Program Access Rules, 66025-66051 [2012-26456]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 77, Number 211 (Wednesday, October 31, 2012)]
[Rules and Regulations]
[Pages 66025-66051]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-26456]



[[Page 66025]]

Vol. 77

Wednesday,

No. 211

October 31, 2012

Part IV





 Federal Communications Commission





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47 CFR Parts 76





 Program Access Rules; Final Rule and Proposed Rule

Federal Register / Vol. 77 , No. 211 / Wednesday, October 31, 2012 / 
Rules and Regulations

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[MB Docket Nos. 12-68; 07-18; 05-192; 07-29; FCC 12-123]


Program Access Rules

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission declines to extend the 
prohibition on exclusive contracts involving satellite-delivered, 
cable-affiliated programming beyond its October 5, 2012 expiration 
date. Instead of this prohibition, the Commission will address 
exclusive contracts involving satellite-delivered, cable-affiliated 
programming on a case-by-case basis in response to program access 
complaints. The Commission also affirms its expanded discovery 
procedures for program access complaints.

DATES: Effective November 30, 2012.

ADDRESSES: Federal Communications Commission, 445 12th Street SW., 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact David Konczal, David.Konczal@fcc.gov, or Kathy 
Berthot, Kathy.Berthot@fcc.gov, of the Media Bureau, Policy Division, 
(202) 418-2120.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order and Order on Reconsideration, FCC 12-123, adopted and 
released on October 5, 2012. The full text of this document is 
available for public inspection and copying during regular business 
hours in the FCC Reference Center, Federal Communications Commission, 
445 12th Street SW., CY-A257, Washington, DC 20554. This document will 
also be available via ECFS (https://www.fcc.gov/cgb/ecfs/). (Documents 
will be available electronically in ASCII, Word 97, and/or Adobe 
Acrobat.) The complete text may be purchased from the Commission's copy 
contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. 
To request this document in accessible formats (computer diskettes, 
large print, audio recording, and Braille), send an email to 
fcc504@fcc.gov or call the Commission's Consumer and Governmental 
Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

Summary of the Report and Order and Order on Reconsideration

I. Introduction

    1. In this Report and Order, we decline to extend the exclusive 
contract prohibition section of the program access rules beyond its 
October 5, 2012 sunset date. This prohibition generally bans exclusive 
contracts for satellite cable programming or satellite broadcast 
programming between any cable operator and any cable-affiliated 
programming vendor in areas served by a cable operator.\1\ The 
prohibition applies only to programming that is delivered via 
satellite; it does not apply to programming delivered via terrestrial 
facilities.\2\ Congress directed the Commission to adopt this 
prohibition in 1992 when cable operators served more than 95 percent of 
all multichannel video subscribers and were affiliated with over half 
of all national cable networks. In expectation that competition in the 
video programming and distribution markets would develop, Congress 
provided that the exclusive contract prohibition would expire on 
October 5, 2002, unless the Commission found that it ``continue[d] to 
be necessary to preserve and protect competition and diversity in the 
distribution of video programming.'' On two previous occasions, first 
in 2002 and again in 2007, the Commission renewed the prohibition for 
five years, with the latest extension expiring on October 5, 2012, thus 
extending the prohibition for ten years beyond the original term 
established by Congress.
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    \1\ An exclusive contract results in one cable operator having 
access to a particular cable-affiliated programming network or 
networks in a given geographic area, to the exclusion of every other 
multichannel video programming distributor (``MVPD'') competing in 
that geographic area.
    \2\ The exclusive contact prohibition in section 628(c)(2)(D) 
pertains only to ``satellite cable programming'' and ``satellite 
broadcast programming.'' See 47 U.S.C. 548(c)(2)(D). Both terms are 
defined to include only programming transmitted or retransmitted by 
satellite for reception by cable operators. See 47 U.S.C. 548(i)(1) 
(incorporating the definition of ``satellite cable programming'' as 
used in 47 U.S.C. 605); id. 548(i)(3). In this Order, we refer to 
``satellite cable programming'' and ``satellite broadcast 
programming'' collectively as ``satellite-delivered programming.''
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    2. We find that a preemptive prohibition on exclusive contracts is 
no longer ``necessary to preserve and protect competition and diversity 
in the distribution of video programming'' considering that a case-by-
case process will remain in place after the prohibition expires to 
assess the impact of individual exclusive contracts. In upholding the 
Commission's last extension of the prohibition in 2007, the United 
States Court of Appeals for the DC Circuit (``DC Circuit'') noted 
changes in the marketplace since 1992 and stated its expectation that 
if the market continued to evolve in this manner, ``the Commission will 
soon be able to conclude that the prohibition is no longer necessary to 
preserve and protect competition and diversity in the distribution of 
video programming.'' As discussed below, because the current market 
presents a mixed picture (with the cable industry now less dominant at 
the national level than it was when the exclusive contract prohibition 
was enacted, but prevailing concerns about cable dominance and 
concentration in various individual markets), we find that extending a 
preemptive ban on exclusive contracts sweeps too broadly. Rather, this 
mixed picture justifies a case-by-case approach in applying our program 
access rules (consistent with the case-by-case inquiries we undertake 
in the terrestrial programming and program carriage contexts), with 
special account taken of the unique characteristics of Regional Sports 
Network (``RSN'') programming. In addition to allowing us to assess any 
harm to competition resulting from an exclusive contract, this case-by-
case approach will also allow us to consider the potentially 
procompetitive benefits of exclusive contracts in individual cases, 
such as promoting investment in new programming, particularly local 
programming, and permitting MVPDs to differentiate their service 
offerings. Accordingly, consistent with Congress's intention that the 
exclusive contract prohibition would not remain in place indefinitely 
and its finding that exclusive contracts can have procompetitive 
benefits in some markets, we decline to extend the preemptive 
prohibition beyond its October 5, 2012 sunset date.
    3. We recognize that the potential for anticompetitive conduct 
resulting from vertical integration between cable operators and 
programmers remains a concern. For example, in some markets, vertical 
integration may result in exclusive contracts between cable operators 
and their affiliated programmers that preclude competitors in the video 
distribution market from accessing critical programming needed to 
attract and retain subscribers and thus harm competition. While the 
amount of satellite-delivered, cable-affiliated programming among the 
most popular cable networks has declined since 2007, some of that 
programming may still be critical for MVPDs to compete in the video 
distribution market. Congress has provided the

[[Page 66027]]

