Federal Register: November 14, 2000 (Volume 65, Number 220)
DOCID: FR Doc 00-29028
FEDERAL COMMUNICATIONS COMMISSION
Federal Communications Commission
CFR Citation: 47 CFR Parts 73 and 76
Docket ID: [CS Docket No. 00-2; FCC 00-388]
ACTION: Television broadcasting:
DOCUMENT ACTION: Final rule.
Implementation of the Satellite Home Viewer Improvement Act of 1999: Application of Network Nonduplication, Syndicated Exclusivity, and Sports Blackout Rules to Satellite Retransmissions of Broadcast Signals
DATES: Effective November 29, 2000.
This document adopts regulations to implement certain aspects of the Satellite Home Viewer Improvement Act of 1999, which was enacted on November 29, 1999. Among other things, the act authorizes satellite carriers to add more local and national broadcast programming to their offerings and seeks to place satellite carriers on an equal footing with cable operators with respect to availability of broadcast programming. This document adopts regulations that apply current cable rules for network nonduplication, syndicated program exclusivity and sports blackout to satellite carriers.
Satellite Home Viewer Improvement Act; implementation—; Network nonduplication, syndicated exclusivity, and sports blackout rules; application to satellite retransmissions,
This is a summary of the Commission's Report and Order (``Order''), FCC 00388, adopted October 27, 2000; released November 2, 2000. The full text of the Commission's Order is available for inspection and copying during normal business hours in the FCC Reference Center (Room CYA257) at its headquarters, 445 12th Street, SW, Washington, DC 20554, or may be purchased from the Commission's copy contractor, International Transcription Service, Inc., (202) 857 3800, 1231 20th Street, NW, Washington, DC 20036, or may be reviewed via internet at http://www.fcc.gov/csb/ For copies in alternative formats, such as braille, audio cassette or large print, please contact Sheila Ray at ITS.
Paperwork Reduction Act
This Report and Order contains new or modified information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 10413. The Commission is requesting Office of Management and Budget (``OMB'') approval, under the emergency processing provisions of the 1995 Act (5 CFR 1320.13), of the information collection requirements contained in this Report and Order. Synopsis of the Order
1. In this Report and Order (``Order''), we adopt network non duplication, syndicated exclusivity, and sports blackout rules for satellite carriers. These rules implement provisions of the Satellite Home Viewer Improvement Act of 1999 (``SHVIA,'' Public Law 106113, 113 Stat. 1501, 1501A526 to 1501A545 (Nov. 29, 1999)), which provides statutory copyright licenses for satellite carriers to provide additional local and national broadcast programming to subscribers. In enacting the SHVIA, Congress sought to create parity between satellite carriers and cable operators with regard to the retransmission of broadcast programming and to expand the availability of such programming to consumers. Prior to enactment of the SHVIA, the copyright laws made it virtually impossible for satellite subscribers to receive television broadcast programming by satellite. In adopting these rules, the Commission implements the statutory requirements and seeks to facilitate competition in the multichannel video programming distribution marketplace.
2. Section 1008 of the SHVIA creates a new section 339 of the
Communications Act of 1934, as amended (``Communications Act'')
entitled ``Carriage of Distant Television Stations by Satellite Carriers.'' Section 339(b) directs the Commission to apply
the network nonduplication, syndicated exclusivity, and sports blackout rules, previously applicable only to cable television systems, to satellite carriers' retransmission of nationally distributed superstations to satellite subscribers. Congress also requires the Commission to apply the cable sports blackout rule to satellite carriers' retransmission of network stations, but only ``to the extent technically feasible and not economically prohibitive.'' The Commission released a Notice of Proposed Rulemaking (``NPRM'') on January 7, 2000, seeking comment on how best to apply these rules to satellite carriers (65 FR 4927, February 2, 2000). The Commission received 22 comments and 14 reply comments to the NPRM.
3. The network nonduplication, syndicated exclusivity, and sports blackout rules (collectively referred to herein as ``the exclusivity rules''), as applied in the cable context, generally protect exclusive contractual rights that have been negotiated between program providers and broadcasters or other rights holders. These exclusive contractual rights are potentially threatened by cable systems that are capable of importing duplicative programming from distant sources beyond the control of the contracting parties. The cable exclusivity rules provide that specific programs must be deleted from distant television broadcast signals delivered to cable subscribers if the programs are subject to exclusive rights pursuant to contracts with local stations. Additionally, pursuant to the sports blackout rule, sporting events carried on distant stations must be deleted when carriage would violate sporting teams' or leagues' arrangements to protect gate receipts in the local market.
4. Section 339(b)(1)(A) of the Communications Act, as amended by the SHVIA, requires the Commission ``to apply network nonduplication protection (47 CFR 76.92), syndicated exclusivity protection (47 CFR 76.151), and sports blackout protection (47 CFR 76.67) to the retransmission of the signals of nationally distributed superstations by satellite carriers to subscribers.'' Section 339(b)(1)(B) requires the Commission to ``apply sports blackout protection (47 CFR 76.67) to the retransmission of the signals of network stations by satellite carriers to subscribers'' ``to the extent technically feasible and not economically prohibitive.'' The SHVIA requires that the Commission implement these new rules so that they will be ``as similar as possible'' to the rules applicable to cable operators.
Summary of Decision
5. In implementing these sections of the SHVIA, the Commission attempts to be faithful to the clear Congressional intent to place satellite carriers on an equal footing with cable operators, while taking into consideration that the operational structures of these two Multichannel Video Programming Distributors (``MVPD''s) are very different. In the context of the SHVIA, which is fundamentally part of the copyright laws, we are cognizant also of the important protection that the exclusivity rules provide to broadcasters and copyright holders. The SHVIA facilitates satellite carriage of additional broadcast stations through the use of a statutory copyright license. By applying the cable exclusivity rules to satellite carriers, Congress sought to keep the competitive marketplace in balance by protecting the broadcasters' private contractual arrangements and ensuring that satellite carriers have regulatory obligations that are as similar as possible to cable operators. The statutory language unambiguously directs us to apply all three of the cable exclusivity rules to satellite carriers with respect to retransmission of nationally distributed superstations. The SHVIA further requires that only the sports blackout rule be applied to satellite carriers' retransmission of network stations and limits application of the cable rule in this context ``to the extent technically feasible and not economically prohibitive.'' Congressional intent, as expressed in the Joint Explanatory Statement, places a heavy burden on showing that rules similar to the cable rules would be ``economically prohibitive'' for satellite carriers.
