Cable Act of 1992Must-Carry and Retransmission Consent Provisions

\22\In its opposition, Time Warner argues that cable operators should be given at least seven days, not three, to respond to any requests for information regarding copyright liability. We reject Time Warner's proposal and note that in the Clarification we observed that the information that must be provided to broadcasters should be readily available to the cable operator. ---------------------------------------------------------------------------

47. We concur with INTV and NAB that stations should be able to commit to copyright indemnification for periods shorter than the three years specified in the 1992 Cable Act. In light of the numerous factors that affect the liability payments, we believe that commitments can be for periods as short as one year (two six-month accounting periods). Otherwise, a station may be required to make a commitment that cannot be fulfilled, thereby leading to protracted litigation. However, in fairness to cable operators, we support NAB's proposal that broadcasters notify cable operators 60 days prior to termination of any agreements to indemnify them for copyright liability. In particular, this will provide sufficient time for cable operators to notify subscribers regarding the deletion of the station.\23\ Further, we disagree with NCTA that to permit agreements for periods of less than three years essentially allows stations to revert to retransmission consent. A station electing must-carry status remains a must-carry station for the entire three-year period, but, in situations where the station is considered distant for copyright purposes, a cable operator is not obligated to honor that election unless it receives a commitment for copyright reimbursement. Further, we note that where a station does not initially meet the criteria for must-carry status, it subsequently may assert its rights once it satisfies the conditions for must-carry status. ---------------------------------------------------------------------------

\23\We note that this rule also requires notification of the affected broadcast station, although in such instances the deletion will be at the request of the broadcaster. ---------------------------------------------------------------------------

48. In a related matter, we find it appropriate to require cable operators to notify a broadcaster of any change in service that will have an unexpected change on the amount of copyright reimbursement that will be required to maintain its must-carry status. For example, as petitioners point out, there are some circumstances where a permitted signal subject to a .563% royalty rate may become a penalty station and require a payment of 3.75% of the system's gross revenues. We believe it is reasonable to expect a cable operator to inform a must-carry station when the estimated cost of continued carriage may change. We also agree with NAB that it is inappropriate for broadcasters whose stations do not cause a copyright liability for the cable system to be required to commit to indemnification before such liability is actually incurred. In both cases, a change in a station's potential copyright liability may affect its decision whether to retain its must-carry status by indemnifying the cable operator or to cede its must-carry rights. Accordingly, we will require cable operators to notify broadcast stations at least 60 days prior to any unexpected change on their copyright status. This will allow sufficient time for the station to determine whether it wishes to continue carriage and, if not, it will give the cable operator enough time to send out the required notice of deletion of a signal. However, the broadcast station must indemnify the cable operator for costs incurred during that copyright accounting period, but not for additional costs once the broadcaster has notified the cable operator that it will discontinue must-carry status in light of changes proposed, but not yet effectuated, by the cable operator. 49. Calculation of station liability. INTV and NAB request clarification regarding the method for determining the incremental copyright liability attributable to a particular station. We indicated in the Report and Order that increased copyright liability should be specifically associated with the carriage of each station and further that ``stations should be counted in the order they satisfy all the necessary conditions for attaining must-carry status.'' However, this statement does not accurately reflect the reality of copyright liability, nor does it adequately address the concern that cable operators may have the ability to manipulate the liability of stations which have been historically carried on the system, or which are added pursuant to must-carry. We note that NAB is correct in stating that the copyright liability is determined according to the sequence by which the signal is added to the system. Section 111(d) of Title 17 provides the method for calculating copyright royalties to be paid by a cable system. In addition, the copyright rules provide specific information regarding statements of account and methods of computation for the payment of copyright royalties. We agree with NCTA that the copyright rules determine the manner in which the cable operator will have to pay royalties for each station carried. 50. In an effort to eliminate confusion in making the determination of increased liability associated with each station, we believe that stations which were carried prior to the implementation of must-carry should continue to be accounted in the same manner with respect to the sequence of signal carriage. Stations which were or are added by the system should have their copyright liability based on the sequence by which the signal was or is added to the system. In the event multiple signals are added on the same day, the sequence of incremental increase in liability should be based on the order in which the stations met all necessary conditions for attaining must-carry status. We anticipate that providing the station with the statement of account filed with the Copyright Office will ensure the station the opportunity to review how this process is achieved. Therefore, we decline to adopt an alternative system for determining the copyright liability of individual stations' carriage on a cable system. 51. The Commission's must-carry requirements became effective on June 2, 1993, during a Copyright Office accounting period.\24\ Prior to the implementation of the must-carry rules, carriage of any station was at the discretion of the cable operator. In such cases, the cable operator carried such a signal even though it incurred a copyright liability for the period ending June 30, 1993. That liability did not increase due to a change in our regulations for stations which had previously been carried, and therefore the liability had already been assumed. We do not believe it appropriate to require the broadcast station to reimburse for that liability, even if carriage became mandatory on June 2, 1993. However, with respect to a broadcast station which was not previously carried by the cable system and which immediately asserted its must-carry rights on June 2, 1993, we believe that such station should reimburse the cable operator for any increased copyright liability incurred as a result of adding that signal between June 2, 1993 and June 30, 1993. Therefore, in the case of a station that agreed to be added on June 2 and committed to indemnification, the station is responsible for the whole semiannual fee. In particular, the station had the opportunity to postpone satisfying the conditions of must-carry status until the first day of the next Copyright Office accounting period. ---------------------------------------------------------------------------

\24\The Copyright Office divides the year into two accounting periods--January 1 to June 30 and July 1 to December 31. ---------------------------------------------------------------------------