Commission with the authority to address exclusive contracts on a case-
by-case basis. We thus conclude that, in the context of present market 
conditions, such an individualized assessment of exclusive contracts in 
response to complaints is a more appropriate regulatory approach than 
the blunt tool of a prohibition that preemptively bans all exclusive 
contracts between satellite-delivered, cable-affiliated programmers and 
cable operators. This case-by-case consideration of exclusive contracts 
involving satellite-delivered, cable-affiliated programming will mirror 
our treatment of terrestrially delivered, cable-affiliated programming, 
including the establishment of a rebuttable presumption that an 
exclusive contract involving a cable-affiliated RSN has the purpose or 
effect prohibited in section 628(b) of the Act. As demonstrated by our 
recent actions on complaints involving withholding of terrestrially 
delivered, cable-affiliated programming, the Commission is committed to 
exercising its authority under section 628 of the Act to require cable-
affiliated programmers to license their programming to competitors in 
appropriate cases.\3\
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    \3\ See Verizon v. MSG/Cablevision (Bureau Order), Order, 26 FCC 
Rcd 13145 (MB 2011), affirmed, Verizon v. MSG/Cablevision 
(Commission Order), Memorandum Opinion and Order, 26 FCC Rcd 15849 
(2011); AT&T v. MSG/Cablevision (Bureau Order), Order, 26 FCC Rcd 
13206 (MB 2011), affirmed, AT&T v. MSG/Cablevision (Commission 
Order), Memorandum Opinion and Order, 26 FCC Rcd 15871 (2011), 
appeal pending sub nom. Cablevision Sys. Corp. et al. v. FCC, No. 
11-4780 (2nd Cir.). In addition, where vertical integration occurs 
as a result of a transaction involving the transfer of Commission 
licenses, we have authority under section 310(d) to impose 
conditions that address potential competitive harms that might 
result from such integration. See, e.g., Comcast/NBCU Order, 
Memorandum Opinion and Order, 26 FCC Rcd 4238 (2011).
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    4. In addition to case-by-case adjudication, we expect that 
additional factors will mitigate the risk of any potentially adverse 
impact of the expiration of the exclusive contract prohibition on 
consumers and competition. First, approximately 30 satellite-delivered, 
cable-affiliated, national networks (accounting for 30 percent of all 
such networks) and 14 satellite-delivered, cable-affiliated, RSNs 
(accounting for over 40 percent of all such RSNs) are subject to 
program access merger conditions adopted in the Comcast/NBCU Order 
until January 2018. These conditions require Comcast/NBCU to make these 
networks available to competitors, even after the expiration of the 
exclusive contract prohibition.\4\ Second, the record indicates that 
existing affiliation agreements between programmers and MVPDs require 
programming covered by the agreement to be made available for the term 
of the existing agreement despite the expiration of the exclusive 
contract prohibition. This effectively defers the period that exclusive 
contracts will begin to be enforced and thus minimizes any potential 
disruption to consumers that could result from the expiration of the 
prohibition. Third, in addition to claims under section 628(b) of the 
Act, additional causes of action under section 628 will continue to 
apply after expiration of the exclusive contract prohibition, including 
claims alleging undue influence under section 628(c)(2)(A) and claims 
alleging discrimination under section 628(c)(2)(B). In particular, 
nothing in our decision today will alter our treatment of selective 
refusals to license, whereby a satellite-delivered, cable-affiliated 
programmer refuses to license its content to a particular MVPD (such as 
a new entrant or satellite provider) while simultaneously licensing its 
content to other MVPDs competing in the same geographic area. Even 
after the expiration of the exclusive contract prohibition, such 
conduct will remain a violation of the discrimination provision in 
section 628(c)(2)(B) of the Act, unless the cable-affiliated programmer 
can establish a legitimate business reason for the conduct in response 
to a program access complaint challenging the conduct. Fourth, we will 
continue to monitor the video marketplace. If the expiration of the 
exclusive contract prohibition, combined with future changes in the 
competitive landscape, result in harm to consumers or competition, we 
have statutory authority pursuant to section 628(b) of the Act to take 
remedial action by adopting rules to address such concerns.
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    \4\ These conditions provide that, if ``negotiations fail to 
produce a mutually acceptable set of price, terms, and conditions'' 
for a carriage agreement with one or more Comcast-controlled 
networks, an MVPD or bargaining agent may ``submit [the] dispute to 
commercial arbitration.'' Comcast/NBCU Order, 26 FCC Rcd at 4259-62, 
paragraphs 49-59 and 4358, Condition II. Each party is required to 
submit a ``final offer * * * in the form of a contract for 
carriage'' for a period of three years. Id. at 4365, Condition 
VII.A.13. The arbitrator must ``choose the final offer of the party 
which most closely approximates the fair market value of the 
programming carriage rights at issue.'' Id. at 4366, Condition 
VII.B.4. Following the decision of the arbitrator, ``the parties 
shall be bound by the final offer chosen by the arbitrator.'' Id. at 
4367, Condition VII.B.11; see also id. at 4364, Condition VII.A.1 
(stating that the arbitration will ``determine the terms and 
conditions of a new agreement''). By requiring Comcast-controlled 
networks to enter into arbitration with a requesting MVPD to 
determine the price, terms, and conditions of a new carriage 
agreement, these conditions require Comcast-controlled networks to 
make their programming available to all requesting MVPDs and thus 
preclude any Comcast-controlled network from enforcing an exclusive 
contract, including in regions where Comcast does not operate its 
cable systems. See id. at 4261, paragraph 55 (explaining that these 
conditions apply to the benefit of all MVPDs, ``not just those that 
compete directly with Comcast''). Our decision to decline to extend 
the exclusive contract prohibition beyond its sunset date does not 
impact our analysis in the Comcast/NBCU Order concluding that these 
conditions were necessary to curb Comcast's anticompetitive 
exclusionary program access strategies that might result from the 
transaction. In that proceeding, based on an extensive factual 
record in the context of an adjudication, the Commission found MVPDs 
would be ``substantially harm[ed]'' without Comcast-NBCU's suite of 
local, regional, and national programming, and that an 
``anticompetitive exclusionary program access strategy would often 
be profitable for Comcast.'' Comcast/NBCU Order, 26 FCC Rcd at 4254, 
paragraph 37 (footnotes omitted) and 4257-58, paragraph 44.
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    5. We also take related actions herein to amend our rules 
pertaining to subdistribution agreements, common carriers, and Open 
Video Systems (``OVS'') to reflect the expiration of the exclusive 
contract prohibition. Further, we modify merger conditions pertaining 
to exclusive contracts adopted in the Liberty Media Order to conform to 
our revised rules. In addition, we revise our procedural rules to (i) 
provide for a 45-day answer period for all complaints alleging a 
violation of section 628(b), regardless of whether the complaint 
involves satellite-delivered or terrestrially delivered programming; 
and (ii) establish a six-month deadline (calculated from the date of 
filing of the complaint) for the Media Bureau to act on a complaint 
alleging a denial of programming.
    6. In the Order on Reconsideration in MB Docket No. 07-29, we (i) 
affirm the expanded discovery procedures for program access complaints 
adopted in the 2007 Extension Order; (ii) modify the standard 
protective order for use in program access complaint proceedings to 
include a provision allowing a party to object to the disclosure of 
confidential information based on concerns about the individual seeking 
access; and (iii) clarify that a party may object to any request for 
documents that are protected from disclosure by the attorney-client 
privilege, the work-product doctrine, or other recognized protections 
from disclosure.

II. Report and Order in MB Docket No. 12-68 et al.

A. Background

    7. In areas served by a cable operator, section 628(c)(2)(D) 
generally prohibits exclusive contracts for satellite cable programming 
or satellite broadcast programming between any cable operator and any 
cable-affiliated

[[Page 66028]]

programming vendor.\5\ The exclusive contract prohibition applies to 
all satellite-delivered, cable-affiliated programming and preemptively 
bans all exclusive contracts for such programming with cable operators, 
regardless of whether the withholding of particular programming would 
impact competition in the marketplace. As mentioned above, the 
exclusive contract prohibition applies only to programming that is 
delivered via satellite; it does not apply to programming that is 
delivered via terrestrial facilities. Under the statute and our 
implementing rules, an exclusive contract is permissible if a cable 
operator or cable-affiliated programmer obtains prior approval by 
demonstrating to the Commission that the contract serves the public 
interest. Congress thus recognized that some exclusive contracts may 
serve the public interest by providing offsetting benefits to the video 
programming market or assisting in the development of competition among 
MVPDs.
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    \5\ In unserved areas, Congress adopted a per se prohibition on 
exclusive contracts between cable operators and satellite-delivered, 
cable-affiliated programmers. 47 U.S.C. 548(c)(2)(C). Unlike the 
exclusive contract prohibition in served areas, the exclusive 
contract prohibition in unserved areas is not subject to a sunset 
provision and is unaffected by this Order.
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    8. Congress also provided that the exclusive contract prohibition 
would sunset after ten years (on October 5, 2002), unless the 
Commission found that it ``continue[d] to be necessary to preserve and 
protect competition and diversity in the distribution of video 
programming.'' On two previous occasions, first in 2002 and again in 
2007, the Commission found that the prohibition remained necessary and 
thus renewed it for an additional five-year term on each occasion, with 
the latest extension expiring on October 5, 2012. In issuing the latest 
extension, the Commission recognized that ``Congress intended for the 
exclusive contract prohibition to sunset at a point when market 
conditions warrant'' and specifically ``caution[ed] competitive MVPDs 
to take any steps they deem appropriate to prepare for the eventual 
sunset of the prohibition, including further investments in their own 
programming.'' The DC Circuit upheld the Commission's decision, 
characterizing the developments in the marketplace as a ``mixed 
picture'' and deferring to the Commission's analysis. The court 
expressed an expectation, however, that at the next review ``the 
Commission will weigh heavily Congress's intention that the exclusive 
contract prohibition will eventually sunset.''
    9. On March 20, 2012, the Commission adopted and released an NPRM 
initiating a third review of the necessity of the exclusive contract 
prohibition. The NPRM presented data on the current state of 
competition in the video distribution market and the video programming 
market and invited commenters to submit more recent data or empirical 
analyses.\6\ The NPRM sought comment on whether current conditions in 
the video marketplace support retaining, sunsetting, or relaxing the 
exclusive contract prohibition. No commenter challenged the accuracy of 
the data set forth in the NPRM.
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    \6\ See id. at 3424-30, paragraphs 21-29 and 3473-87, Appendices 
A-C.
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B. Discussion