6. In general, under the new statutory provisions, the network non duplication and syndicated exclusivity rules apply when a satellite carrier retransmits a nationally distributed superstation to a household within a local broadcaster's zone of protection, and the nationally distributed superstation carries a program to which the local station has exclusive rights. The program may fall under either the definition of network program (delivered simultaneously to more than one broadcast station, (47 CFR 76.5(m)) or the definition of syndicated program (sold, licensed, distributed or sold to licensees in more than one market (47 CFR 76.5(ii)). In addition, the sports blackout rules will apply when a subject sporting event will not be aired live by any local television station, and a satellite carrier retransmits a nationally distributed superstation or a distant network station carrying that sporting event to a household within the zone of protection of the holder of exclusive distribution rights to the event. In all of these cases, the television broadcast station or other rights holder may require the satellite carrier to blackout these particular programs for the satellite subscriber households within the protected zone.
7. In the NPRM we sought comments on how we could follow the Congressional mandate to apply the cable exclusivity rules as closely as possible to satellite carriers while taking account of the differences between the two industries. In general, the comments did not provide specific data on cost or technical difficulties in applying the exclusivity rules to satellite carriers and leave us with the conclusion that, in most cases, these rules can be applied directly to satellite carriers. There is a general consensus, however, that the ``community units'' used for identification of cable systems are inapplicable in the satellite context. We decide here to use zip codes in lieu of community units to define the various zones of protection afforded under the satellite exclusivity rules adopted today. In large part, the notification provisions of the cable exclusivity rules can be applied in the satellite context, except with respect to the sports blackout requirements, for which we have the statutory flexibility and record to support slightly different requirements. In a further effort to provide comparable treatment for the cable and satellite rules, we adapt the exceptions to the cable exclusivity rules for small systems to the satellite context. We also require that the contractual language granting exclusive rights in a market clearly apply to satellite carriage, and we provide a period of time for satellite carriers to phasein implementation of the new rules. Finally, we decline to take the steps advocated by the National Football League to go beyond the statutory requirements to delete nonduplicating sports programming that is part of a sports program ``unitary'' package because it would unnecessarily and unjustifiably further limit the ability of consumers to view the programming of their choice.
Statutory Interpretation and Definitional Issues
8. Section 339(b)(1), as created by the SHVIA, applies to
``satellite carriers.'' Section 339(d)(4) defines ``satellite carrier'' by reference to the Copyright Act definition as
an entity that uses the facilities of a satellite or satellite service licensed by the Federal Communications Commission and operates in the FixedSatellite Service under part 25 of title 47 of the Code of Federal Regulations or the Direct Broadcast Satellite Service under part 100 of title 47 of the Code of Federal
Regulations, to establish and operate a channel of communications for pointtomultipoint distribution of television station signals, and that owns or leases a capacity or service on a satellite in order to provide such pointtomultipoint distribution, except to the extent that such entity provides such distribution pursuant to tariff under the Communications Act of 1934, other than for private home viewing. (17 U.S.C. 119(d)(6))
Contrary to the arguments of several commenters, there is nothing in the SHVIA or the legislative history that suggests that satellite carriers operating in the CBand were intended to be exempted from the requirements of section 339(b)(1). CBand satellite carriers are licensed under part 25 of the Commission's rules. We do not agree that an isolated and ambiguous colloquy between two Senators overrides unambiguous statutory language. We recognize, however, that CBand carriers operate differently from DBS carriers and that the number of CBand subscribers is steadily decreasing, and to the extent CBand satellite carriers can be subject to exceptions from any of the exclusivity rules we adopt today, they are specifically described below. In the absence of specific language distinguishing CBand satellite carriers, references to ``satellite carriers'' in this Order refer to all satellite carriers that meet the definition in the SHVIA.
9. Section 339(b)(1)(A) of the Communications Act requires the
Commission to apply network nonduplication protection, syndicated
exclusivity protection, and sports blackout protection to the
retransmission of the signals of nationally distributed superstations
by satellite carriers to subscribers. For these purposes, a
``nationally distributed superstation'' is a term that is defined as a
television broadcast station, licensed by the Commission, that meets the following three criteria:
(A) is not owned or operated by or affiliated with a television network that, as of January 1, 1995, offered interconnected program service on a regular basis for 15 or more hours per week to at least 25 affiliated television licensees in 10 or more States;
(B) on May 1, 1991, was retransmitted by a satellite carrier and was not a network station at that time; and
(C) was, as of July 1, 1998, retransmitted by a satellite carrier under the statutory license of section 119 of title 17, United States Code.
Television network means ``a television network in the United States which offers an interconnected program service on a regular basis for 15 or more hours per week to at least 25 affiliated broadcast stations in 10 or more States'' (47 U.S.C. 339(d)(5)). A ``network station'' is ``(A) a television broadcast station, including any translator station or terrestrial satellite station that rebroadcasts all or substantially all of the programming broadcast by a network station, that is owned or operated by, or affiliated with, one or more of the television networks in the United States which offer an interconnected program service on a regular basis for 15 or more hours per week to at least 25 of its affiliated television licensees in 10 or more States'' or ``(B) a noncommercial educational broadcast station (as defined in section 397 of the Communications Act of 1934)'' except that the term does not include ``the signal of the Alaska Rural Communications Service, or any successor entity to that service.'' (17 U.S.C. 119(d)(2).)