52. INTV seeks to establish a rebuttable presumption that all stations are significantly viewed throughout their ADIs. We recognize that there may be some merit in considering alternative procedures for addressing significant viewing showings and that there may be both policy and efficiency reasons for attempting to parallel ADI and significant viewing service area decisions. The INTV proposal, however, is in our view sufficiently novel that it is not appropriately considered in the context of this proceeding. This is particularly the case since the significant viewing process has ramifications in terms of other rules, such as the network nonduplication rules, that are not the subject of this proceeding. 2. Remedies 53. Section 615(d)(1) and Section 615(j) provide for the resolution of carriage and channel positioning disputes between a broadcast station and a cable operator. With respect to commercial stations, the 1992 Cable Act requires a local commercial station to notify the cable operator of an alleged violation, and requires the cable operator to respond to such a notice, prior to the station's filing a complaint with the Commission. However, with respect to NCE stations, the 1992 Cable Act permits a NCE station to file a complaint with the Commission prior to notifying the cable operator. In the Report and Order we discussed these provisions and adopted rules for their implementation. Upon review of those rules, we find it necessary to make some adjustments on our own motion, as they relate to the filing of a complaint by a NCE station. 54. As indicated above, a NCE station is not required to notify a cable operator prior to filing a complaint with the Commission. In the Report and Order, we stated that ``it is anticipated, though not required, that if there is any question relating to the carriage obligations of the cable system, the NCE station will make inquiries of the cable system prior to filing a complaint.'' We also stated that if a NCE station wanted to follow the procedures outlined for complaints filed by a commercial broadcasting station, it could do so as long as it notified the cable system of such intent. In establishing the time frames by which any broadcaster (commercial, noncommercial or LPTV) should file a complaint, we stated that such complaint should be filed within 60 days of an ``affirmative action'' by a cable operator which directly affects the carriage rights of a broadcast station. We then proceeded to define ``affirmative action'' as the denial by a cable operator of a request for either carriage or channel position, or the failure of a cable system to respond to such a demand within the required 30-day time frame. It appears that by establishing such a 60-day requirement based upon an ``affirmative action,'' we have made the complaint procedure for NCE stations more rigorous than was intended, either by our rule or the intent of the 1992 Cable Act. Therefore, for the purposes of a NCE station complaint, we are revising Sec. 76.7 to allow a NCE station to file a complaint at any time it determines that its carriage rights have been violated. We believe this better reflects the language of the 1992 Cable Act and will eliminate the possibility that a NCE complaint would be dismissed based solely on a failure to meet the 60-day time frame, prior to having the merits of the complaint considered.