    10. For the reasons discussed below, we decline to extend the 
exclusive contract prohibition beyond its October 5, 2012 sunset date. 
First, we review marketplace developments since 2007 and conclude that, 
because the current market presents a mixed picture (with the cable 
industry now less dominant at the national level than it was when the 
exclusive contract prohibition was enacted, but prevailing concerns 
about cable dominance and concentration in various individual markets), 
a preemptive ban on exclusive contracts sweeps too broadly and is no 
longer ``necessary to preserve and protect competition and diversity in 
the distribution of video programming'' considering that a case-by-case 
process will remain in place after the prohibition expires to assess 
the impact of individual exclusive contracts. Second, we describe the 
case-by-case process that will remain after sunset of the preemptive 
ban to address competitive harms that may arise in connection with 
exclusive contracts, including a 45-day period for answering a section 
628(b) complaint and the establishment of a rebuttable presumption that 
an exclusive contract involving a satellite-delivered, cable-affiliated 
RSN has the purpose or effect prohibited in section 628(b). We also 
explain how addressing exclusive contracts on a case-by-case basis 
comports with the First Amendment. Third, we describe necessary 
amendments to our rules pertaining to subdistribution agreements, 
common carriers, and OVS and to merger conditions pertaining to 
exclusive arrangements adopted in the Liberty Media Order to reflect 
the expiration of the exclusive contract prohibition.
1. Expiration of the Exclusive Contract Prohibition
a. Standard of Review
    11. Congress provided that the exclusive contract prohibition would 
expire on October 5, 2002, unless the Commission found that it 
continued to be ``necessary'' to preserve and protect competition and 
diversity in the distribution of video programming. The Commission has 
previously determined that the exclusive contract prohibition continues 
to be ``necessary'' if, in the absence of the prohibition, competition 
and diversity in the distribution of video programming would not be 
preserved and protected. The DC Circuit has upheld the Commission's 
interpretation of the term ``necessary'' and has also ruled that the 
Commission's analysis of the prohibition is appropriately focused on 
harm to competition and consumers, not harm to competitors.
    12. The Commission has also explained that the sunset provision 
``creates a presumption that the rule will sunset'' unless the 
Commission finds that it continues to be necessary.\7\ Moreover, the 
Commission has explained that, because the exclusive contract 
prohibition has been in effect since 1992, ``it is difficult to obtain 
specific factual evidence of the impact on competition in the video 
distribution market if the prohibition were lifted.'' Accordingly, we 
rely on ``economic theory and predictive judgment[s] in addition to 
specific factual evidence in reaching our decision concerning the 
continued need for the exclusive contract prohibition.''
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    \7\ Commenters' suggestion that vertically integrated cable 
operators bear the burden of demonstrating that the prohibition is 
no longer necessary finds no basis in the statute.
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b. Analysis
    13. In evaluating whether the exclusive contract prohibition 
continues to be necessary, the Commission has previously examined data 
on the status of competition in the video programming market and the 
video distribution market. The Commission presented extensive data in 
the NPRM on these issues, which presented a mixed picture, and invited 
commenters to submit more recent data or empirical analyses. While no 
commenter disputed the accuracy of the data presented in the NPRM, 
updated information in the record requires some modifications to these 
data. In the discussion below and in Appendix E, we present the most 
recent data available on the market shares of cable operators and other 
MVPDs in the video distribution market,

[[Page 66029]]

which differ only slightly from the data presented in the NPRM, and 
continue to show a mixed picture. In addition, in the discussion below 
and in Appendices F and G, we update the data presented in the NPRM on 
cable-affiliated networks to reflect (i) Comcast/NBCU's sale of its 
interest in A&E Television Networks, LLC (``A&E''); and (ii) 
information in the record provided by Cablevision, Comcast, and Time 
Warner Cable (``TWC'') regarding their affiliation with RSNs and 
whether those RSNs are satellite-delivered or terrestrially delivered. 
Appendices E through G are available at: https://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-12-123A1.pdf.
    14. Based on similar data and other record evidence, the Commission 
in past extension decisions has analyzed whether, in the absence of the 
exclusive contract prohibition, cable-affiliated programmers would have 
the incentive and the ability to harm competition and diversity in the 
distribution of video programming by entering into exclusive contracts. 
We undertake the same analysis here. Below, we consider the 
``incentive'' element followed by the ``ability'' element.
(i) Incentive
    15. In evaluating whether cable-affiliated programmers retain the 
incentive to enter into exclusive contracts, the Commission analyzes 
whether there continues to be an economic rationale for exclusivity. 
The Commission has explained that, if a vertically integrated cable 
operator enters into an exclusive arrangement for affiliated 
programming, it can recoup profits lost at the upstream level (i.e., 
lost licensing fees and advertising revenues) by increasing the number 
of subscribers of its downstream MVPD division. The Commission has also 
explained that, particularly where rival distributors are limited in 
their market shares, a cable-affiliated programmer will be able to 
recoup a substantial amount of the revenues foregone by pursuing 
exclusivity. In the 2007 Extension Order, the Commission concluded that 
vertically integrated cable programmers retained the incentive to enter 
into exclusive contracts for satellite-delivered programming.
    16. As discussed below, the record here shows a mixed picture, 
indicating that vertically integrated cable programmers may still have 
an incentive to enter into exclusive contracts for satellite-delivered 
programming in many markets. As the Commission explained previously, 
the profitability of exclusivity increases as the number of subscribers 
controlled by the vertically integrated cable operator increases. In 
past extension decisions, the Commission has analyzed the aggregate 
market share of cable operators on a national and regional basis to 
assess the profitability of exclusivity. In the 2007 Extension Order, 
the Commission found that the cable industry's share of MVPD 
subscribers nationwide had decreased since 2002 from 78 percent to 
approximately 67 percent, but that this market share was still 
sufficient to make exclusivity a profitable strategy. Here, the record 
evidence indicates that the cable industry's share of MVPD subscribers 
nationwide has continued to decrease, from 67 percent in 2007 to 57.4 
percent today, which indicates that vertically integrated cable 
operators as a whole--and considered solely on a national basis--have a 
reduced incentive to enter into exclusive contracts, compared to 2007.
    17. On a regional basis, however, there remain markets where cable 
operators have a substantial share of subscribers. In the 2007 
Extension Order, the Commission noted that the cable industry's share 
of MVPD subscribers in certain Designated Market Areas (``DMAs'') 
remained above or near the 78 percent level that the Commission 
previously found in 2002 was sufficient to make exclusivity a 
profitable strategy. Here, the record indicates that the cable 
industry's share of MVPD subscribers in certain DMAs remains above or 
near both the 67 percent level and the 78 percent level that the 
Commission has previously found to be sufficient to make exclusivity a 
profitable strategy. Although the number of DMAs in which the cable 
industry's share of MVPD subscribers exceeds these benchmarks has 
decreased since 2007, there are still a considerable number of DMAs in 
which concerns about competition remain.
    18. Moreover, we note that data submitted in the record by cable 
operators indicate that clustering has increased since 2007. The 
Commission has, in past orders, observed that clustering may increase a 
cable operator's incentive to enter into exclusive contracts for 
regional programming. In the 2007 Extension Order, the Commission noted 
that Comcast passed more than 70 percent of television households in 30 
Designated Market Areas (DMAs) and TWC passed more than 70 percent of 
television households in 23 DMAs. Based on the 2011 data provided by 
the cable operators, Comcast now passes more than 70 percent of 
television households in [REDACTED] DMAs and TWC passes more than 70 
percent of television households in [REDACTED] DMAs.\8\ These 
calculations employ data from Nielsen on television households in each 
DMA and homes passed data provided by the cable operators. In the 2007 
Extension Order, the Commission also noted that the collective market 
share of MVPDs that compete with incumbent cable operators in many DMAs 
where cable multiple system operators (``MSOs'') have clusters is far 
less than their collective nationwide market share. The same holds true 
today.
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    \8\ We also received data from Cablevision showing [REDACTED] 
DMAs in which Cablevision passes more than 70 percent of television 
households.
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    19. In addition to this data, we note that real-world evidence 
indicates that in some markets cable-affiliated programmers may have an 
incentive to enter into exclusive contracts that can harm competition. 
As noted in the previous extension decisions as well as in the 2010 
Program Access Order, vertically integrated cable operators have 
withheld from competitors certain terrestrially delivered networks, 
which are not subject to the exclusive contract prohibition. Most 
recently, Cablevision and MSG withheld the terrestrially delivered MSG 
HD and MSG+ HD RSNs from AT&T and Verizon.
    20. Because the record before us indicates that there may be 
certain region-specific circumstances where vertically integrated cable 
operators may have an incentive to withhold satellite-delivered 
programming from competitors,\9\ we believe that a case-by-case 
approach authorized under other provisions of the Act--rather than a 
preemptive ban on exclusive contracts--will adequately address 
competitively harmful conduct in a more targeted, less burdensome 
manner. We disagree with commenters to the extent they imply that 
Congress intended the prohibition to expire only once vertically 
integrated cable operators no longer have any incentive to enter into 
exclusive contracts. Such an interpretation

