Media Law Newsroom

A Broadcaster May Not Refuse To Negotiate With An MVPD Regarding Retransmission Consent

The Good Faith Order determined that Congress did not intend to subject retransmission consent negotiation to detailed substantive oversight by the Commission.   Instead, the order found that Congress intended that the Commission follow established precedent, particularly in the field of labor law, in implementing the good faith retransmission consent negotiation requirement.   Consistent with this conclusion, the Good Faith Order adopted a two-part test for good faith.  The first part of the test consists of a brief, objective list of negotiation standards.   First, a broadcaster may not refuse to negotiate with an MVPD regarding retransmission consent.  Second, a broadcaster must appoint a negotiating representative with authority to bargain on retransmission consent issues.  Third, a broadcaster must agree to meet at reasonable times and locations and cannot act in a manner that would unduly delay the course of negotiations.  Fourth, a broadcaster may not put forth a single, unilateral proposal.  Fifth, a broadcaster, in responding to an offer proposed by an MVPD, must provide considered reasons for rejecting any aspects of the MVPD’s offer.  Sixth, a broadcaster is prohibited from entering into an agreement with any party conditioned upon denying retransmission consent to any MVPD.  Finally, a broadcaster must agree to execute a written retransmission consent agreement that sets forth the full agreement between the broadcaster and the MVPD. 

The second part of the good faith test is based on a totality of the circumstances standard.  Under this standard, an MVPD may present facts to the Commission which, even though they do not allege a violation of the specific standards enumerated above, given the totality of the circumstances constitute a failure to negotiate in good faith. 

The Good Faith Order provided examples of negotiation proposals that presumptively are consistent and inconsistent with “competitive marketplace considerations.”   The Good Faith Order found that it is implicit in Section 325(b)(3)(C) that any effort to further anti-competitive ends through the negotiation process would not meet the good faith negotiation requirement.   The order stated that considerations that are designed to frustrate the functioning of a competitive market are not “competitive marketplace considerations.”  Further, conduct that is violative of national policies favoring competition -- that, for example, is intended to gain or sustain a monopoly, an agreement not to compete or to fix prices, or involves the exercise of market power in one market in order to foreclose competitors from participation in another market -- is not within the competitive marketplace considerations standard included in the statute. 

Finally, the Good Faith Order established procedural rules for the filing of good faith complaints pursuant to Section 76.7 of the Commission’s rules.   The burden of proof is on the complainant to establish a good faith violation and complaints are subject to a one year limitations period.

 B. The Reciprocal Bargaining Obligations of SHVERA
 
In enacting the SHVERA good faith negotiation obligation for MVPDs, Congress used language identical to that of the SHVIA imposing a good faith obligation on broadcasters, requiring the Commission, until January 1, 2010, to:

prohibit a multichannel video programming distributor from failing to negotiate in good faith for retransmission consent under this section, and it shall not be a failure to negotiate in good faith if the distributor enters into retransmission consent agreements containing different terms and conditions, including price terms, with different broadcast stations if such different terms and conditions are based on competitive marketplace considerations.

Congress did not instruct the Commission to amend its existing good faith rules in any way other than to implement the statutory extension and impose the good faith obligation on MVPDs.  Accordingly, we believe that Congress did not intend that the Commission revisit the findings and conclusions that were reached in the SHVIA rulemaking.  The little legislative history directly applicable to Section 207 supports this approach and, in pertinent part, provides:

In light of evidence that retransmission negotiations continue to be contentious, the Committee chose to extend these obligations, and also to begin applying the good-faith obligations to MVPDs.  The Committee intends the MVPD good-faith obligations to be analogous to those that apply to broadcasters, and not to affect the ultimate ability of an MVPD to decide not to enter into retransmission consent with a broadcaster.  

We believe that the implementation of Section 207 most consistent with the apparent intent of Congress is to amend our existing rules to apply equally to both broadcasters and MVPDs.  We tentatively conclude that we should amend Sections 76.64(l) and 76.65 as set forth on Appendix A of this Notice.  We seek comment on this proposal and any other reasonable implementation of Section 207.