III. Retransmission Consent

A. Definition Issues

1. Multichannel Video Programming Distributors 55. Section 325(b)(1) provides that ``no cable system or other multichannel video programming distributor shall retransmit the signal of a broadcasting station, or any part thereof, * * * ``except with express authorization of the station or if carried pursuant to must-carry. Section 602(12) of the Communications Act defines a multichannel video programming distributor as ``a person such as, but not limited to, a cable operator, a multichannel multipoint distribution service (MMDS), a direct broadcast satellite service, or a television receive-only satellite program distributor, who makes available for purchase, by subscribers or customers, multiple channels of video programming.'' 56. In the Report and Order we found that ``local broadcast signals provided by MATV facilities or by VHF/UHF antennas on individual dwellings situated within the station's broadcast service area are not subject to retransmission consent, provided that these signals are available without charge at the resident's option.'' We further stated that this exemption applies to MATV-SMATV, MMDS-SMATV and MMDS-individual antenna combinations, so long as there is no charge. The analogy used was that of an individual purchasing and installing a roof top antenna to receive broadcast signals. This exception to retransmission consent was added to the Commission's rules as Sec. 76.64(e). That section states that ``[p]rovision of local broadcast signals my master antenna television (MATV) facilities or by VHF/UHF antennas on individual dwellings is not subject to retransmission consent, provided that these signals are available without charge at the resident' option. That is, the antenna facilities must be owned by the individual subscriber or building owner and not under the control of the multichannel video programming distributor.'' On October 5, 1993, at the request of the Wireless Cable Association (``WCA'') and the National Private Cable Association (``NPCA''), we adopted a Stay Order with respect to Sec. 76.64(e), pending our resolution of this issue. The determining factor used in the rule relates to antenna ownership, not the provision of the service free-of-charge. 57. We note that a wireless operator meets the definition of a multichannel video programming distributor (``MVPD'') and generally would be responsible for obtaining retransmission consent for all broadcast signals retransmitted over their system. We are cognizant of Congress' desire not to affect a viewer who receives these broadcast signals over an antenna not owned by a MVPD. The application of the retransmission consent requirement to MMDS and SMATV facilities was an effort to create regulatory parity between these types of operations and cable systems. In the Report and Order, the Commission expressed its belief that to the extent the signal reception involved was under the control of the individual subscriber and the signals involved were not being ``sold'' by the MMDS and SMATV operators, the consent requirement should not apply. In addition, and in recognition of the concerns raised by WCA, we find that retransmission consent is not required if the broadcast signal reception service is received without a separate subscription charge and the antenna is either (1) owned by the subscriber or the building owner; or (2) under the control and available for purchase by the subscriber or building owner upon termination of service. We believe that this interpretation upholds Congressional intent without causing undue disruption to subscribers. We will amend Sec. 76.64(e) of our rules to reflect this change. B. The Scope of Retransmission Consent 1. Radio 58. In the Report and Order we concluded that Congress intended to provide retransmission consent to all broadcast signals, including those retransmitted by radio. Petitions for reconsideration argue that the retransmission consent provisions of Section 325 and the must-carry provisions of Sections 614 and 615 were intended to work in concert and, therefore, because the must-carry provisions apply only to broadcast television signals, Congress intended retransmission consent to apply only to broadcast television signals. Cable operators argue that most cable systems carry radio stations as an all-band offering, meaning that as with any standard radio receiver, all stations which deliver a signal to the antenna are carried on the system. They contend that the refusal of one radio station to grant consent would preclude all other radio stations from being carried in the all-band method. Several commenters assert that cable operators are more likely to drop the all-band radio offering, rather than attempt to bargain for retransmission consent from all stations carried. 59. We continue to believe that Section 325, as amended by the 1992 Cable Act, applies to radio signals as well as television signals. The statutory language and the legislative history support this conclusion and we have not been presented with a credible argument for reading the statute otherwise. Section 325(b)(2) expressly exempts certain broadcast stations from the consent provision, and radio stations are not included in these exceptions. However, with respect to the difficulty of obtaining consent for all stations carried in an all-band method, we believe that cable system have a legitimate concern. In order to make possible the offering of an ``all-band'' FM radio service, cable operators need only seek the consent of stations within the usual reception area of a high power FM station. Therefore, cable systems must obtain consent from all stations which are located within 92 km (57 miles) of the cable system's receiving antenna(s). The distance of 92 km was selected as a result of the Commission's allotment policies relating to FM radio stations. Because the predicted service contour of a Class C FM radio station is 92 kilometers, the use of such a distance will ensure that retransmission consent is obtained from FM radio stations received by the cable system's receiving antenna(s). Other stations, in the absence of specific notice to the contrary, will be presumed to be insufficiently present to be considered carried in the all-band reception mode. This should eliminate concern over obtaining consent from signals which fade in and out of an all-band offering due to atmospheric conditions. We note that although the cable operator is not required to obtain retransmission consent from stations outside the 92 km zone, any such station that is received and retransmitted by the cable system may affirmatively refuse to grant, or negotiate for compensation in return for granting, retransmission consent to the cable operator. Alternatively, a cable system may choose to use a filtering device to eliminate those radio stations from an all-band offering for which the cable operator is unable or unwilling to obtain consent. This change will be reflected in Section 76.64 of our rules, under a new subpart (n). 2. Low Power Television Stations 60. In concluding in the Report and Order that low power television stations are entitled to retransmission consent, we stated that low power television stations are ``television broadcast stations.'' We incorrectly stated, however, that a low power station meets the definition of television broadcast station in Sec. 76.5 of our rules. Section 76.5(b) defines television broadcast station as ``any television broadcast station operating on a channel regularly assigned to its community by Sec. 73.606 of this chapter * * *.'' A low power television station, defined in Section 74.701(f), however, is authorized under subpart G of Part 74 of our rules. However, we continue to believe that the statute was clear that low power television stations are entitled to assert retransmission consent over their signals. 3. Exceptions to the Retransmission Consent Requirement 61. Section 325, as amended by the 1992 Cable Act, provides four exceptions to retransmission consent. Section 325(b)(2) states that retransmission consent shall not apply to the retransmission of NCE stations, retransmission directly to a home satellite antenna, the retransmission of the broadcast signal of a network directly to a home satellite antenna of an unserved household, or the retransmission of the signal of a superstation if such signal was obtained from a satellite carrier and the originating station was a superstation on May 1, 1991. Petitions for reconsideration have been filed regarding the interpretation of the fourth exception. 62. On May 26, 1993, the Commission adopted an Order, 58 FR 32452 (6/10/93), denying a Request for Stay submitted by Yankee Microwave, Inc. (``Yankee''). In subsequent pleadings Yankee requested reconsideration of that Order, or alternatively, the immediate grant of its petition for reconsideration. Yankee sought relief, on behalf of its cable system customers, from the provisions of Sec. 76.64(b)(2) regarding the superstation exception. Alternatively, Yankee requested revision of that section of our rules so it would apply to microwave carriers of a superstation signal, as well as to satellite carriers of such a signal. By Order of the Chief, Mass Media Bureau, a temporary waiver was granted to Yankee upon a finding by the Bureau that Yankee would suffer irreparable harm if the provisions of the rule were enforced prior to our decision on the pending petitions for reconsideration. On October 5, 1993, the Mass Media Bureau adopted an Order which denied a similar request filed by EMI, Inc. (``EMI'') primarily based on that party's lack of a showing of imminent harm. We now address the requests and oppositions raised by parties to this proceeding. 63. In the Report and Order we rejected arguments that the retransmission consent requirement should not apply to superstation signals delivered via terrestrial means such as microwave. Petitions for reconsideration argue that the effect of the rule is to unfairly discriminate in favor of satellite carriers to the detriment of alternative delivery methods such as microwave. We are persuaded by commenters that the unintended effect of the rule is to unfairly discriminate against alternative methods of delivery of a superstation signal. We believe, consistent with the stated purpose and intent of the 1992 Cable Act, that it is the delivery of satellite signals, not the manner of delivery which should be excepted from the retransmission consent requirement. In other words, if a superstation meets the definition of ``superstation'' contained in the Copyright Act, then the manner of delivery of such a signal shall not control. However, as discussed more fully below, the exception will only apply to delivery of such a superstation signal outside the local market of the station. 