[[Page 66030]]

contradicts Congress's recognition that exclusive contracts do not 
always harm competition and can have procompetitive benefits in some 
cases.
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    \9\ We also note that, in past extension decisions, the 
Commission has noted that increases in horizontal consolidation 
among vertically integrated cable operators means they will reap a 
greater portion of the gains from exclusivity, thereby increasing 
the incentive to enter into exclusive contracts. Our most recent 
data indicates that the percentage of MVPD subscribers receiving 
their video programming from one of the four largest vertically 
integrated cable operators today is 42.7 percent, an increase from 
the 2002 Extension Order (34 percent), but a decrease from the 2007 
Extension Order (54-56.75 percent). While the record evidence 
demonstrates that the data pertaining to horizontal consolidation 
have remained consistent with 2002 levels, this factor is outweighed 
by other marketplace considerations favoring elimination of the 
preemptive ban.
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(ii) Ability
    21. In addition to an incentive to enter into exclusive contracts, 
we also assess the ``ability'' of vertically integrated cable operators 
to use exclusivity to harm competition and diversity in the 
distribution of video programming. In this regard, the Commission 
considers whether satellite-delivered, cable-affiliated programming 
remains programming for which there are no good substitutes and are 
necessary for competition. In previous extension orders, the Commission 
found that there were no good substitutes for a significant amount of 
satellite-delivered, cable-affiliated programming, and that such 
programming remained necessary for viable competition in the video 
distribution market. Accordingly, the Commission concluded that cable-
affiliated programmers retained ``the ability to favor their affiliated 
cable operators over competitive MVPDs such that competition and 
diversity in the distribution of video programming would not be 
preserved and protected absent the rule.'' In reaching this conclusion, 
the Commission explained that ``[w]hat is most significant to our 
analysis is not the percentage of total available programming that is 
vertically integrated with cable operators, but rather the popularity 
of the programming that is vertically integrated and how the inability 
of competitive MVPDs to access this programming will affect the 
preservation and protection of competition in the video distribution 
marketplace.''
    22. We recognize that some commenters contend that the data in the 
NPRM indicate little change since 2007 in the amount of satellite-
delivered, cable affiliated programming among the most popular cable 
networks. These claims, however, do not consider four developments that 
impact significantly our determination as to whether a preemptive 
prohibition remains necessary under the terms of the statute.
    23. First, as explained in the NPRM, the Commission in 2011 granted 
the application of Comcast, General Electric Company (``GE''), and NBCU 
to assign and transfer control of broadcast, satellite, and other radio 
licenses from GE to Comcast. Reviewing that vertical integration 
pursuant to section 310(d), the Commission approved the transaction 
with conditions, including a program access condition requiring 
Comcast/NBCU to make networks it controls (the ``Comcast-controlled 
networks'') \10\ available to competitors. As set forth in Appendices F 
and G, we estimate that 30 satellite-delivered national networks and 14 
satellite-delivered RSNs are Comcast-controlled networks. Comcast/NBCU 
is subject to these conditions until January 2018. In other words, even 
after the exclusive contract prohibition expires, these Comcast-
controlled networks could not be subject to an exclusive contract until 
January 2018. For that reason, we find it appropriate to exclude the 
Comcast-controlled networks when assessing the continued need for a 
preemptive ban.\11\
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    \10\ As discussed in the NPRM, the program access merger 
conditions apply to ``C-NBCU Programmers.'' Whether a network 
qualifies as a ``C-NBCU programmer'' is a fact-specific 
determination. As described in the NPRM, with the exception of the 
iN DEMAND networks, we assume that any network in which Comcast or 
NBCU holds a 50 percent or greater interest is a ``C-NBCU 
Programmer'' subject to these conditions. We refer to these networks 
as ``Comcast-controlled networks.'' We refer to other networks in 
which Comcast or NBCU holds a less than 50 percent interest as 
``Comcast-affiliated networks,'' which we assume for purposes of the 
estimates in this Order are not ``C-NBCU Programmers'' subject to 
the program access merger conditions adopted in the Comcast/NBCU 
Order, but are subject to the program access rules, including the 
exclusive contract prohibition. No commenter opposed this proposed 
distinction between Comcast-controlled and Comcast-affiliated 
networks as set forth in the NPRM. In addition, given Comcast's 
previous statements that it cannot control decisionmaking at iN 
DEMAND, the NPRM proposed to consider iN DEMAND as Comcast-
affiliated, but not Comcast-controlled. No commenter opposed this 
characterization, thus we consider the iN DEMAND networks to be 
Comcast-affiliated, but not Comcast-controlled, for purposes of the 
estimates in this Order. Nothing in this Order should be read to 
state or imply any position as to whether any particular network 
qualifies or does not qualify as a ``C-NBCU Programmer.''
    \11\ Our decision here is consistent with the 2011 Program 
Carriage Order. In that order, the Commission found that the 
``number of cable-affiliated networks recently increased 
significantly after the merger of Comcast and NBC Universal, thereby 
highlighting the continued need for an effective program carriage 
complaint regime.'' In the Comcast/NBCU Order, the Commission 
specifically relied on the program carriage complaint process to 
address concerns relating to program carriage resulting from the 
merger. Accordingly, the increase in vertical integration resulting 
from the Comcast/NBCU transaction was a significant factor in the 
2011 Program Carriage Order. With respect to program access 
concerns, however, the Comcast/NBCU Order adopted specific 
conditions to address these concerns, thus allowing us to exclude 
the Comcast-controlled networks from consideration here.
---------------------------------------------------------------------------

    24. Some commenters contend, however, that the Commission must 
consider the Comcast-controlled networks as if they would be impacted 
by a sunset of the exclusivity prohibition. They claim that, if the 
Commission declines to extend the prohibition based on an analysis of 
the market that ignores the Comcast-controlled networks, the Commission 
will have no vehicle to consider whether the prohibition remains 
necessary after the Comcast merger conditions expire. We reject these 
claims. The Commission may exercise its broad rulemaking authority 
under section 628(b) to adopt rules prohibiting certain exclusive 
contracts involving cable-affiliated programming if it becomes 
necessary after these merger conditions expire, based on an assessment 
of the marketplace at that time.
    25. Second, after the Commission released the NPRM, Comcast sold 
its interest in A&E to A&E's other owners (Disney and Hearst). As a 
result of this transaction, the regulatory status of the 17 networks 
owned by A&E changed from cable-affiliated to non-cable-affiliated. As 
set forth in the NPRM, A&E-owned networks account for four of the Top 
20 national cable networks as ranked by average prime-time ratings and 
three of the Top 20 national cable networks as ranked by 
subscribership. Thus, the change in the regulatory status of the A&E 
networks has reduced since 2007 the number of satellite-delivered, 
cable-affiliated networks among the Top 20 national cable networks 
ranked by subscribership and by average prime-time ratings.
    26. Third, in both the 2002 Extension Order and the 2007 Extension 
Order, the Commission found significant that the subscription premium 
networks HBO and Cinemax were cable-affiliated. The Commission relied 
on comments arguing that ``first-run programming produced by HBO and 
other premium networks [is] essential for a competitive MVPD to offer 
to potential subscribers in order to compete with the incumbent cable 
operator.'' In 2009, however, the Commission approved a transaction 
resulting in the separation of TWC, a cable operator, from Time Warner 
Inc., an owner of satellite-delivered, national programming networks, 
including HBO and Cinemax. As a result, HBO and Cinemax are no longer 
cable-affiliated. This transaction was also significant because it 
changed the regulatory status of other cable networks cited by the 
Commission in the 2007 Extension Order (CNN, TBS, and TNT) from cable-
affiliated to non-cable-affiliated. In declining to adopt a condition 
applying the program access rules to Time Warner Inc. post-transaction, 
the Commission explained that the underlying premise of the program 
access rules would no longer apply because Time Warner Inc. (a non-
cable-affiliated programmer) and TWC would no longer have the incentive 
to discriminate in favor of each other.