10. In the NPRM, we stated that the television broadcast stations that meet the foregoing criteria are limited to KTLATV (Los Angeles), WPIXTV (New York), KWGNTV (Denver), WSBKTV (Boston), WWORTV (New York) and WGNTV (Chicago). KTLA, WPIX and KWGN are all now affiliates of the Warner Brothers Network (``WB''). In addition, WSBK and WWOR currently are affiliated with the UPN Network. WGN is affiliated with WB but provides a different ``syndex/nondupe proof'' signal for uplink and carriage as a superstation. We note that WB and UPN did not qualify as ``television networks'' as of January 1, 1995, the operative date referenced in section 339(d)(2)(A) because they did not satisfy each of the statutory criteria as of that date. We also stated that since no other station could meet these criteria in the future due to the date specific conditions set forth in the definition, the foregoing constitutes a finite list of the nationally distributed superstations covered by the statute. Commenters directly addressing this issue generally agree with our conclusion that this list of nationally distributed superstations is complete and finite.
11. By creating this special category known as nationally distributed superstations, Congress permits satellite carriers to retransmit these superstations to subscribers regardless of whether they are ``served'' or ``unserved'' pursuant to the Copyright Act. The amended copyright provision provides that the retransmission of nationally distributed superstations to subscribers who do not reside in ``unserved households'' shall not violate the compulsory copyright license. (An unserved household is defined in part as one that cannot receive overtheair a signal of Grade B intensity for a primary television network station (17 U.S.C. 119(d)(10)).) Thus, we conclude that as a result of section 1005(b), there is no geographic restriction on the retransmission of ``nationally distributed superstations'' pursuant to the compulsory copyright license.
12. In addition, the SHVIA amended the retransmission consent section of the Communications Act, which generally prohibits MVPDs from retransmitting the signals of a broadcaster absent the broadcaster's written authorization. The SHVIA allows a satellite carrier to retransmit the signal of a superstation outside the station's local market without the station's consent if: (i) The station was a superstation on May 1, 1991, and (ii) the station was retransmitted by the satellite carrier as of July 1, 1998, provided the satellite carrier complies with the Commission's nonduplication, syndicated exclusivity, and sports black out rules. This provision differs slightly from the definition of a nationally distributed superstation in that it does not specify that the superstation must not be affiliated with a network that existed as such as of January 1, 1995. At this time, this distinction is without practical significance because the six television stations cited above meet the relevant criteria of either definition, and there are no additional stations that are included or excluded by operation of this third criterion. As discussed in the NPRM, we conclude that, pursuant to these new statutory mandates in the SHVIA, satellite carriers are permitted to retransmit the signals of the nationally distributed superstations covered by section 339(b)(1)(A) outside the station's local market to both served and unserved households without the station's consent and without geographic restriction. In a similar but not identical provision, the SHVIA permits a cable operator or other MVPD (other than a satellite carrier) to retransmit a television broadcast station outside of its local market without its consent, provided the MVPD obtains the signal from a satellite, and the station was a superstation on May 1, 1991 and was retransmitted by a satellite carrier under the Section 119 statutory license as of July 1, 1998.
13. In addition to applying the existing cable exclusivity rules to
nationally distributed superstations, Section 339(b)(1)(B) requires the [[Page 68085]]
Commission to apply sports blackout protection to the retransmission of the signals of network stations by satellite carriers to subscribers ``to the extent technically feasible and not economically
prohibitive.'' By its terms, Section 339(b)(1)(B) applies only to ``network stations,'' which are television broadcast stations owned or operated by, or affiliated with, the television networks. Affiliates of these networks are the only entities that meet the definition of a television network station contained in the Copyright Act and are the only stations covered by Section 339(b)(1)(B). In the cable context, the Commission's sports blackout rule applies to any television broadcast station and is not limited to network stations. Consistent with the provisions of the statute, we confine the application of the satellite sports blackout rule to retransmission of network stations. The SHVIA statutory license for satellite carriers applies only to retransmission of distant network stations. Thus it is consistent for the sports blackout provisions to be similarly limited pursuant to Section 339(b)(1)(B).
14. In the NPRM we observed that the title of new Section 339, ``Carriage of Distant Television Stations by Satellite Carriers,'' indicates that this section is intended to apply to satellite retransmission of distant network stations, notwithstanding that the text of Section 339(b)(1) does not specifically so state. The cable exclusivity rules were originally created and apply today to address cable importation of distant stations. We conclude, and most commenters agree, that it was Congress' intent to apply the sports blackout rules to retransmission of distant network stations and not to local network stations. We note, too, that the statutory copyright license for satellite carriage of distant network stations relies upon the definition of ``network station'' in the copyright provisions.
15. We also sought comment in the NPRM on whether stations based in
foreign countries are affected by the SHVIA provisions requiring
application of the cable exclusivity and sports blackout rules to
satellite retransmissions. Certain commenters addressing this issue
argue that while the blackout protection afforded by the rules should
apply to a foreign station's programming carried by a U.S. satellite
carrier, a foreign station cannot invoke these protections against
satellite importation of programming into its home market. Grupo
Televisa, on the other hand, argues that the rules should apply in
favor of nonU.S. licensed border stations serving U.S. markets and
affiliated with U.S. networks, citing the inclusion of such stations in
the compulsory license of Section 1002 of the SHVIA. We agree with MPAA
and NHL that foreign stations are beyond our jurisdiction and therefore
unable to invoke the protection of the exclusivity and sports blackout
rules. With respect to retransmission of a foreign station's
programming into U.S. markets by a U.S. licensed satellite carrier, we
conclude that the satellite rules will apply as they do with respect to
the exclusivity rules governing cable systems. The definition of
``television broadcast station'' in 47 CFR 76.5(b) includes stations
licensed by a foreign government but provides that such foreign station
not entitled to assert program exclusivity. Also, in the DISCO II Order
the Commission explained that it will license the earth stations that
use a nonU.S. licensed satellite to provide service to subscribers in
the United States, rather than relicense foreign satellite operators.
The earth station operators providing service in the United States
through these nonU.S. licensed satellites are ``satellite carriers''
as defined in the SHVIA because they are licensed under either part 25 or part 100 of the Commission's rules.
Section 339(B)(1)(A): Application of Network NonDuplication, Syndicated Exclusivity, and Sports Blackout to Retransmission of Nationally Distributed Superstations
16. Section 339(b)(1)(A) requires the Commission to apply network nonduplication protection, syndicated exclusivity protection, and sports blackout protection to the retransmission of signals of nationally distributed superstations by satellite carriers. In this section, we address the application of the network nonduplication and syndicated exclusivity rules to nationally distributed superstations together because these two rules are similar in significant respects.