64. Rights of superstations within the local market. Section 614 defines a local commercial broadcast station as any full power commercial television broadcast station licensed by the Commission that is located in the same television market as the cable system. As long as the local commercial broadcast station delivers a good quality signal and agrees to indemnify the cable system for any additional copyright liability, the station is entitled to must-carry rights within the local market. Otherwise, that station has the right, pursuant to Section 325(b) (4)-(5), to elect retransmission consent. Section 325 states that the term ``superstation'' shall be defined according to Section 119(d) of Title 17 of the United States Code. Section 119(d) of Title 17 defines a superstation as ``a television broadcast station other than a network station, licensed by the Federal Communications Commission that is secondarily transmitted by a satellite carrier.'' 65. We believe that Congress intended for all local commercial broadcast stations to have the option to assert either must-carry or retransmission consent within their individual market. These local commercial broadcast stations do not become superstations until such time as they are retransmitted via satellite outside their market, an activity unrelated to their status as local commercial broadcast stations within their market. Therefore, such local commercial stations retain the right to elect between must-carry and retransmission consent within their market. C. Must-Carry/Retransmission Consent Election and Implementation 66. Section 325(b)(3)(B) provides that television stations must make an election between must-carry and retransmission consent ``within one year after the date of enactment'' and every three years thereafter. In the Report and Order we established the implementation of these provisions indicating that the initial election for must-carry or retransmission consent must be made by June 17, 1993. We also provided that subsequent elections must be made by October 1, 1996, October 1, 1999, etc., and would become effective on January 1, 1997, January 1, 2000, etc. We determined that broadcasters were to send copies of their election to the cable operator and were to retain copies of such elections in their public files. We failed, however, to instruct television broadcast stations on the term of retention. Consistent with the requirements of the 1992 Cable Act and other recordkeeping provisions of Secs. 73.3526 and 73.3527 of our rules, we will require television broadcast stations to retain election statements in their public files for the term of the three year-election period applicable to such election statements. We will amend Secs. 73.3526 and 73.3527 to indicate not only the need to include such information in the station's public file, but also the three-year retention period for such election statement. 67. In the Report and Order we noted that no party had commented on our proposal to require a new television station to make an initial must-carry/retransmission consent election within 30 days from the date that it commences regular broadcasts. We adopted that proposal, as well as an effective date of ninety (90) days following the election. In considering this provision further, we believe that such an election schedule could have a detrimental effect on a new television station which is entering the market. The Commission's rules provide that a television station which has completed construction may commence program tests prior to filing for a license with the Commission. These stations generally know in advance the date they plan to commence broadcasting. On our own motion, we therefore alter the initial election and effective date with respect to new television broadcast stations. A new television station shall elect between must-carry and retransmission consent sixty (60) days prior to commencing program tests, and shall notify the cable operator of that election. In the event that must-carry status is elected, the new station shall also include its channel position in the election statement to the cable operator. The election statement should be sent to the cable operator by certified mail, return receipt requested. The initial election of the broadcast station shall take effect ninety (90) days after it is made. This will provide the cable operator with sufficient time to notify subscribers of any change which may be required in the channel line-up of the system. The result will be that a new television broadcast station will have the opportunity to be carried on a cable system 30 days after it commences broadcasts over-the-air. We believe that such a result serves the public interest and provides new broadcast stations with appropriate access to enable them to effectively enter a market. Section 76.64(f)(4) of our rules is being revised to reflect this change. 68. In the Report and Order we failed to provide for the introduction of a new cable system in a market. Consistent with the purpose of the 1992 Cable Act, a new cable system will be required to notify all local commercial and noncommercial broadcast stations of its intent to commence service. The cable operator must send such notification, by certified mail, at least 60 days prior to commencing cable service. Commercial broadcast stations must notify the cable system within 30 days of the receipt of such notice of their election of either must-carry or retransmission consent with respect to such new cable system. If the commercial broadcast station elects must-carry, it must also indicate its channel position in its election statement to the cable system. Such election shall remain valid for the remainder of any three-year election interval, as established in Sec. 76.64(f)(2). Noncommercial educational broadcast stations should notify the cable operator of their request for carriage and their channel position. The cable system must determine, in advance of commencing service on the system, whether a station is delivering a good quality signal and/or if a station will be required to indemnify for copyright purposes. The cable system must notify the broadcaster of any signal quality problems or copyright liability and must receive the station's response to such information prior to commencing carriage of the station's signal. These provisions are being added to our rules as Sec. 76.64(l). D. Retransmission Consent and Section 614 69. In the Report and Order we rejected the tentative conclusion of the Notice that cable operators could negotiate with broadcasters to carry less than the entire program schedule of a retransmission consent station. We interpreted Section 614(b)(3)(B) and the legislative history as not permitting negotiation for carriage or partial broadcast signals. On October 5, 1993, at the request of various parties to this proceeding, we stayed the rule requiring carriage in the entirety for retransmission consent signals. Section 76.62(a) of the rules requires the carriage of the entire program schedule of any television station carried by a cable system. The rule applies to stations carried pursuant to Sections 614, 615 or 325. The only exception to this ``carriage in its entirety'' requirement is specific programming that is prohibited under Sec. 76.67 (sports blackout rule) or subpart F of Part 76 of our rules (network nonduplication and syndicated exclusivity). In the Stay Order we granted a stay, with respect to stations carried pursuant to Section 325 (retransmission consent stations), of the new Sec. 76.62(a). The stay was issued in response to a request by Media-Com, the licensee of a low power television station located in Akron, Ohio. Media-Com requested a waiver of the provision to permit it to continue part-time carriage on a Warner Cable system under a private agreement. We granted the stay in an effort to avoid an interim loss to the public of its present cable access while we considered petitions for reconsideration with respect to the carriage in the entirety issue. We stated in the Stay Order that we would resolve this issue in this Memorandum Opinion and Order. Petitioners request reconsideration of the requirement for carriage in the entirety with respect to retransmission consent signals. 70. First, we continue to believe that, with respect to stations which have elected must-carry status, Section 614(b)(3) requires cable operators to ``carry the entirety of the program schedule of any television station carried on the cable system * * *.'' As discussed in the Report and Order, the legislative history indicates that carriage in the entirety was intended for those local commercial broadcast signals entitled to must-carry status under Section 614. Indeed, the legislative history is replete with discussions relating to the must-carry provisions, the need for adequate carriage of local broadcast stations on cable systems and the controlling market power of cable systems. Congress was concerned that such market power not overwhelm the ability of local broadcast stations to obtain carriage, and that the terms of carriage not be unreasonable.\25\ Congress indicated its strong belief that absent the must-carry provisions, local broadcast stations would not be readily available to cable subscribers. In the Senate Report, Congress stated that ``it is for this reason that the legislation incorporates a special provision focusing just on the carriage of local broadcast signals. Moreover, this provision addresses both the primary concern of carriage and the secondary concerns of the terms of carriage. Based on these concerns, we believe that all qualified local commercial broadcast stations should have the minimal protection afforded by Section 614. Further, we also continue to believe that any broadcast station that is eligible for must-carry status, although it may be carried pursuant to a retransmission consent agreement must, therefore, be carried in the entirety, unless carriage of specific programming is prohibited, pursuant to our rules relating to network nonduplication, syndicated exclusivity, sports programming or similar regulations. ---------------------------------------------------------------------------