[[Page 66031]]

    27. Fourth, in the 2007 Extension Order, the Commission relied on 
data indicating that 46 percent of all RSNs were cable-affiliated. 
These data, however, did not distinguish between terrestrially 
delivered and satellite-delivered RSNs. As discussed above, the 
exclusive contract prohibition applies only to programming that is 
delivered via satellite; it does not apply to programming that is 
delivered via terrestrial facilities. An exclusive contract involving a 
terrestrially delivered, cable-affiliated RSN is permitted unless the 
Commission finds in response to a complaint that it violates section 
628(b) of the Act. We, therefore, further refine our prior analysis by 
distinguishing between cable-affiliated RSNs that are subject to the 
prohibition (i.e., RSNs delivered via satellite) and those that are not 
(i.e., RSNs delivered via terrestrial means). To that end, the Media 
Bureau asked the three cable operators that own the greatest number of 
RSNs (Cablevision, Comcast, and TWC) whether their RSNs are satellite-
delivered or terrestrially delivered. The responses reveal that a 
little fewer than half (43 percent) of all cable-affiliated RSNs are 
terrestrially delivered and therefore beyond the scope of the exclusive 
contract prohibition.\12\ The remaining 57 percent of cable-affiliated 
RSNs are satellite-delivered, but over 43 percent of these RSNs are 
Comcast-controlled and thus subject to program access merger conditions 
until January 2018. As set forth in Appendix G, the data demonstrate 
the following regarding the 108 RSNs (both cable-affiliated and non-
cable-affiliated) available today: (i) 52 RSNs (48 percent) are not 
cable-affiliated; (ii) 24 RSNs (22 percent) are cable-affiliated but 
terrestrially delivered and therefore subject to a case-by-case process 
under section 628(b); \13\ (iii) 14 RSNs (13 percent) are cable-
affiliated and satellite-delivered, but are also Comcast-controlled, 
and therefore subject to program access merger conditions until January 
2018 that require Comcast to make these networks available to 
competitors; \14\ and (iv) only 18 RSNs (17 percent) are cable-
affiliated, satellite-delivered, and not Comcast-controlled, and 
therefore potentially impacted by the expiration of the exclusive 
contract prohibition.\15\
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    \12\ The Media Bureau did not request information from Bright 
House or Cox regarding whether their affiliated RSNs are satellite-
delivered or terrestrially delivered. This includes the following 
four RSNs: Bright House Sports Network, Bright House Sports Network 
HD, Cox Sports Television, and Cox Sports Television HD. Moreover, 
Comcast and TWC did not provide information regarding whether the 
following affiliated RSNs are satellite-delivered or terrestrially 
delivered: Comcast SportsNet Houston, Comcast SportsNet Houston HD, 
Midco Sports Network, Midco Sports Network HD, Time Warner Cable 
SportsNet, Time Warner Cable SportsNet HD, Time Warner Cable 
Deportes, and Time Warner Cable Deportes HD. For purposes of this 
analysis, and with the exception of Cox-4 and Cox-4 HD (which the 
Commission has previously found are terrestrially delivered), we 
assume that all cable-affiliated RSNs for which we do not have 
information are satellite-delivered and therefore subject to the 
exclusive contract prohibition. Thus, our estimate that 43 percent 
of cable-affiliated RSNs are terrestrially delivered is 
conservative.
    \13\ Four of these 24 terrestrially delivered, cable-affiliated 
RSNs are Comcast-controlled RSNs and therefore also subject to 
program access merger conditions until January 2018 that require 
Comcast to make these networks available to competitors.
    \14\ As discussed above, our decision to decline to extend the 
exclusive contract prohibition beyond its sunset date does not 
impact our analysis in the Comcast/NBCU Order concluding that the 
program access merger conditions adopted therein were necessary to 
curb Comcast's anticompetitive exclusionary program access 
strategies that might result from the transaction.
    \15\ Even with respect to these 18 RSNs, TWC has stated it will 
make its four RSNs featuring the games of the Los Angles Lakers 
(Time Warner Cable SportsNet, Time Warner Cable SportsNet HD, Time 
Warner Cable Deportes, and Time Warner Cable Deportes HD) available 
to competing MVPDs.
---------------------------------------------------------------------------

    28. Based on the four developments noted above, the record 
indicates a decrease since 2007 in the amount of satellite-delivered, 
cable-affiliated programming among the most popular cable networks. In 
particular, the number of Top 20 national cable networks as ranked by 
average prime time ratings that are cable-affiliated has fallen from 
seven in 2007 to one today \16\ and the number of Top 20 national cable 
networks as ranked by subscribership that are cable-affiliated has 
fallen from six in 2007 to three today.\17\ Moreover, while the 
Commission in 2007 found that ``popular subscription premium networks, 
such as HBO and Cinemax'' were cable-affiliated, those networks are no 
longer cable-affiliated today. In addition, while the Commission in 
2007 relied on data indicating that 46 percent of all RSNs were 
satellite-delivered and cable-affiliated, this figure is only 17 
percent today (not including Comcast-controlled networks, which are 
subject to program access merger conditions).\18\
---------------------------------------------------------------------------

    \16\ This number increases to three if the Comcast-controlled 
national networks are included. In the early 1990s when the 
exclusive contract prohibition was adopted, 12 of the Top 15 
national cable networks as ranked by average prime time ratings were 
cable-affiliated.
    \17\ This number increases to four if the Comcast-controlled 
national networks are included. In the early 1990s when the 
exclusive contract prohibition was adopted, 10 of the Top 25 
national cable networks as ranked by subscribership were cable-
affiliated.
    \18\ This percentage increases to 30 percent if the Comcast-
controlled RSNs are included.
---------------------------------------------------------------------------

    29. In light of the mixed picture presented by the current MVPD 
market (including the decline in the amount of satellite-delivered, 
cable-affiliated programming among the most popular cable networks), we 
find that a broad, preemptive ban on exclusive contracts is no longer 
necessary to prevent cable-affiliated programmers from harming 
competition, considering that a case-by-case process will remain in 
place after the prohibition expires to assess the impact of individual 
exclusive contracts. We recognize that some satellite-delivered, cable-
affiliated programming, such as certain RSNs, remains necessary for 
competition and has no good substitutes. However, we do not believe 
this warrants extension of a preemptive ban on exclusivity when a case-
by-case approach can address competitively harmful exclusive contracts 
on a more targeted basis.
(iii) Conclusion
    30. Based on the foregoing, we can no longer conclude that the 
exclusive contract prohibition remains necessary to preserve and 
protect competition and diversity in the distribution of video 
programming considering that a case-by-case process will remain in 
place after the prohibition expires to assess the impact of individual 
exclusive contracts. While the record indicates that vertically 
integrated cable operators may still have the ability and incentive to 
withhold satellite-delivered, cable-affiliated programming in some 
markets with the effect of harming competition and diversity, the 
record also demonstrates a decline since 2007 in the amount of 
satellite-delivered, cable-affiliated programming among the most 
popular cable networks. To be sure, absent the prohibition, there may 
be instances where cable operators enter into exclusive contracts for 
satellite-delivered, cable-affiliated programming that is necessary for 
competition and has no good substitutes. But Congress has provided the 
Commission with the authority to address such contracts on a case-by-
case basis after the expiration of the prohibition. Specifically, 
sections 628(b), 628(c)(1), and 628(d) of the Act grant the Commission 
broad authority to prohibit ``unfair acts'' of cable operators and 
their affiliated programmers that have the ``purpose or effect'' of 
``hinder[ing] significantly or prevent[ing]'' any MVPD from providing 
``satellite cable programming or satellite broadcast programming to 
subscribers or consumers.'' In addition, the Commission has authority 
(i) pursuant to section 628(c)(2)(B) of the Act to prohibit 
discrimination in the prices, terms, and conditions for sale of 
satellite-delivered, cable-affiliated programming among MVPDs; and (ii) 
pursuant to section 628(c)(2)(A) of the

[[Page 66032]]

Act to prohibit a cable operator from engaging in undue or improper 
influence over the decision of its affiliated, satellite-delivered 
programmer to enter into an exclusive contract. The Commission is 
committed to using this statutory authority to require cable-affiliated 
programmers to license programming to competitors in appropriate cases, 
as demonstrated by our recent actions on complaints involving 
terrestrially delivered, cable-affiliated RSNs. As demonstrated in 
those proceedings, a case-by-case approach allows for an individualized 
assessment of exclusive contracts based on the facts presented in each 
case.
    31. As some commenters note, however, the Commission in previous 
extension decisions characterized a case-by-case process for addressing 
exclusive contracts as an inadequate substitute for the 
``particularized protection'' afforded by the exclusive contract 
prohibition. But the Commission reached that conclusion on a much 
different factual record. Here, based on the decline during the past 
five years in the amount of satellite-delivered, cable-affiliated 
programming among the most popular cable networks, we can no longer 
conclude that a case-by-case process is insufficient to protect MVPDs 
from the potential anticompetitive impact of exclusive contracts or 
that a preemptive ban continues to be warranted.\19\ Moreover, our 
recent actions addressing complaints involving terrestrially delivered, 
cable-affiliated RSNs demonstrates the adequacy of a case-by-case 
process.
---------------------------------------------------------------------------