17. The Commission's cable television network nonduplication rule
allows a television broadcast station that has purchased exclusive
rights to network programming within a specified area to protect its
exclusivity against carriage of duplicating programming on local cable
systems. The ``specified'' or ``protected'' zone is the smaller of
either the area protected by the terms of the contract or the 35 or 55
mile area designated by the rules. In the satellite rules, this area is
generally termed the ``zone of protection'' or protected zone. (47 CFR
76.92). The rule allows a local television broadcast station to demand
that a local cable system's duplicate carriage of the same program from
an otherwise distant station be blacked out. ``Network program'' is
something of a misnomer in terms of common usage as it appears to
suggest a program provided by a recognized network. In fact, it is
defined as ``any program delivered simultaneously to more than one
broadcast station regional or national, commercial or noncommercial''
(47 CFR 76.5(m)). It is not necessary that the program be delivered by
a ``television network.'' (In addition to full power television
stations, 100 watt translator stations are allowed to demand network
nonduplication protection under certain circumstances. Translator
stations are not entitled to syndicated exclusivity protection (47 CFR
76.92(d)). Due to differential carriage rights, we are not replicating
this provision in the satellite nonduplication rules.) A station may
assert its exclusivity rights regardless of whether its signal is
carried by the cable system in question. Under the cable network non
duplication rule, a television station is entitled to assert its
exclusivity rights against a cable system serving any ``cable community
unit'' within the station's ``specified zone'' that is carrying
duplicative programming for which the local station has obtained
exclusive distribution rights. (Cable systems are comprised of one or
more ``community units'' that correspond to separate and discrete
communities or municipal entities. The rule applies on a community unit
basis by requiring the cable system for a particular community unit to
black out a specific program based on the priorities established in the
rule. The ``specified zone'' of a television broadcast station is the
35 mile area surrounding its community of license. The 35 mile
specified zone, as well as all other mileage zones used in applying the
exclusivity rules, is measured from the relevant station's ``reference
point'' in its community of license. The rules provide a list of the
reference points to identify television market boundaries used for this
purpose. See 47 CFR 76.5(e), (dd); 76.53; and 76.92(a).) A television
station's rights within these areas are limited by the terms of the
contractual agreement between the station and the holder of the rights
to the program (``rights holder''). In addition, for local programming
to be protected, the local programming must be the same as the distant
programming that is being imported into a local station's market. Even
the use of different camera crews and announcers during the production
of an imported program may result in the distant program not being [[Page 68086]]
considered the same, per Major League Baseball, 6 FCC Rcd. 5573 (1991).
18. The Commission's syndicated program exclusivity rule allows local stations to protect their exclusive distribution rights for syndicated programming on local cable systems in a local market. (A syndicated program is defined as ``any program sold, licensed, distributed or offered to television station licensees in more than one market within the United States other than as network programming. * * *'') This rule is similar in operation to the network nonduplication rule, but it applies to exclusive contracts for syndicated programming, rather than for network programming. In this rule, too, a local television station is entitled to assert its exclusivity rights within a specified zone of 35 miles surrounding the television station's city of license. Unlike the network nonduplication rule, however, the maximum zone of protection allowed under the rules is 35 miles surrounding a television station's city of license in a nonhyphenated television market and 35 miles surrounding each named city in any size hyphenated market; the zone of protection is not greater in smaller markets.
19. As with network nonduplication, the syndicated exclusivity rule applies on a community unit basis by requiring the cable system for a particular community unit to black out a specific program based on the priorities established in the rule. In addition, the geographic limits for exclusivity under the Commission's rules are limited by the terms of the contractual agreement between the station and the holder of the rights to the program. As with network nonduplication, the protected zone is the smaller of either the area of exclusivity provided in the contract or the 35 mile area surrounding the relevant reference point(s). Thus, if the rights holder grants the television station a zone of protection of ten miles, then that station would be precluded from exercising its exclusivity rights against any cable system located more than ten miles from that station's city of license. In addition, as with the network nonduplication rules, for syndicated programming to be protected, the programming covered by the contract must be the same as the distant programming. We note that under both of these cable rules, it is not necessary that the broadcast station or rights holder asserting protection actually be carried on the cable system in question, nor is it required that the rights holder asserting its rights actually display the programming for which it asserts protection. These cable rules protect contractual rights and apply even if the programming is not shown at all or if the subscribers subject to the deletion do not have another source to receive the programming. Separate Satellite Rules
20. Initially, we sought comment on whether we should incorporate the rules we adopt to implement Sec. 339(b)(1)(A) into the existing Commission rules, or whether we should adopt separate rules for satellite carriers. Commenters generally recommend that the Commission adopt separate rules for satellite carriers patterned after the cable exclusivity rules. We concur that, even though Congress specifically cited the existing rule sections in the statute, it will be less confusing and simpler to implement a separate set of rules in the satellite context. We agree with DirecTV that new rules will be easier to understand and comply with if they are contained in a parallel, but distinct, section, which will allow the differences between the rules applicable to the satellite and cable industries to be highlighted. This will enable the Commission to maintain consistency in its rules, while adopting the minor adjustments that are necessary to properly apply the rules to satellite carriers (e.g., application only to nationally distributed superstations). In this regard, we do not agree with WB that the direct references to the corresponding cable rules indicate that Congress intended the rules to be identical. The statutory language directs us to develop rules that apply the exclusivity protections in the satellite context, not merely to add the words ``satellite carriers'' in the existing cable rules. While we are establishing a separate rule section for the exclusivity rules that apply to satellite carriers, these rules will not be substantially different from the equivalent cable rules.