\25\The Conference Report states that ``the must-carry and channel positioning provisions in the bill are the only means to protect the federal system of television allocations, and to promote competition in local markets * * *. Given the current economic condition of free, local over-the-air broadcasting, an affirmative must-carry requirement is the only effective mechanism to promote the overall public interest.'' ---------------------------------------------------------------------------

71. The Report and Order concluded that Section 614(b)(3) requires carriage in the entirety of any broadcast station carried on the cable system. However, upon reconsideration, we believe that the ability of a broadcaster and cable system to negotiate and agree to carriage of less than the entire signal is permitted only where Section 614 is inapplicable. Specifically, as pointed out by NCTA, Section 614 applies only to qualified local commercial television signals (including qualified LPTV stations), and does not apply to either non-local or non-qualified local commercial broadcast signals. Therefore, where the broadcaster's signal is not eligible for must-carry rights, either by failure to meet the requisite definitions or because the broadcast station is outside the local market (ADI), and where, therefore Section 614 is inapplicable, the broadcaster's rights to freely negotiate for the carriage of that signal pursuant to retransmission consent includes the right to negotiate for partial carriage of the signal. 72. Section 325 states that no cable system or other multichannel video programming distributor shall without consent retransmit ``the signal of a broadcasting station, or any part thereof, * * *'' In contrast, Section 614(b)(3)(B), the must-carry provision, states that the cable operator shall carry ``the entirety of the program schedule * * *.'' Further, Section 325(b)(4) states that if a station elects retransmission consent, ``the provisions of section 614 shall not apply to the carriage of the signal of such station by such cable system.'' While, at first blush, the statutory language appears to permit broadcasters to negotiate with cable operators for retransmission consent for any part of their signal (i.e., any programs), we now believe that a more correct and harmonious reading of Section 614 and 325 together leads to an interpretation that Congress intended cable systems to carry all the programming of must-carry eligible stations regardless of whether the broadcast station opts for must-carry status or not. While it is clear under Section 325 that some negotiated partial carriage is permitted, Section 325 does not mandate the availability of partial carriage in all negotiations. Given this fact, and the congressional emphasis on full carriage for must-carry qualified stations (discussed above), we believe the statutory provisions read in concert suggest that qualified must-carry stations should, as a matter of policy, be carried in their entirety even if they are carried pursuant to retransmission consent. 73. This interpretation is bolstered by Congress' direction to the Commission in Section 325(b)(3)(A) to fashion ``regulations to govern the exercise by television broadcast stations of the right to grant retransmission consent under this subsection and of the right to signal carriage under section 614.'' By including this provision in Section 325, we believe that Congress recognized the interplay between the two sections and gave the Commission authority to fill in regulatory gaps. Thus, at the very least, the Commission has the flexibility to require carriage in the entirety for qualified must carry stations carried pursuant to retransmission consent to ensure that the basic underlying objectives of the 1992 Cable Act relating to local broadcast service would be fulfilled. Otherwise, the statutory goals at the heart of Sections 614 and 325--to place local broadcasters on a more even competitive level and thus help preserve local broadcast service to the public--could easily be undermined. 74. The Senate Report confirms this interpretation by stating that the ``rights granted to stations under section 325 and under section 614 and 615 can be exercised harmoniously, and it anticipates that the FCC will undertake to promulgate regulations which will permit the fullest applications of whichever rights each television station elects to exercise.'' We believe that our rules should provide the wildest possible range of opportunity for both broadcast stations and cable operators, where the must-carry provisions are not applicable. Thus, any station which is eligible for must-carry status must be carried, if at all, in its entirety regardless of whether the station elects must-carry or retransmission consent. Similarly, any station which is not eligible for must-carry status under Section 614, because it is not a local commercial broadcast station, or does not qualify under the definitions of Section 614, may negotiate for partial carriage. Thus, we conclude, based upon a reading of both Sections 614 and 325, that broadcast stations whose signals are entitled to must-carry but are instead carried pursuant to retransmission consent are not permitted to negotiate for carriage of less than their entire signal. We note that this interpretation of the statute is supported by the legislative history which notes that the retransmission consent provision was drafted in such a way as to promote the ``established relationships between broadcasters and cable systems,'' and to ``minimize unnecessary disruption to broadcasters and cable operators.'' 75. The 1992 Cable Act was specific in stating that ``[c]able systems carrying the signals of broadcast stations, whether pursuant to an agreement with the station or pursuant to the provisions of [must-carry], will continue to have the authority to retransmit the programs carried on those signals under the section 111 compulsory license.'' The Committee emphasized that nothing in the 1992 Cable Act was ``intended to abrogate or alter existing program licensing agreements between broadcaster and program suppliers, or to limit the terms of existing or future licensing agreements.'' 76. We continue to intepret retransmission consent as a new right given to the broadcaster under the terms of the 1992 Cable Act and as a right separate from the right of the underlying copyright holder and do not believe that our reconsideration decision in any way undermines the separate nature of these rights or creates a conflict between communications and copyright based policies. Congress indicated that it intended ``to establish a marketplace for the disposition of the rights to retransmit broadcast signals.'' As stated in the Report and Order, the right involved is one which may be freely bargained away in future programming contracts. Although NAB and INTV argue that carriage in the entirety is required to ensure the continued validity of both the retransmission consent right and the current compulsory copyright, we do not see how providing broadcasters and cable operators with additional flexibility to negotiate retransmission agreements for signals not eligible for must-carry status algers the nature of the rights granted under Sections 325 and 614 in any way. Indeed, according this additional flexibility is consistent with interpreting the right in question as a new right subject to the control of the station licensee. To the extent these rights have been bargained away, the remaining rights that have not been disposed of still remain under the control of the station involved. As noted in paragraph 99, a contrary interpretation would not only deprive broadcasters and cable operators of the ability to negotiate mutually advantageous arrangements for the carriage of portions of distant signals but would negate the functioning of various portions of Section 111 of the Copyright Act and of the Commission's rules which specifically contemplate the possibility that portions of distant signals may be carried. Accordingly, we interpret Section 325 to provide that broadcasters may bargain with cable operators for the right to carriage of any part of the broadcast signal provided that such station is not eligible under the provisions of Section 614, either because it is not a local commercial broadcast signal or it does not qualify for mandatory carriage. ``Carriage in the entirety'' remains a requirement with respect to signals eligible for mandatory carriage under the provisions of Section 614. Sections 76.62(a) and 76.64(k) are being revised to reflect this change. E. Retransmission Consent Contracts 77. In the Report and Order we specifically prohibited exclusive retransmission consent agreements between television broadcast stations and cable operators. This provision forbids a television station from making an agreement with one MVPD for carriage, exclusive of other MVPDs. After reviewing the comments filed in response to the Notice, we concluded that this prohibition is necessary in light of the concerns that led Congress to regulate program access and cable signal carriage agreements. We then stated that we would revisit the issue in three years. We reject petitioners arguments that prohibiting exclusive retransmission consent agreements is not warranted and is not supported by the 1992 Cable Act. We are adding a new paragraph (m) to Sec. 76.64 of our rules to reflect this decision. As we indicated in the Report and Order, we will consider the need for such a prohibition against exclusive retransmission consent agreements in three years. F. Other Matters 78. Retransmission Consent and Network Nonduplication Protection. In the Report and Order, we concluded that local television stations electing retransmission consent should continue to be entitled to invoke network nonduplication or syndicated exclusivity protection, whether or not they are carried by the cable system. Commenters had sought to eliminate exclusivity rights for stations choosing retransmission consent. We found, however, that the legislative history addressed this matter and that Congress intended for exclusivity protection to apply under its regulatory framework. 79. We affirm our decision to allow stations electing retransmission consent to assert network nonduplication or syndicated exclusivity protection as provided in the rules.\26\ We observe that this issue was considered earlier in this proceeding in response to a petition from NCTA, which we denied in the Report and Order. Parties have provided no new arguments nor additional evidence to convince us that our decision conflicts with the intent of Congress. We also do not find that there is a conflict between retransmission consent rights and exclusivity rights. Network nonduplication and syndicated exclusivity rights protect the exclusivity that broadcasters have acquired from their program suppliers, including their network partners, while retransmission consent allows broadcasters to control the redistribution of their signals. Both policies promote the continued availability of the over-the-air television system, a substantial government interest in Congress' view. ---------------------------------------------------------------------------

