Broadcast Industry in Uproar as Media Bureau Chief Calls for Exclusivity Rules End
Broadcasters and allies are howling over the FCC's increased public advocacy for repeal of the syndicated exclusivity and network nonduplication rules. "Chairman [Tom] Wheeler appears to be on a singular crusade to eliminate exclusivity rules that serve an important part of the overall localism landscape," NAB said in a statement Tuesday in response to Media Bureau Chief Bill Lake's blog. Lake said that the exclusivity rules "are past their prime in light of the significant statutory and marketplace changes that have occurred since their adoption."
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The blog is likely at the bidding of Wheeler, who doesn't have the votes needed to repeal the rules, said a broadcast executive. "This may be more internal than external," broadcast attorney Jack Goodman said. Broadcast industry officials said it's unusual for a bureau chief to express opinions on pending matters.
Lake's blog echoed language Wheeler used in August when he indicated a desire to eliminate the exclusivity rules (see 1508120051). While Wheeler then called the exclusivity rules "outdated and unnecessary," Lake Tuesday said "it's time for the Commission to end its intrusion into this aspect of the commercial marketplace and leave it to the TV networks, syndicators and broadcast stations to implement the exclusive distribution rights they choose to create."
Lake spent much of the blog rebutting what has become a major issue for broadcasters -- that the exclusivity rules are intertwined with the compulsory copyright license requirements set by Congress and that axing the exclusivity rules while Congress does nothing about compulsory licenses would let multichannel video programming distributors retransmit copyrighted material with no recourse or compensation (see 1509100049). "The asserted inextricable link does not exist, nor does the imagined free ride," Lake said. He said that what the compulsory license argument ignores is the 1992 Cable Act's creation of the retransmission consent regime and its requirement that MVPDs get broadcaster permission to retransmit a broadcast station's signal. Minus the exclusivity rules, networks, syndicators and broadcast stations would still be able to come up with exclusive distribution rights contractually, he said. The main reason for adopting MVPD compulsory licenses was the notion that separately licensing all the different programming carried by a broadcaster would be onerous, Lake said. While cable channels' success in getting the rights for the programs they provide to MVPDs "may justify a fresh look at that rationale," Lake said, "geographic exclusivity can be well protected by contract with the backup of the retransmission consent regime."
That argument is wrong, broadcast allies told us. While broadcasters can take a cable company to court when there has been a violation of their copyright, the legal landscape minus the exclusivity rules is too convoluted, said Preston Padden, executive director of Expanding Opportunities for Broadcasters Coalition. "Unless the poor judge is going to do three years of legal research, they're not going to understand what's going on." An easy solution would be the FCC adopting an order saying the exclusivity rules will be repealed the day Congress repeals the copyright license, Padden said. Retrans "didn't change the dynamic," Goodman said, adding Congress in the past explicitly indicated that the 1992 Cable Act was not intended to change the exclusivity regime. "This is not the way Congress or the commission has thought of this," and eliminating exclusivity rules while keeping the compulsory copyright makes it easy for cable operators to carry distant signals and greatly shifts negotiating leverage in cable's favor, Goodman said.
In a filing posted Tuesday in docket 10-71, NAB responded to American Cable Association arguments (see 1509170058) that compulsory license and the exclusivity rules are not tightly bound together. Congress was fully aware of the copyright regime, as well as the various FCC regulations governing cable TV-broadcaster relations, when it adopted retransmission consent, NAB said. Congress explicitly said at the time that “[a]mendments or deletions of the [exclusivity rules]” would “be inconsistent with the regulatory structure created” in the Cable Act, including retransmission consent, NAB said. "By eliminating the exclusivity rules, the Commission would not only upset the balance Congress relied upon to craft laws governing carriage of broadcast signals by cable TV providers, but also the balance created by Congress" between cable TV providers and DBS, said NAB.
Padden said he has been in contact with congressional staffers and is meeting with some later this week regarding copyright license repeal. "But there's a very long process before Congress repeals these licenses," he said. "It takes Congress a while." Meanwhile, Goodman said, Lake's blog makes clear "They're not giving up."
In its statement, NAB said neither Wheeler nor Lake "have identified any consumer benefit to eliminating the rules. And just last year Congress included broadcast exclusivity protections in the DBS context in satellite TV legislation. We're hopeful other FCC members will reject this government giveaway to Big Cable."