21. Some satellite industry commenters argue that we must take into account the distinctive characteristics of satellite services and the associated issues of technical feasibility and the cost of compliance. EchoStar contends that the rules for satellite carriers should be significantly different from the cable rules due to the characteristics of satellite services and the onerous burdens of compliance. Echostar raises a variety of technical and administrative issues, such as the need to develop a database to determine affected subscribers and the addition of ``untold layers of complexity to its authorization/ unscrambling procedures'' to delete different programs in different areas of the country if we merely apply the cable exclusivity rules to satellite without change. EchoStar asserts that unless appropriately mitigated, the rules could lead to the cessation of satellite carriage of superstations, which would contravene the legislative goal of parity between cable and satellite operators. EchoStar also argues that if Congress intended for the Commission to automatically employ the cable rules in the satellite context it would not have directed the Commission to conduct a rulemaking. Alternatively, in support of a separate rule section, DirecTV asserts that, given the technological differences between cable and satellites, in certain situations it does not make sense, or is simply not technologically feasible, to merely ``lift'' the cable rules.
22. We reject the arguments that the satellite exclusivity rules should be substantially different from the cable rules due to technical considerations and the burdens of compliance. Congress directed the Commission to make the rules ``as similar as possible'' to the cable rules and to protect the contractual exclusivity rights purchased by broadcasters and sold by program rights holders. The statute specifically cites the existing network nonduplication and syndicated exclusivity rules as guidance. In particular, the statute does not provide for any exemption from these rules based on technical feasibility or economic hardship as it does for the application of the sports blackout rules to network stations. We believe, however, that in considering the application of these rules to satellite carriers we must consider several modifications that reflect the practical differences between the two industries and the different delivery systems they employ, as detailed herein.
23. Some broadcasters argue that for there to be parity between
cable and satellite providers, the Commission should extend the
protections of network nonduplication to all distant network carriage
to protect emerging networks and notes that the existing cable rules
are not statutorily mandated. Because Congress provided for the
application of the sports blackout rule to network stations, but not
for the network nonduplication or syndicated exclusivity rules, we
believe that extending the rules in this manner is beyond what Congress
intended. We reject this proposal on the same basis that we reject the
satellite industry's request to adopt significantly different rules for satellite carriers due to technical considerations.
Zone of Protection
24. Under the network nonduplication rules, a commercial or noncommercial television station licensed to a major television market may assert exclusivity rights within its specified zone. That zone is generally the 35mile area surrounding a broadcast television station's community of license. The zone of protection for stations licensed to smaller television markets extends an additional 20 miles (``secondary zone''), for a total of 55 miles surrounding its community of license. Pursuant to the syndicated exclusivity rules, a local commercial television station is entitled to assert its exclusivity rights only within a 35mile geographic zone. There is no extended zone of protection for smaller market stations. For both rules, a station licensed to a hyphenated television market, as defined in the rules, is entitled to assert exclusivity within 35 miles surrounding each named city. However, the zone of protection may not exceed the area agreed upon between the program supplier or network and the television station nor the area within which the station has acquired broadcast territorial exclusivity rights. For purposes of all of the rules discussed in this Order, we refer generally to a ``zone of protection'' or ``protected zone'' to apply to the entire area protected by the rules' provisions.
25. A majority of commenters support the adoption of the same zones of protection for broadcast stations in this context because they provide a definitive area within which exclusivity rights may be asserted. We agree. We also concur that, as with the cable rules, the zone of protection should be limited by the terms of the contractual agreement between the station and the program rights holder, with the applicable geographic zone set forth in the rules providing an outside limit on the permitted zone of protection. Several commenters mention, but reject, the use of other zones of protection, such as a station's grade B contour or a zone of protection coextensive with the boundaries of ``local market'' for retransmission consent purposes. As Tribune observes, since Congress did not mention a zone different from that of the cable rules, it appears appropriate to use the existing specified zone. We also believe that this conclusion is consistent with the congressional directive to make these rules as similar as possible to the cable rules. We further believe that implementation in the satellite context is feasible because existing methods (e.g., the geocoding techniques used to determine served and unserved households) can be used to determine whether a household is located in a specified zone. Accordingly, local broadcast television stations will be entitled to assert exclusivity protection throughout the same zones of protection as those specified in the cable rules.
26. We reject EchoStar's proposal that a satellite carrier should
not be required to comply with requests for exclusivity (either network
or syndicated) unless the program deletion is requested by qualified
broadcast stations whose geographic zones (not counting overlaps) cover
a substantial majority of the nation. The ``geographic zone'' is
limited to the 35/55 mile area around the reference point in the
community of license. EchoStar argues that this requirement is needed
in order to deal with the mosaic of diverse deletion requests for the
same feed. EchoStar's proposal ignores the exclusivity rights of
individual broadcasters and undermines regulatory objectives, contrary
to congressional intent and, in our view, defeats the purpose of the
statutory mandate to protect the exclusivity rights of local broadcast
stations. Moreover, while EchoStar claims that it would have to develop
a huge database to determine whether a subscriber is within the
specified zone, we observe that satellite carriers already maintain
such databases of subscribers for determining eligibility for local
intolocal and network signals, for information on the particular
services to which a household subscribes, and for billing purposes. In
addition, even though satellite carriers use a nationwide or multi
state footprint to deliver programming, they provide signals on a
householdbyhousehold basis that enables them to deliver different
programming to different households based upon which programming
package the subscriber selects. Satellite carriers currently delete
programming when it is required by contracts negotiated in the
marketplace. Furthermore, as a practical matter, the programming
deletions affect only five of the six nationally distributed
superstations because WGN is ``largely, if not completely syndex and
nondupeproof.'' With respect to network program deletions, we expect
significant uniformity across markets where affiliates of WB or UPN
assert their rights since each superstation is affiliated with one of
these networks. With respect to syndicated programming, the
superstations are large market stations, which typically acquire the
most popular syndicated programming that is sold in the vast majority
of markets, making EchoStar's fear of a crazy quilt pattern of
deletions largely unfounded. Moreover, the statute unambiguously
requires that we apply the exclusivity rules in these situations.
Adopting EchoStar's proposal to limit application of the rules to the
nonexistent circumstance in which the broadcaster's geographic zone
would cover most of the nation effectively eliminates the application
of the exclusivity rules. The statutory language does not give us this
choice. We also reject EchoStar's proposal to establish a procedure to
exempt satellite carriers on a casebycase basis upon a showing of
extraordinary hardship. We believe that such a policy is contrary to
the intent of the statute to protect the rights of local broadcast
licensees. We also note that, in adopting exclusivity rules in 1988, we eliminated a similar waiver process.