\26\We note that we also considered whether to modify the geographic zone applicable to exclusivity protection to make it consistent with the definition of a local television market as the ADI, as specified in the 1992 Cable Act. We declined to make such a change. ---------------------------------------------------------------------------

80. We also note that cable operators believe that broadcasters have an advantage in the negotiations for retransmission agreements due to their ability to assert their exclusivity rights, while broadcasters believe the reverse. Local broadcast stations are an important part of the service that cable operators offer and broadcasters rely on cable as a means to distribute their signals. Thus, we believe that there are incentives for both parties to come to mutually beneficial arrangements. Moreover, the allegations that local stations electing retransmission consent would not be carried due to their inability to successfully negotiate agreements with cable operators and then assert their exclusivity rights and deprive subscribers of programming was speculative at the time the reconsideration petitions were filed. Now that the retransmission consent provisions are in effect, there is no evidence that subscribers are being deprived of network programming. We note that there are only limited situations where local stations are not carried. Therefore, the dire consequences predicted do not exist and we continue to believe that stations should receive the exclusivity protection to which they are entitled.

IV. Administrative Matters

Regulatory Flexibility Analysis

81. Pursuant to the Regulatory Flexibility Act of 1980, the Commission included a final analysis in the Report and Order detailing (i) the need for and purpose of the rules, (ii) the summary of issues raised by public comment in response to the initial regulatory flexibility analysis, Commission assessment, and changes made as a result, and (iii) significant alternatives considered and rejected. No substantive changes have occurred pertaining to the final analysis as a result of the petitions for reconsideration.

Paperwork Reduction Act

82. The proposal contained herein has been analyzed with respect to the Paperwork Reduction Act of 1980 and found to impose a new or modified information collection requirement on the public. Implementation of any new or modified requirement will be subject to approval by the Office of Management and Budget as prescribed by the Act.