    \19\ The Commission's conclusions in the Comcast/NBCU Order do 
not require a different result. In that proceeding, based on an 
extensive factual record in the context of an adjudication, the 
Commission found that the ``record evidence supports a finding that 
without Comcast-NBCU's suite of RSN, local and regional broadcast 
and national cable programming, other MVPDs likely would lose 
significant numbers of subscribers to Comcast, substantially harming 
those MVPDs that compete with Comcast in video distribution.'' 
Comcast/NBCU Order, 26 FCC Rcd at 4254, paragraph 37 (footnotes 
omitted). Moreover, the Commission found that ``this anticompetitive 
exclusionary program access strategy would often be profitable for 
Comcast.'' Id. at 4257-58, paragraph 44. The Commission's findings 
with respect to that transaction, which involved the nation's 
largest cable operator both in terms of subscribers and number of 
cable networks owned, do not compel the same conclusion with respect 
to all other vertically integrated cable operators. Indeed, the 
Commission specifically noted that ``[a]ll adjudicatory findings are 
fact specific and based on the evidence in the record in a specific 
matter.'' Id. at 4258, paragraph 45. Moreover, consistent with the 
case-by-case approach we describe herein, the Commission explained 
that ``[a]n assessment of the consequences of foreclosure of the 
programming at issue in a particular transaction must be made on a 
case-by-case basis, considering whether the foreclosure to rival 
MVPDs of access to the specific programming networks offered by the 
parties to the transaction likely would result in the loss of 
subscribers to MVPDs having access.'' Id. at 4258, paragraph 45 n. 
109.
---------------------------------------------------------------------------

    32. Some commenters note that Congress has already established a 
case-by-case approach for assessing exclusive contracts involving 
satellite-delivered, cable-affiliated programming. Specifically, 
pursuant to section 628(c)(4), a cable operator or a satellite-
delivered, cable-affiliated programmer may submit a ``Petition for 
Exclusivity'' to the Commission for approval to enforce or enter into 
an exclusive contract by demonstrating that the contract serves the 
public interest. Some commenters claim that the Commission could 
streamline this procedure rather than requiring MVPDs to pursue 
complaints. We reject this contention. Given the decline during the 
past five years in the amount of satellite-delivered, cable-affiliated 
programming among the most popular cable networks, we find no basis to 
continue to preemptively ban exclusive contracts and to place the 
burden on cable operators or their affiliated programmers to 
demonstrate that an exclusive contract serves the public interest 
before entering into or enforcing the contract. Indeed, relying on the 
Petition for Exclusivity process to avoid the expiration of the 
prohibition would mean that the prohibition would never expire, 
contrary to Congress's direction.
    33. We recognize the possibility that the expiration of the 
exclusive contract prohibition may result in cable operators acquiring 
additional programming, including ``must have'' programming, and then 
entering into exclusive contracts for such programming. We also 
recognize the possibility that some existing satellite-delivered, 
cable-affiliated programming may increase in popularity in the future. 
The record, however, provides no basis on which to predict the 
likelihood of these developments or their impact on competition. 
Indeed, such developments seem contrary to current market trends, as 
discussed above. Given this, extending the prohibition based simply on 
the chance of a reversal in industry trends would be at odds with 
Congress' inclusion of a sunset provision. Moreover, even if a 
marketplace reversal were to occur, the Commission has the tools in 
place to address these developments, either on a case-by-case basis in 
response to complaints, which include a rebuttable presumption of 
``significant hindrance'' for RSNs, or by adopting rules pursuant to 
section 628(b) that prohibit certain types of exclusive contracts 
involving cable-affiliated programming.\20\
---------------------------------------------------------------------------

    \20\ Some commenters also speculate that cable operators will 
enter into exclusive contracts covering a bundle of cable-affiliated 
networks, which has a more harmful impact on competitors than an 
exclusive contract involving a single network. Should this occur, 
however, the Commission will be able to address these situations 
post-sunset pursuant to the provisions of section 628 that do not 
sunset. The Commission's conclusions in the Comcast/NBCU Order do 
not require a different result. In that proceeding, the Commission 
found that the ``evidence suggests that the overall bundle of NBCU 
cable networks is critical programming that MVPDs need to offer a 
competitive service that is attractive to consumers even if no 
individual network in the bundle were considered `marquee' 
programming.'' Comcast/NBCU Order, 26 FCC Rcd at Appendix B, 4395-
96, paragraph 46. As discussed above, this conclusion was based on 
an extensive factual record in the context of an adjudication 
involving the nation's largest cable operator, both in terms of 
subscribers and number of cable networks owned, and does not compel 
the same conclusion with respect to all other vertically integrated 
cable operators.
---------------------------------------------------------------------------

c. Additional Factors Weighing in Favor of Expiration of the Exclusive 
Contract Prohibition
    34. We find additional factors also weigh in favor of our decision 
to decline to extend the prohibition beyond its sunset date. First, as 
both Congress and the Commission have specifically recognized, 
exclusive contracts may result in the procompetitive benefit of 
increasing investment in programming in some cases, thereby promoting 
competition and diversity in the video programming market. Vertically 
integrated cable operators and cable-affiliated programmers note that 
expiration of the prohibition will provide cable operators with an 
incentive to increase their investment in programming ventures, 
particularly local and regional programming. They also claim that 
exclusivity is critical to programmers for the following reasons: (i) A 
new service with limited interest may be able to gain carriage only if 
it can provide a distributor with exclusive carriage; (ii) exclusivity 
may be critical for a niche network that targets a particular audience; 
(iii) a programmer may wish to enter into an exclusive arrangement to 
reduce or share the risks with a cable operator; and (iv) exclusivity 
enhances the incentive of the cable operator to market and publicize 
the network. Moreover, expiration of the exclusive contract prohibition 
may also encourage other MVPDs or non-MVPD-affiliated programmers to 
create programming to counteract any exclusives involving cable 
operators, thereby leading to more competition and diversity in the 
video programming market. The Commission recognized this benefit in the 
2010 Program Access Order, explaining that,

[[Page 66033]]

``[i]f particular programming is replicable, our policies should 
encourage MVPDs or others to create competing programming, rather than 
relying on the efforts of others, thereby encouraging investment and 
innovation in programming and adding to the diversity of programming in 
the marketplace.''
    35. Some MVPDs question the potential for procompetitive benefits 
resulting from exclusive contracts involving satellite-delivered, 
cable-affiliated programming, noting that exclusive contracts involving 
non-cable-affiliated programmers are rare and that the Commission 
previously noted an increase in programming networks over time despite 
the exclusive contract prohibition. Nevertheless, Congress specifically 
recognized the benefits of exclusive contracts in some cases, as 
demonstrated by its mandate that the Commission allow the exclusive 
contract prohibition to expire when it is no longer ``necessary'' to 
preserve and protect competition and diversity in the video 
distribution market.
    36. Second, the Commission has recognized that exclusive contracts 
may result in the procompetitive benefit of allowing MVPDs to 
differentiate their service offerings.\21\ To be sure, the issue of 
whether the procompetitive benefits of product differentiation outweigh 
the anticompetitive harms is a fact-specific determination best handled 
on a case-by-case basis. But, at least in some markets, it is possible 
that consumers will benefit from increased competition in the video 
distribution market when MVPDs differentiate their service offerings 
and thereby invite competitive countermeasures from their rivals.\22\
---------------------------------------------------------------------------

    \21\ Some commenters claim that exclusivity will harm consumers 
because no consumer could access the full range of programming 
available without having to subscribe to more than one service. This 
argument, however, is not specific to cable-affiliated programming. 
Rather, it is an argument against any type of exclusive programming 
arrangement, including those involving non-cable-affiliated 
programming that is not covered by the exclusive contract 
prohibition. Moreover, despite this alleged drawback of exclusivity, 
Congress has specifically found that exclusive contracts may have 
countervailing procompetitive benefits in some cases.
    \22\ The Commission in the 2007 Extension Order found that the 
ability of MVPDs to engage in competitive countermeasures did not 
mitigate the impact of being unable to offer essential programming, 
as demonstrated by the material adverse impact on competition in the 
video distribution market resulting from withholding of RSNs in San 
Diego and Philadelphia. For the reasons discussed herein, given 
market developments since 2007, we find no basis to assume that the 
anticompetitive impact of exclusive arrangements always outweighs 
the procompetitive benefits.
---------------------------------------------------------------------------