Use of Zip Codes To Determine the Location of Affected Households
27. The cable rules apply the exclusivity rules on a community unit
basis within a station's zone of protection. Community units are
political jurisdictions (i.e., a city, town, or county) or portions of
political jurisdictions for which a local government body has granted a
franchise to operate a cable system. These separate areas may or may
not encompass an entire city or county. Several commenters support the
application of these rules on a community unit basis in order that they
be as similar as possible to the cable rules and to eliminate the
possible confusion to customers in the same neighborhood that would be
caused by a program being blacked out if a household subscribed to
cable, but not if it subscribed to a satellite service. In order to
promote parity between cable operators and satellite carriers, they
argue that it is important that the blackout areas for satellite
carriers be as congruent as possible with the blackout areas for
competing cable systems. They further state that requiring satellite
carriers to black out programming on the same community unit basis as
is applied to cable is the most easily applied, understood, and
enforced approach for providers and residents. Other commenters claim
that it is impossible or inappropriate to import the community unit
concept from cable to satellite as cable systems have specific,
municipallygranted franchises to serve discrete communities, the
boundaries of which are difficult to determine and unnecessarily complex to apply. They propose that subscribers
subject to the blackout rules be ascertained by means of their zip code, a method currently used by satellite carriers for other purposes. These commenters argue that since satellite providers do not have identifiers assigned to the communities they serve, as is the case for cable, a comparable method for determining the areas to which the zone of protection applies involves reliance on zip codes. This method, like the use of cable community units, is not a perfect means to achieve congruence between the zip code boundary and that of the specified zone, but it is a workable compromise using a fairly stable identifier. Moreover, in their reply comments, several proponents of the use of community units state that they would be willing to support a zip code approach as a reasonable alternative as long the rules would apply throughout the entire zip code.
28. We conclude that it is appropriate to use zip codes rather than community units in the satellite context. There are approximately 38,000 fivedigit zip codes in the United States, compared with nearly 33,000 community units. There is no readily applicable measure that will precisely match specified zones in either the cable or satellite context. However, zip codes are already used by satellite providers to determine the location of subscribers for other purposes and it would be more difficult to determine which satellite subscribers are located within a cable community unit, which is tied to the cable franchise process. As with the cable community unit concept, reliance on zip codes can often be overinclusive of the zone covered by the exclusivity rights to be protected. To closely align the rules for satellite carriers with the cable rules, we have been urged to require a satellite provider to provide protection in all relevant zip codes that fall, in whole or in part, within the zone of protection. We conclude, as described below, that if technology permits satellite carriers to more closely align their deletions to the precise areas of the protected zone, they may do so.
29. Satellite interests generally propose that the broadcaster or rights holder asserting its exclusivity rights provide the satellite carrier with an electronic file of the affected zip codes that corresponds to the specified zone. Alternatively, broadcasters contend that the satellite carriers already have zip code information that they use for other purposes and they should be responsible for determining which subscribers are located in the areas where the programming must be blacked out. Since exclusivity contracts vary in their coverage areas and it is the broadcast station or rights holder that has negotiated such contracts, we conclude that the party seeking exclusivity protection will be responsible for identifying the affected zip code areas along with the other information that must be provided to the satellite carrier. This approach is consistent with our existing cable rules that place the notification burdens on the party seeking to assert its exclusivity rights. We do not believe that this requirement places an undue burden on a broadcaster seeking exclusivity. In many cases, the contracts will provide for exclusivity up to the limits of the specified zone and the broadcaster will only have to determine the appropriate zip codes once to cover such contracts. Accordingly, we will require broadcast stations or rights holders to provide satellite carriers with the list of affected zip codes, although we will not mandate that it be in any specific format (e.g., we will not require an electronic file). We encourage satellite carriers and broadcasters to work together to effectuate the provisions of the statute, even though we place the onus of determining the affected zip codes on the party seeking exclusivity protection. We see no reason to make special or separate provisions for satellite carriers to verify that the list of zip codes is accurate. If it comes to light that the list is inaccurate, the satellite carrier may object to the broadcaster or rights holder.
30. We believe that for purposes of complying with these and other provisions of the SHVIA, satellite operators must generally be aware of the actual physical location of a subscriber. Several commenters express concerns regarding the accurate location of a subscriber whose address is a post office box (e.g., a U.S. Post Office Box or a private post office box) or rural route number, stating that a nonstreet address makes it impossible to apply any rule that relies on a geographic location. Since accurate addresses are the linchpin of a system that relies on geographic location, they propose that satellite carriers be required to certify that they have no basis for believing that subscribers have provided inaccurate addresses for purposes of evading the rules. In opposition, DirecTV argues that there is no parallel provision in the cable rules to serve as a basis for imposing this additional obligation on satellite carriers. In addition, proposals to impose a number of restrictions on satellite carriers to ``reduce if not obviate both the domestic and external grey marketing'' of satellite programming are rejected as they are beyond the scope of this proceeding.
31. On the basis of the record, there is general agreement that rural route numbers reasonably approximate the actual location of the subscriber and are acceptable because they are generally located close to the residential address where the subscriber receives the satellite programming. Accordingly, we will allow satellite carriers to use the zip codes associated with rural route numbers to determine the location of such subscribers. However, where a subscriber chooses to provide a post office box for a billing address, we will require that satellite carriers obtain a residential street addressor simply a zip code where the service is actually being received. Upon request, satellite carriers may verify the data provided by broadcasters and vice versa. We decline to adopt the reporting and auditing procedures proposed in the comments, as they would place an undue burden on broadcasters, satellite carriers and the Commission.