Ordering Clauses

83. Accordingly, it is ordered, That pursuant to the authority contained in Sections 4 (i) and (j), and 303 of the Communications Act of 1934, as amended, and the Cable Television Consumer Protection and Competition Act of 1992, Pub. L. 102-385, Parts 73 and 76 of the Commission Rules, 47 CFR Parts 73 and 76 are amended as set forth below. 84. It is further ordered, That rule provisions of Part 76 of the rules set forth below shall be effective 30 days after publication in the Federal Register. Rule provisions of Part 73 of the rules set forth below shall be effective upon approval from OMB. 85. It is further ordered, That Secs. 76.62 and 76.64 of the Commission's rules which were stayed by Order of the Commission on October 5, 1993 are revised as indicated below and the Stay Order is lifted as of the effective date of these rules. 86. It is further ordered, That the petitions for reconsideration are granted in part and denied in part only to the extent indicated in this Memorandum Opinion and Order, except that the Petition for Reconsideration filed by Western Broadcasting of Puerto Rico is dismissed without prejudice.

List of Subjects

47 CFR Part 73

Radio broadcasting.

47 CFR Part 76

Cable television.

Federal Communications Commission. William F. Caton, Acting Secretary.

Amendatory Text

Part 73 of Chapter I of Title 47 of the Code of Federal Regulation is amended as follows:

PART 73--BROADCAST RADIO SERVICES

1. The authority citation for part 73 is revised to read as follows:

Authority: Secs. 303, 48 Stat., as amended, 1082; 47 U.S.C. 154, as amended.

2. Section 73.3526 is amended by adding paragraph (g) to read as follows:

Sec. 73.3526 Local public inspection file of commercial stations.

* * * * * (g) Statements of a commercial television station's election with respect to either must-carry or retransmission consent as defined in Sec. 76.64 of this chapter shall be retained in the public file of the television station for the duration of the three year election period to which the statement applies. 3. Section 73.3527 is amended by adding paragraph (g) to read as follows:

Sec. 73.3527 Local public inspection file of noncommercial educational stations.

* * * * * (g) Noncommercial television stations requesting mandatory carriage on any cable system pursuant to Sec. 76.56 of this chapter shall place a copy of such request in its public file and shall retain both the request and relevant correspondence for the duration of any period to which the statement applies. Part 76 of Chapter I of Title 47 of the Code of Federal Regulations is amended as follows:

PART 76--CABLE TELEVISION SERVICE

1. The authority citation of part 76 is revised to read as follows:

Authority: Secs. 2, 3, 4, 301, 303, 307, 308, 309, 48 Stat., as amended, 1064, 1065, 1066, 1081, 1082, 1083, 1084, 1085, 1101; 47 U.S.C. Sec. 152, 153, 154, 301, 303, 307, 308, 309; Secs. 612, 614- 615, 623, 632 as amended, 106 Stat. 1460, 47 U.S.C. 532; Sec. 623, as amended, 106 Stat. 1460; 47 U.S.C. 532, 533, 535, 543, 552.

2. Section 76.7(c)(4) (i), (ii), and (iii) are revised and a new paragraph (c)(4)(iv) is added to read as follows:

Sec. 76.7 Special relief and must-carry complaint procedures.

* * * * * (c) * * * (4)(i) Must-carry complaints filed pursuant to Sec. 76.61(a) (Complaints regarding carriage of local commercial television stations) shall be accompanied by the notice from the complainant to the cable television system operator (Sec. 76.61(a)(1)), and the cable television system operator's response (Sec. 76.61(a)(2)), if any. If no timely response was received, the complaint should so state. (ii) Must-carry complaints filed pursuant to Sec. 76.61(b) (Complaints regarding carriage of qualified local NCE television stations) should be accompanied by any relevant correspondence between the complainant and the cable television system operator. (iii) No must-carry complaint filed pursuant to Sec. 76.61(a) (complaints regarding local commercial television stations) will be accepted by the Commission if filed more than sixty (60) days after the date of the specific event described in this paragraph. Must-carry complaints filed pursuant to Sec. 76.61(a) should affirmatively state the specific event upon which the complaint is based, and shall establish that the complaint is being filed within sixty (60) days of such specific event. With respect to such must-carry complaints, the specific event shall be (A) The denial by a cable television system operator of request for carriage or channel position contained in the notice required by Sec. 76.61(a)(1), or (B) The failure to respond to such notice within the time period allowed by Sec. 76.61(a)(2). (iv) With respect to must-carry complaints filed pursuant to Sec. 76.61(b), such complaints may be filed at any time the complainant believes that the cable television system operator has failed to comply with the applicable provisions of subpart D of this part. * * * * * 3. Section 76.55 is amended by revising paragraph (a)(2), adding a note after paragraph (a)(3)(iii), adding new paragraph (b)(3), a note following paragraph (d)(6), and revising the note following paragraph (e)(3), to read as follows:

Sec. 76.55 Definitions applicable to the must-carry rules.

* * * * * (a) * * * (2) Is owned and operated by a municipality and transmits noncommercial programs for educational programs for educational purposes, as defined in Sec. 73.621 of this chapter, for at least 50 percent of its broadcast week. (3) * * * (iii) * * *

Note to paragraph (a): For the purposes of Sec. 76.55(a), ``serving the franchise area'' will be based on the predicted protected contour of the NCE translator.

(b) * * * (3) Notwithstanding the provisions of this section, a cable operator shall not be required to add the signal of a qualified local noncommercial educational television station not already carried under the provision of Sec. 76.56(a)(5), where such signal would be considered a distant signal for copyright purposes unless such station agrees to indemnify the cable operator for any increased copyright liability resulting from carriage of such signal on the cable system. * * * * * (d) * * * (6) * * *

Note to paragraph (d): For the purposes of this section, a good quality signal shall mean a signal level of either -45 dBm for UHF signals or -49 dBm for VHF signals at the input terminals of the signal processing equipment, or a baseband video signal.