We note that the original SHVIA good faith provision by its terms applied to “television broadcast stations.”  Similarly, the SHVERA good faith provision applies to “multichannel video programming distributors.”  We seek comment whether, under the statute, the good faith negotiating standards may be any different for carriage of significantly viewed television broadcast stations outside of their designated market area (“DMA”).   Significantly viewed television broadcast stations do not have carriage rights outside of their DMA and carriage of their signals by out-of-market MVPDs is permissive.  We seek comment as to whether the Commission has discretion under Section 325(b)(3)(C) to distinguish this situation.  For example, if a television broadcast station from DMA X is significantly viewed in DMA Y and seeks carriage on an MVPD located in DMA Y, must the MVPD in DMA Y negotiate retransmission consent in good faith with the broadcaster from DMA X in exactly the same way that it negotiates with broadcasters that are located in DMA Y?  Should the same good faith negotiation standard apply to broadcasters and MVPDs regardless of the DMA in which they reside?  Should a different standard apply, and if so what standard?  Should the good faith retransmission consent negotiation obligation apply only to MVPDs and broadcasters located in the same DMA?  We seek comment on this issue.

III. PROCEDURAL MATTERS
A. Initial Regulatory Flexibility Analysis
The Initial Regulatory Flexibility Analysis is attached to this Notice as Appendix B.
B. Initial Paperwork Reduction Act of 1995 Analysis
This document does not contain proposed information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13.  In addition, therefore, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).
 
C. Ex Parte Rules 
Permit-But-Disclose.  This proceeding will be treated as a “permit-but-disclose” proceeding subject to the “permit-but-disclose” requirements under Section 1.1206(b) of the Commission’s rules.   Ex parte presentations are permissible if disclosed in accordance with Commission rules, except during the Sunshine Agenda period when presentations, ex parte or otherwise, are generally prohibited.  Persons making oral ex parte presentations are reminded that a memorandum summarizing a presentation must contain a summary of the substance of the presentation and not merely a listing of the subjects discussed.  More than a one- or two-sentence description of the views and arguments presented is generally required.   Additional rules pertaining to oral and written presentations are set forth in section 1.1206(b).
D. Filing Requirements

Comments and Replies.  Pursuant to Sections 1.415 and 1.419 of the Commission’s rules,  interested parties may file comments on this Notice on or before 30 days after publication in the Federal Register, and reply comments on or before 45 days after publication in the Federal Register. Comments may be filed using:  (1) the Commission’s Electronic Comment Filing System (“ECFS”), (2) the Federal Government’s eRulemaking Portal, or (3) by filing paper copies. 

Electronic Filers:  Comments may be filed electronically using the Internet by accessing the ECFS:  http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal:  http://www.regulations.gov. Filers should follow the instructions provided on the website for submitting comments.  For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this proceeding, filers must transmit one electronic copy of the comments for each docket or rulemaking number referenced in the caption.  In completing the transmittal screen, filers should include their full name, U.S. Postal Service mailing address, and the applicable docket or rulemaking number.  Parties may also submit an electronic comment by Internet e-mail. To get filing instructions, filers should send an e-mail to ecfs@fcc.gov, and include the following words in the body of the message, “get form.”  A sample form and directions will be sent in response.

Paper Filers:  Parties who choose to file by paper must file an original and four copies of each filing.  If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.  Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail (although we continue to experience delays in receiving U.S. Postal Service mail).  All filings must be addressed to the Commission’s Secretary, Office of the Secretary, Federal Communications Commission.

 The Commission’s contractor will receive hand-delivered or messenger-delivered paper filings for the Commission’s Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC  20002.  The filing hours at this location are 8:00 a.m. to 7:00 p.m.  All hand deliveries must be held together with rubber bands or fasteners.  Any envelopes must be disposed of before entering the building.

Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD  20743.
U.S. Postal Service first-class, Express, and Priority mail should be addressed to 445 12th Street, SW, Washington DC  20554.

Availability of Documents.  Comments, reply comments, and ex parte submissions will be available for public inspection during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, S.W., CY-A257, Washington, D.C., 20554.  These documents will also be available via ECFS.  Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat. 

Accessibility Information.  To request information in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the FCC’s Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).  This document can also be downloaded in Word and Portable Document Format (PDF) at: http://www.fcc.gov. 

Additional Information.  For additional information on this proceeding, contact Steven Broeckaert, Steven.Broeckaert@fcc.gov, of the Media Bureau, Policy Division, (202) 418-2120.
IV.  ORDERING CLAUSES

Accordingly, IT IS ORDERED that pursuant to Section 207 of the Satellite Home Viewer Extension and Reauthorization Act of 2004, and Sections 1, 4(i) and (j), and 325 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i) and (j), and 325, NOTICE IS HEREBY GIVEN of the proposals and tentative conclusions described in this Notice of Proposed Rulemaking.

IT IS FURTHER ORDERED that the Reference Information Center, Consumer and Governmental Affairs Bureau, shall send a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.