32. In addition, MPAA proposes that in instances in which the
satellite carriers serve individual households that are within a zip
code but outside the specified zone, such subscribers should be
permitted to petition for a waiver so that their programming is not
blacked out. It contends that, since the satellite rules apply on a
household basis, this waiver process would serve the purposes of the
statute (i.e., parity with cable and protection of rights holders)
without unduly depriving satellite subscribers beyond the specified
zone of programming. We acknowledge the cable rules require cable
operators to provide exclusivity protection throughout community units,
even if some of their subscribers in that unit are located outside the
specified zone. This requirement is based on our understanding that it
is not technically feasible for cable operators to black out
programming to individual households. On the grounds of maintaining
regulatory parity, NCTA advocates requiring satellite carriers to
delete programming throughout zip code areas that in whole or part
overlap the broadcaster's zone of protection. Notwithstanding our
general interest in regulatory parity, we are reluctant to require
satellite carriers to delete programming beyond the boundaries of the
broadcaster's or rights holder's zone of protection if they have the
technical capacity to accommodate such finetuning. Due to the
unavoidable difference in coverage between the zip code areas and the
community units, there are likely to be some differences between cable and satellite subscribers
in terms of programming required to be deleted. Therefore, there is no reason to require deletions outside the protected zone on the grounds of parity. The satellite rules provide that satellite carriers must delete protected programming from subscribers within the zone of protection, but need not delete programming from subscribers who live in the part of a zip code area that extends beyond the zone of protection.
Terms of Contractual Agreements
33. Pursuant to Sec. 76.93, television stations are entitled to exercise network nonduplication protection in accordance with their network agreements. The syndicated exclusivity rules allow television stations to exercise exclusivity rights in accordance with their syndicated program license agreement, consistent with the requirements to invoke protection specified in Sec. 76.159. Under Sec. 76.159, to be eligible for syndicated exclusivity protection, a station must have a contract or other written indicia that it holds syndication rights for the programming. Section 76.159 requires that contracts contain special language for the licensee to invoke such protection.
34. We find that the current situation is analogous to that of 1988 when the Commission reinstated syndicated exclusivity rights, and the rule we adopt treats these new rights in the same manner as we did syndicated exclusivity contracts at that time. That is, we will give effect to new or existing contracts that unambiguously grant such rights against satellite carriage and permit existing contracts to be clarified or amended if they are ambiguous or did not anticipate a change in the law.
35. The cable rules do not prescribe specific language needed to invoke network nonduplication protection. Such exclusivity is provided in the contractual provisions of networkaffiliate agreements that give individual stations the right to be the exclusive distributor of a network's programming in an area, generally within 35 miles of its city of license. Where a networkaffiliation agreement does not provide for network nonduplication protection against satellite carriage of superstations because this right was unanticipated or the contract is ambiguous regarding such rights, parties will be given an opportunity to amend their agreements to include clear, specific language, as described below.
36. Some commenters contend that if the special language required by the cable syndicated exclusivity rules appears in a contract, it is applicable to satellite carriers. They contend that this language invokes the two essential elements for protectionretransmission pursuant to the compulsory license and reference to the Commission's rules. They state that any station with exclusivity rights visavis cable should be considered to hold the same rights with respect to satellite carriers and that parties should not be required to renegotiate existing exclusivity contracts. We disagree. We cannot assume that the parties to these existing contracts negotiated for protection against satellite carriage when duplicating carriage by satellite was not covered by the Commission's exclusivity rules. We agree with other commenters who counter that the rules should only give effect to contracts that unambiguously grant exclusive rights visaa vis satellite carriers. They assert that existing contracts should not be enforceable against satellite carriers unless it is clear that the licensee or rights holder has negotiated for and received such rights. Until the SHVIA was enacted on November 29, 1999, there was no certainty of satellite exclusivity requirements. Arguably, parties could not have a reasonable expectation of exclusivity protection until the rules adopted by this Order take effect. Accordingly, we conclude that only those exclusive contracts that specifically cover satellite delivered programming or are broad enough to encompass the delivery of duplicating programming by any delivery means (e.g., cable, satellite, wireless cable) entitle a station to assert exclusivity rights under these rules. Without such specificity, it is not clear whether the party granting the exhibition rights for the programming intended to convey network nonduplication or syndicated exclusivity rights to the broadcaster in the satellite context.
37. In reinstituting the syndicated exclusivity rules in 1988, the Commission allowed an opportunity for parties to amend their contracts to reflect the newly granted rights. Because government protection of both network nonduplication and syndicated exclusivity rights vis a vis satellite retransmission did not exist before November 29, 1999, consistent with this precedent we will provide a transition period of six months to allow parties to amend or clarify their network affiliation or syndicated exclusivity agreements to cover the exclusivity rights provided in Sec. 339(b)(1)(A) and the rules we adopt today. We will require also that contracts entered into after release of this Order must include special words to invoke protection against duplication of programming imported under the satellite statutory copyright license. The special words in the satellite context are similar to those required to assert enforceable cable syndicated exclusivity. Parties may use this statement to reference either or both the cable and satellite network nonduplication and syndicated exclusivity rules, depending upon whether their negotiated exclusivity covers protection against cable, satellite or both. Existing affiliate agreements and other contracts that apply to network program non duplication only in the cable context need not be revised to be effective to provide nonduplication protection pursuant to Sec. 76.92. These special words shall apply to both the network nonduplication and syndicated exclusivity rules to ensure that, in either instance, the contracting parties contemplated protection from satellite carriage. Where existing contracts expressly provide for exclusivity against satellite carriage, albeit without using these special words, there is no need for renegotiation, nor for a six month period for parties to renegotiate. In these situations of remarkable prescience in the contract terms, the normal notification requirements will apply.
38. We will not require, as Echostar proposes, that the contracts be nondiscriminatory or be exercised in a nondiscriminatory fashion. We believe that such requirements are inconsistent with the rights of parties to negotiate the extent of exclusivity that they determine to be in their best interests and were not contemplated by the statute. Such requirements would also be inconsistent with the cable exclusivity rules.
39. In order to exercise network nonduplication rights, a
television station must notify each cable system operator of the
protection sought. The syndicated exclusivity rules contain similar
notification procedures with respect to broadcasters or distributors
notifying cable systems of the exclusivity sought. In both cases, the
notices must identify the party seeking nonduplication protection and
the affected programming. Notices must be provided within 60 calendar
days of the signing of the contract. Exclusivity protection begins on
the date specified in the notice or the first day of the calendar week
that begins 60 days after the cable operator receives notice from the
broadcaster. In addition, cable operators may rely on published
information sources (e.g., newspapers) to determine which programs must
be deleted or obtain the information from the station seeking protection or the station whose
programming is to be deleted. Furthermore, the rules require that the party exercising its exclusivity rights must provide a copy of the relevant portions of its contract to the cable system, upon request.