(e) * * * (3) * * *

Note to paragraph (e): For the 1993 must-carry/retransmission consent election, the ADI assignments specified in the 1991-1992 Television Market Guide will apply. * * * * * 4. Section 76.56 is amended by revising paragraphs (a)(1)(iii), (a)(5) and (b)(1) to read as follows:

Sec. 76.56 Signal carriage obligations.

(a) * * * (1) * * * (iii) Systems with more than 36 usable activated channels shall be required to carry the signals of all qualified local NCE television stations requesting carriage, but in any event at least three such signals; however a cable system with more than 36 channels shall not be required to carry an additional qualified local NCE station whose programming substantially duplicates the programming of another qualified local NCE station being carried on the system. * * * * * (5) Notwithstanding the requirements of paragraph (a)(1) of this section, all cable operators shall continue to provide carriage to all qualified local NCE television stations whose signals were carried on their systems as of March 29, 1990. In the case of a cable system that is required to import a distance qualified NCE signal, and such system imported the signal of a qualified NCE station as of March 29, 1990, such cable system shall continue to import such signal until such time as a qualified local NCE signal is available to the cable system. This requirements may be waived with respect to a particular cable operator and a particular NCE station, upon the written consent of the cable operator and the station. (b) * * * (1) A cable system with 12 or fewer usable activated channels, as defined in Sec. 76.5(oo), shall carry the signals of at least three qualified local commercial television stations, except that if such system serves 300 or fewer subscribers it shall not be subject to these requirements as long as it does not delete from carriage the signal of a broadcast television station which was carried on that system on October 5, 1992. * * * * * 5. Section 76.57(a) is revised to read as follows:

Sec. 76.57 Channel positioning.

(a) At the election of the licensee of a local commercial broadcast television station, and for the purpose of this section, a qualified low power television station, carried in fulfillment of the must-carry obligations, a cable operator shall carry such signal on the cable system channel number on which the local commercial television station is broadcast over the air, or on the channel on which it was carried on July 19, 1985, or on the channel on which it was carried on January 1, 1992. * * * * * 6. Section 76.60 is amended by adding a new paragraph (c) to read as follows:

Sec. 76.60 Compensation for carriage.

* * * * * (c) A cable operator may accept payments from stations pursuant to a retransmission consent agreement, even if such station will be counted towards the must-carry complement, as long as all other applicable rules are adhered to. 7. Section 76.62(a) is revised to read as follows:

Sec. 76.62 Manner of carriage.

(a) Cable operators shall carry the entirety of the program schedule of any television station (including low power television stations) carried by the system unless carriage of specific programming is prohibited, and other programming authorized to be substituted, under Sec. 76.67 or subpart F of part 76, or unless carriage is pursuant to a valid retransmission consent agreement for the entire signal or any portion thereof as provided in Sec. 76.64. * * * * * 8. Section 76.64 is amended by revising paragraphs (b)(2) (e), (f)(4) and (k) and by adding paragraphs (l), (m) and (n) to read as follows:

Sec. 76.64 Retransmission consent.

* * * * * (b) * * * (2) The multichannel video programming distributor obtains the signal of a superstation that is distributed by a satellite carrier and the originating station was a superstation on May 1, 1991, and the distribution is made only to areas outside the local market of the originating station; or * * * * * (e) The retransmission consent requirements of this section are not applicable to broadcast signals received by master antenna television facilities or by direct over-the-air reception in conjunction with the provision of service by a multichannel video program distributor provided that the multichannel video program distributor makes reception of such signals available without charge and at the subscribers option and provided further that the antenna facility used for the reception of such signals is either owned by the subscriber or the building owner; or under the control and available for purchase by the subscriber or the building owner upon termination of service. (f) * * * (4) New television stations shall make their initial election any time between 60 days prior to commencing broadcast and 30 days after commencing broadcast; such initial election shall take effect 90 days after they are made. * * * * * (k) Retransmission consent agreements between a broadcast station and a multichannel video programming distributor shall be in writing and shall specify the extent of the consent being granted, whether for the entire signal or any portion of the signal. (l) A cable system commencing new operation is required to notify all local commercial and noncommercial broadcast stations of its intent to commence service. The cable operator must send such notification, by certified mail, at least 60 days prior to commencing cable service. Commercial broadcast stations must notify the cable system within 30 days of the receipt of such notice of their election for either must-carry or retransmission consent with respect to such new cable system. If the commercial broadcast station elects must-carry, it must also indicate its channel position in its election statement to the cable system. Such election shall remain valid for the remainder of any three-year election interval, as established in Sec. 76.64(f)(2). Noncommercial educational broadcast stations should notify the cable operator of their request for carriage and their channel position. The new cable system must notify each station if its signal quality does not meet the standards for carriage and if any copyright liability would be incurred for the carriage of such signal. Pursuant to Sec. 76.57(e), a commercial broadcast station which fails to respond to such a notice shall be deemed to be a must-carry station for the remainder of the current three-year election period. (m) Exclusive retransmission consent agreements are prohibited. No television broadcast station shall make an agreement with one multichannel distributor for carriage, to the exclusion of other multichannel distributors. (n) A multichannel video programming distributor providing an all-band FM radio broadcast service (a service that does not involve the individual processing of specific broadcast signals) shall obtain retransmission consents from all FM radio broadcast stations that are included on the service that have transmitters located within 92 kilometers (57 miles) of the receiving antenna for such service. Stations outside of this 92 kilometer (57 miles) radius shall be presumed not to be carried in an all-band reception mode but may affirmatively assert retransmission consent rights by providing 30 days advance notice to the distributor.