    37. Third, declining to extend the exclusive contract prohibition 
beyond its sunset date and relying instead on a case-by-case process is 
consistent with our First Amendment obligations and promotes the goals 
of Executive Order 13579 and the Commission's plan adopted consistent 
with the Executive Order, whereby the Commission analyzes rules that 
may be outmoded, ineffective, insufficient, or excessively burdensome 
and determines whether any such regulations should be modified, 
streamlined, or repealed. In today's marketplace, a nuanced, narrower, 
case-by-case approach that meets the statutory objectives is more 
appropriate than the blunt regulatory tool of a prohibition that 
preemptively bans all exclusive contracts and places the burden on the 
proponent of exclusivity to demonstrate how the exclusive contract 
serves the public interest before entering into or enforcing the 
contract.
    38. Fourth, our action here promotes regulatory parity by treating 
satellite-delivered and terrestrially delivered programming similarly. 
Specifically, we will now consider all exclusive contracts involving 
cable-affiliated programming on a case-by-case basis in response to 
complaints, regardless of whether the programming is satellite-
delivered or terrestrially delivered. Nothing in the record here 
establishes any basis for continuing to apply a preemptive prohibition 
to exclusive contracts involving satellite-delivered, cable-affiliated 
programming while assessing exclusive contracts involving terrestrially 
delivered, cable-affiliated programming on a case-by-case basis. 
Achieving parity in treatment between these two types of programming 
will remove any uncertainty and confusion surrounding which regulatory 
approach (preemptive prohibition or case-by-case) applies. In addition, 
parity in regulatory treatment will help to ensure that business 
reasons, rather than regulatory distinctions, drive the decision 
whether to deliver programming by satellite or terrestrial means.
    39. Fifth, we expect that any enforcement of exclusive contracts in 
the near term will be limited by the terms of existing affiliation 
agreements. In the NPRM, the Commission sought comment on which of two 
alternative scenarios would occur after the expiration of the exclusive 
contract prohibition: (i) existing affiliation agreements allow 
programmers to terminate or modify their existing agreements 
immediately on the effective date of the sunset and to instead enter 
into exclusive contracts with cable operators; or (ii) existing 
affiliation agreements require programmers to continue to provide their 
programming to MVPDs for the duration of the term of the affiliation 
agreements despite the expiration of the exclusive contract 
prohibition. In response, no commenter claimed that expiration of the 
exclusive contract prohibition would allow cable-affiliated programmers 
to immediately terminate existing agreements. Rather, one commenter 
noted that programmers have contractual commitments to continue to 
provide their programming to MVPDs despite the expiration of the 
exclusive contract prohibition. Thus, enforcement of exclusive 
contracts in the near term will be limited, thereby effectively 
deferring the period that exclusive contracts will begin to be 
enforced.
d. Impact of the Expiration of the Exclusive Contract Prohibition on 
Competition and Consumers
    40. Some commenters claim that declining to extend the exclusive 
contract prohibition beyond its sunset date and relying instead on a 
case-by-case process will harm competition, consumers, and MVPDs. We 
find these claims unpersuasive. First, they claim that a case-by-case 
complaint process is burdensome and time-consuming, especially for 
smaller MVPDs. These claims are based on the length of time needed to 
resolve complaints involving terrestrially delivered RSNs, such as the 
recent Verizon v. MSG/Cablevision and AT&T v. MSG/Cablevision cases. In 
those decisions, however, the Media Bureau specifically noted certain 
atypical circumstances that resulted in a delay in resolution of the 
complaints. We do not expect that complaints challenging exclusive 
contracts involving satellite-delivered, cable-affiliated programming 
will present similarly atypical circumstances. In any event, for the 
reasons discussed below, we establish a six-month deadline (calculated 
from the date of filing of the complaint) for the Media Bureau to act 
on a complaint alleging a denial of programming. Some commenters also 
claim that a complainant will not have access to the programming 
subject to the exclusive contract during the pendency of the complaint, 
thereby harming the complainant's ability to attract and retain 
subscribers. As the Commission explained in the 2010 Program Access 
Order, however, a complainant may seek a standstill of an existing 
programming contract during the pendency of a complaint. Moreover, to 
the extent MVPDs are concerned about the costs of pursuing a complaint, 
they may seek to join with other MVPDs in pursuing a complaint to share 
those costs. An exclusive contract results in one cable operator having 
access to a

[[Page 66034]]

particular cable-affiliated programming network or networks in a given 
geographic area, to the exclusion of every other MVPD competing in that 
geographic area. Accordingly, unlike a selective refusal to license 
where a cable-affiliated programmer withholds programming from one 
rival MVPD, an exclusive contract impacts every MVPD competing in the 
geographic area subject to the exclusive contract. For example, if a 
satellite-delivered, cable-affiliated RSN enters into an exclusive 
contract with an incumbent cable operator for each franchise area 
within a DMA, there are at least two DBS operators as well as 
potentially several telcos and cable overbuilders that will be impacted 
by the exclusive contract and that can seek to join as complainants in 
challenging the contract.
    41. Second, some commenters claim that expiration of the exclusive 
contract prohibition will hinder the deployment of broadband. They note 
that the Commission in the 2010 Program Access Order explained that a 
wireline firm's decision to deploy broadband is linked to its ability 
to offer video and that unfair acts involving terrestrially delivered, 
cable-affiliated programming that impede the ability of MVPDs to 
provide video service can also impede the ability of MVPDs to provide 
broadband services. The Commission, however, did not address this 
concern by adopting a preemptive ban on exclusive contracts and other 
allegedly unfair acts involving terrestrially delivered, cable-
affiliated programming. Rather, the Commission adopted a case-by-case 
approach for addressing these allegedly unfair acts, which is precisely 
the approach we rely on here. As in the 2010 Program Access Order, we 
believe that a case-by-case process will protect MVPDs from the 
potential anticompetitive impact of exclusive contracts, including the 
impact on broadband deployment.
    42. Third, although some commenters claim that expiration of the 
exclusive contract prohibition will have a particularly adverse impact 
on new entrants in the video distribution market, including small and 
rural MVPDs, we note that the expiration of the exclusive contract 
prohibition does not impact the ability of MVPDs to challenge selective 
refusals to license. Specifically, to the extent that these concerns 
are based on fear that cable-affiliated programmers will single out 
certain MVPDs (such as a satellite provider or a new entrant with a 
small subscriber base) and withhold programming from them, as discussed 
below, such programmers will face the prospect of a complaint alleging 
non-price discrimination in violation of section 628(c)(2)(B).\23\
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    \23\ Some commenters claim that the emergence since 2007 of 
distributors of video programming over the Internet justifies 
extension of the exclusive contract prohibition, claiming that 
vertically integrated cable operators have an enhanced incentive to 
withhold programming from potential new sources of competition. Even 
assuming that these distributors qualify as MVPDs entitled to the 
benefits of the program access rules, however, this type of 
selective refusal to license would be addressed pursuant to the 
discrimination provision in section 628(c)(2)(B).
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    43. Fourth, DISH claims that expiration of the exclusive contract 
prohibition will result in increased programming costs for MVPDs by 
providing cable-affiliated programmers with increased leverage in 
negotiations based on threats to provide a competing cable operator 
with exclusivity. As with certain other concerns mentioned above, this 
concern is not specific to cable-affiliated programming and argues 
against any type of exclusive programming arrangement. In addition, 
DISH provides no evidence that non-cable-affiliated programmers have 
used such threats in programming negotiations. Moreover, as mentioned 
above, Congress specifically recognized the procompetitive benefits of 
exclusivity in some cases. DISH offers no basis to conclude that this 
singular concern about increased programming costs outweighs the 
potential procompetitive benefits of exclusivity envisioned by 
Congress.
    44. As the preceding analysis makes clear, the benefits of our 
decision to decline to extend the exclusive contract prohibition beyond 
its sunset date will outweigh any potential costs. We believe that the 
case-by-case approach for considering exclusive contracts--which will 
allow the Commission to consider the unique facts and circumstances of 
each case--will be sufficient to protect MVPDs, including small, rural, 
and new entrant MVPDs, in their efforts to compete and will minimize 
the alleged costs of allowing the exclusive contract prohibition to 
sunset. We also expect that the following additional factors will 
further reduce these alleged costs: (i) A significant percentage of 
satellite-delivered, cable-affiliated programming is subject until 
January 2018 to program access merger conditions adopted in the 
Comcast/NBCU Order, which require Comcast/NBCU to make these networks 
available to competitors even after the expiration of the exclusive 
contract prohibition;\24\ (ii) we expect that any enforcement of 
exclusive contracts in the near term will be limited by the terms of 
existing affiliation agreements; (iii) even after the expiration of the 
exclusive contract prohibition, a satellite-delivered, cable-affiliated 
programmer's refusal to license its content to a particular MVPD (such 
as a small, rural, or new entrant MVPD), while simultaneously licensing 
its content to other MVPDs competing in the same geographic area, will 
continue to be a violation of the discrimination provision in section 
628(c)(2)(B), unless the programmer can establish a ``legitimate 
business reason'' for the conduct in response to a program access 
complaint challenging the conduct; and (iv) if the expiration of the 
exclusive contract prohibition results in harm to consumers or 
competition on a broad scale, we have statutory authority pursuant to 
section 628(b) of the Act to take remedial action by adopting rules, 
including a prohibition on certain types of exclusive contracts 
involving cable-affiliated programming, to address these concerns.
---------------------------------------------------------------------------