40. A number of commenters observe that the current notification procedures have proven workable for the parties in the cable context and generally support the same notification requirements and time periods for satellite carriers. For example, DirecTV states that stations should be required to notify satellite carriers of any exclusivity rights in the same manner required under the cable rules. We agree and will model the satellite notification rules on the cable requirements. We apply the same 60day notice requirement following the signing of a contract providing exclusivity and impose the same contract disclosure requirements for satellite carriers. As in the cable context, the satellite carrier will have sufficient lead time to act on the exclusivity request. Accordingly, exclusivity protection will beginning on the later of: (a) the date specified in the notice; or (b) the first day of the calendar week (SundaySaturday) that begins 60 days following the satellite carrier's receipt of the notice from the broadcaster or other rights holder. Using the same notification periods reduces the administrative burden on rights holders and stations and allows them to send a single set of notices to cable systems and satellite carriers, rather than forcing them to send one notice to cable systems at one time and a virtually identical notice to satellite carriers at another time. In this manner, we also minimize the possibility that protection would be lost inadvertently because of differing requirements. It is also consistent with the general goal of making the cable and satellite rules parallel as much as possible.
41. We will require that the notice asserting exclusivity rights
contain the same identifying information about the programming to be
deleted and the extent of the exclusivity (e.g., the dates on which
exclusivity is to begin and end). As indicated above, the notice must
identify the zip codes included in the zone of protection (i.e., the
specified zone or other permitted area covered by the exclusivity
contract). Satellite carriers may request a copy of the relevant
contractual provisions, as cable operators may do, but it is not
required in the notice. We adopt the suggestion that the notice should
be served on satellite carriers with the carrier having the obligation
to disseminate the information to their distributors (distributors
include parties with exclusive territories for the sale and service of
satellite systems, including those distributors that are authorized by
the satellite carrier to authorize or deauthorize programming for
subscribers), if necessary, since they are in the best position to know
which distributors serve which areas. Several commenters suggest that
satellite carriers be required to designate (e.g., on their Web sites)
the name, title, and address to whom the notices should be sent, with this information updated as necessary to avoid delay and
miscommunications. While we recognize that such information might be useful, it should not be necessary to ensure the compliance with exclusivity requests. We have not required cable systems or operators to provide this information and see no reason to do so in the satellite context. Satellite carriers must promptly direct their mail to the appropriate staff. Notice received by the corporation is considered receipt of the notice for purposes of triggering the deletion requirements, so it will be in the best interests of satellite carriers to assure that broadcasters and rights holders have the necessary current information to reach the right person. We urge stations and rights holders to follow DirecTV's suggestion that exclusivity notices be addressed to the ``Director of Programming Operations'' or marked ``Attention: Program Exclusivity Request'' to assist satellite carriers in ensuring that the information is directed to the proper department.
42. The cable rules provide that to determine the scheduling of programs that must be deleted, cable operators may rely on newspapers and other published sources, the broadcaster seeking exclusivity protection, or the broadcast station subject to the requested deletion. Similarly, the provision we adopt allows satellite carriers to rely on such published sources, the broadcaster seeking protection, or the nationally distributed superstation. We received no comments on this provision and believe the cable model will work as well for satellite carriers.
43. Under the cable syndicated exclusivity rules, ``distributors'' of syndicated programming, who own the rights to the programming for purposes of syndication, are entitled to exercise exclusive rights for a period of one year from the initial broadcast syndication licensing of such programming, although not in areas in which the programming has already been licensed. This cable provision is intended to give holders of syndication rights a one year period in which to negotiate their agreements in each market. It originated with private consensus agreements among rights holders, broadcasters and cable operators in 1971. If the programming in question were shown in the market before the syndicator had an opportunity to negotiate for exclusivity, it would diminish the value of the program. In the NPRM, we requested comment on whether to apply this provision in the satellite context, and whether the rights holder should notify the satellite carrier directly. MPAA contends that allowing rights holders to notify carriers directly, as holders of syndication rights can do with cable systems, gives holders a means to protect the value of their programs as well as providing parity in the operation of the rules in the cable and satellite contexts. DirecTV, however, argues that it is unnecessary to import this rule to the satellite context since the rules will apply to a discrete universe of superstations. We believe that it is appropriate to allow distributors to notify satellite carriers directly. We agree they are often the rights holders with the greatest need and incentive to protect their rights. In the satellite context, syndicated exclusivity protection is limited to the six nationally distributed superstations. Allowing the distributor that has the exclusive syndication rights a one year period to negotiate exclusive arrangements for each market has worked well in the cable context and should be applied here in the absence of a specific reason to treat satellite carriers differently in this regard.
44. We also acknowledge that, as with the cable rules, a broadcast
station, syndicator, or other rights holder is entitled to assert
exclusivity protection based upon contractual rights, as discussed
above. It is not necessary that either the entity requesting protection
or the program to be protected actually be carried by the satellite
carrier. Thus we recognize that in some cases subscribers will not be
able to receive the deleted programming from any television broadcast
station carried by the satellite carrier. The Commission's network non
duplication and syndicated exclusivity rules protect contractual
rights. The rights may apply even in situations in which the rights
holder chooses not to display the protected programming or in which the
cable system is not carrying the broadcast station asserting
protection. We specifically recognize that in markets in which the
satellite carrier chooses not to provide localintolocal carriage, a
local station may assert network nonduplication or syndicated
exclusivity protection for programming that subscribers in that market cannot
receive via satellite because the station demanding protection is not carried on satellite. Viewers may be able to receive this programming, however, through use of overtheair antennas or on cable.
45. The cable syndicated exclusivity rules expressly allow a cable operator to substitute programming from another television station when programming is required to be deleted, provided carriage is consistent with all the exclusivity rules, such as sports blackout. No comparable provision is included in the network
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