulated an order that would eliminate the Commission’s network non-duplication and syndicated exclusivity guidelines. As Chairman Wheeler explained, these types of 50-year old rules are previous their prime in light of the substantial statutory and marketplace changes that have occurred since their adoption. Provided these changes, it’s time for the Commission to end its intrusion straight into this aspect of the commercial market place and leave it to TV networks, syndicators, and broadcast stations to implement the exclusive submission rights that they choose to create.

Some have objected to the proposed action on the ground that the exclusivity rules are inextricably linked to the mandatory copyright licenses enacted by Congress for cable and satellite workers. These advocates argue that, as a result, the Commission should keep its exclusivity rules unless and until Congress repeals the compulsory copyright permit. Otherwise, the argument goes, the cable and satellite operators will be given a free ride to retransmit copyrighted material without paying for it and in disregard of exclusive rights that broadcasters have bargained for.

The asserted inextricable link does not exist — nor will the imagined free ride. These types of advocates ignore major pieces of the intervening history – notably the creation of the retransmission consent program in the 1992 Cable Act.

The historical backdrop for the exclusivity rules helps to explain why they are unneeded today. The Commission payment adopted network non-duplication rules regarding cable in 1965. Seven years later, the Commission adopted syndicated exclusivity rules for cable, consistent with a 1971 Consensus Agreement discussed among the cable, broadcast, and system production industries to facilitate the growth and development of cable television service. The parties to the Consensus Agreement decided to support syndicated exclusivity rules regarding cable, as well as copyright legislation that could for the first time subject cable retransmission associated with broadcast television programs to full copyright liability but also include a mandatory copyright license for cable. Congress amended the Copyright Act within 1976 to create a compulsory copyright permit for cable. The compulsory permit permits cable systems to retransmit the signals of broadcast stations without having to negotiate separate copyright permit with every owner of content carried on the stations’ signals, exactly where carriage of the stations complies along with FCC rules. The exclusivity guidelines and a more limited compulsory copyright laws license were later extended to satellite operators.

When the network non-duplication and syndicated exclusivity rules for cable were adopted in 1965 and 1972, so when the cable compulsory license was later created, the Communications Operate did not require cable operators to get a broadcast station’s consent to carry the signal, either locally or within a distant market in which another broadcaster had obtained exclusive distribution legal rights for the same programming. Thus, the exclusivity rules were viewed as necessary to avoid a cable operator from importing an out-of-market station carrying duplicative programming. That situation changed significantly with passage of the 1992 Cable Act. That law for the first time forbade cable operators from retransmitting the signals of a broadcast station with no its consent.

These days, the Communications Act forbids most MVPDs – cable and satellite television alike – from retransmitting the signal of a broadcast station with no broadcaster’s permission.

Under our current retransmission consent program, adistant station must give the consent before its signal might be imported into another station’s nearby market. And, in practice, network affiliation and syndication agreements typically prohibit broadcast stations from granting MVPDs retransmission consent for out-of-market carriage of their signals. Networks, syndicators, and broadcast stations that choose to generate exclusive distribution rights may efficiently safeguard those rights through independently negotiated affiliation and syndication contracts. They will continue to get this right in the absence of our exclusivity rules. It is thus incorrect to suggest that, in the absence of the exclusivity rules, the compulsory copyright laws licenses would allow MVPDs “to cancel exclusive licenses negotiated by broadcasters in the marketplace. ”

Nor would MVPDs get a free trip to carry copyrighted material without paying. MVPDs today pay fees to broadcasters for the right to retransmit their indicators, and when networks, syndicators, or content creators license their content to transmit stations they understand that the content carried on the broadcast signal will be retransmitted by MVPDs, consistent with the agreed-on territorial restrictions. The transactions necessarily reflect that understanding. The fact that an MVPD pays to retransmit the “signal” of a station does not conceal the fact that the payment is the key that unlocks the right to retransmit the content carried on the signal and that the content providers have been paid for inclusion of their programming.

Is it time for you to reconsider the compulsory licenses regarding cable and satellite? The main explanation for their adoption was that it would be too cumbersome for MVPDs to make a deal separately to license all the different programming carried on a broadcast signal. The later success of cable connection channels in acting as “rights aggregators” to obtain the necessary rights to supply the programming they assemble to MVPDs may justify a fresh see that rationale. But the compulsory licenses, as well as the rationale on which they are based, provide no reason to retain the exclusivity rules, as geographic exclusivity could be well protected by contract, with all the backup of the retransmission consent program.

There was a time as well as a place for the Commission’s exclusivity guidelines. That time has passed. It is now period for the Commission to step aside and let programming negotiators within the private marketplace do their work opportunities. Networks, syndicators, and broadcast stations today decide what exclusivity procedures to include in their affiliation and syndication agreements – and they will be free to do so in the absence of our guidelines. They will have multiple means of enforcing those provisions without the additional gadget of an exclusivity complaint to the Commission payment, which has scarcely ever been filed. They may choose to include provisions in their contracts geared to facilitating enforcement, such as procedures for private arbitration, fee shifting, choice of law, and third-party named beneficiary rights. And in the end any train station will know that a network or syndicator does not have to continue to deal with a train station that grants retransmission rights outside of the scope permitted by the affiliation or syndication agreement.

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