    \24\ As discussed above, our decision to decline to extend the 
exclusive contract prohibition beyond its sunset date does not 
impact our analysis in the Comcast/NBCU Order concluding that the 
program access merger conditions adopted therein were necessary to 
curb Comcast's anticompetitive exclusionary program access 
strategies that might result from the transaction.
---------------------------------------------------------------------------

    45. We acknowledge that a case-by case approach will result in 
certain costs by requiring affected parties and the Commission to 
expend time and resources litigating and resolving complaints. We find, 
however, that certain factors will help to minimize these costs. Below, 
we establish a rebuttable presumption that an exclusive contract 
involving a satellite-delivered, cable-affiliated RSN has the purpose 
or effect set forth in section 628(b). This presumption will reduce 
costs by eliminating the need for litigants and the Commission to 
undertake repetitive examinations of Commission precedent and empirical 
evidence on RSNs. In addition, as noted above, the costs of pursuing a 
complaint can be shared by joining with other MVPDs. With these 
additional measures to ease the burdens of litigating complaints, we 
believe that the costs of the case-by-case approach are outweighed by 
the significant benefits of our decision to decline to extend the 
exclusive contract prohibition beyond its sunset date.
e. Alternatives to Expiration of the Exclusive Contract Prohibition
    46. In the NPRM, the Commission sought comment on two ways to relax 
the exclusive contract prohibition as alternatives to a complete 
expiration. For the reasons discussed below, we

[[Page 66035]]

decline to adopt these approaches. First, the Commission sought comment 
on establishing a process whereby a cable operator or satellite-
delivered, cable-affiliated programmer can file a Petition for Sunset 
seeking to remove the exclusive contract prohibition on a market-by-
market basis based on the extent of competition in the market. Both 
vertically integrated cable operators and their MVPD competitors oppose 
this approach. Given the lack of any record support for a market-by-
market sunset process, we decline to adopt it.
    47. Second, the Commission sought comment on whether to retain an 
exclusive contract prohibition for satellite-delivered, cable-
affiliated RSNs and other satellite-delivered, cable-affiliated ``must 
have'' programming. In the 2010 Program Access Order, the Commission 
rejected suggestions that it adopt a preemptive prohibition on 
exclusive contracts involving terrestrially delivered, cable-affiliated 
RSNs. The Commission explained that, previously in the Adelphia Order, 
it analyzed the impact of the withholding of three terrestrially 
delivered, cable-affiliated RSNs on the market shares of DBS operators. 
While the Commission found a significant impact on predicted DBS market 
share in two cases, it found no statistically significant impact in a 
third case. While the Commission found this evidence sufficient to 
support a rebuttable presumption of ``significant hindrance,'' it 
rejected the claim that the ``empirical evidence concerning RSNs is so 
uniform that it supports a per se rule that an unfair act involving a 
terrestrially delivered, cable-affiliated RSN always significantly 
hinders or prevents the MVPD from providing satellite cable programming 
or satellite broadcast programming.''
    48. Based on the record here, we find no basis to reach a different 
conclusion for satellite-delivered, cable-affiliated RSNs. We note 
that, since the 2010 Program Access Order, the Commission has found 
that the withholding of two additional terrestrially delivered, cable-
affiliated RSNs (MSG HD and MSG+ HD) ``significantly hindered'' two 
MVPDs (Verizon and AT&T). Commenters also put forth surveys and other 
evidence, including evidence previously submitted in program access 
complaint proceedings, to support their claims regarding the uniform 
nature of RSNs as critical for competition. But this additional 
evidence fails to refute the Commission's previous findings that 
withholding of a cable-affiliated RSN does not always have a 
significant competitive impact. As the Adelphia Order demonstrates, 
unique factors at play in individual cases can dictate the extent to 
which withholding of an RSN impacts competition, such as whether the 
teams carried by the RSN are new and without an established following. 
Moreover, as discussed above, if we were to adopt a preemptive 
prohibition for exclusive contracts involving satellite-delivered, 
cable-affiliated RSNs, the prohibition would impact only 18 out of the 
56 cable-affiliated RSNs available today. The remaining cable-
affiliated RSNs are either terrestrially delivered (and thus subject to 
a case-by-case complaint process) or Comcast-controlled (and thus 
subject to program access merger conditions that require Comcast to 
make these networks available to competitors).\25\ We find no basis in 
the record to single out these 18 RSNs for a preemptive prohibition on 
exclusive contracts. To be sure, as discussed below, we find, as the 
Commission found in the 2010 Program Access Order, that the weight of 
the existing precedent and categorical evidence concerning RSNs is 
sufficient to establish a rebuttable presumption that an exclusive 
contract involving a cable-affiliated RSN has the purpose or effect 
prohibited in section 628(b) of the Act. But, consistent with our 
previous holding, we continue to believe that, ``[r]ather than adopting 
a general conclusion about the effect of these unfair acts, * * * case-
by-case consideration of the impact on competition in the video 
distribution market is necessary to address whether unfair practices 
significantly hinder competition in particular cases.''
---------------------------------------------------------------------------

    \25\ As discussed above, our decision to decline to extend the 
exclusive contract prohibition beyond its sunset date does not 
impact our analysis in the Comcast/NBCU Order concluding that the 
program access merger conditions adopted therein were necessary to 
curb Comcast's anticompetitive exclusionary program access 
strategies that might result from the transaction.
---------------------------------------------------------------------------

    49. We also decline to retain a preemptive prohibition for any 
other categories of satellite-delivered, cable-affiliated programming. 
Several commenters offer examples of networks and programming that they 
consider to be ``must have'' programming. These commenters, however, 
fail to provide empirical data supporting their positions, nor do they 
offer a rational and workable definition of such programming that can 
be applied objectively. Accordingly, we conclude that there is 
insufficient evidence in the record to support retention of a 
preemptive prohibition for any categories of satellite-delivered, 
cable-affiliated programming.\26\
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    \26\ This lack of record evidence supporting retention of a 
preemptive prohibition should not be read to state or imply that a 
complainant could not show that withholding of certain programming 
results in significant hindrance under section 628(b) based on the 
facts presented in a complaint proceeding.
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2. Case-by-Case Complaint Process
    50. For the reasons discussed above, rather than continue the 
current approach of a preemptive prohibition on exclusive contracts 
between cable operators and satellite-delivered, cable-affiliated 
programmers, we will consider these exclusive contracts instead on a 
case-by-case basis in response to complaints alleging a violation of 
section 628(b). Moreover, additional causes of action under section 628 
will continue to apply after expiration of the exclusive contract 
prohibition, including claims alleging undue influence under section 
628(c)(2)(A) \27\ and claims alleging discrimination under section 
628(c)(2)(B).
---------------------------------------------------------------------------

    \27\ The NPRM sought comment on whether, in the event of the 
expiration of the exclusive contract prohibition, a cable operator 
can ``unduly influence'' a satellite-delivered, cable-affiliated 
programmer to enter into an exclusive contract only if the 
underlying contract violates section 628(b) or section 628(c)(2)(B). 
Because the record on this issue is not well developed, we decline 
to address this issue at this time as a rulemaking matter, but leave 
open the possibility to consider such claims in the context of an 
appropriate adjudicatory matter.
---------------------------------------------------------------------------

a. Section 628(b) Complaints
(i) Procedures for Challenging Exclusive Contracts Involving Satellite-
Delivered, Cable-Affiliated Programming Pursuant to Section 628(b)
    51. The Commission in the 2010 Program Access Order adopted a case-
by-case complaint process to address unfair acts involving 
terrestrially delivered, cable-affiliated programming that allegedly 
violate section 628(b). As detailed below, we are extending these rules 
and policies to section 628(b) complaints challenging exclusive 
contracts involving satellite-delivered, cable-affiliated programming.
    52. Under the case-by-case process for complaints alleging that an 
exclusive contract involving satellite-delivered, cable-affiliated 
programming violates section 628(b), the complainant will have the 
burden to establish that the exclusive contract at issue is ``unfair'' 
based on the facts and circumstances presented. The Commission has held 
previously that determining whether challenged conduct is ``unfair'' 
requires ``balancing the anticompetitive harms of the challenged 
conduct against the procompetitive benefits.'' In addition, the 
complainant will have the burden of proving that the exclusive contract 
has the ``purpose or effect'' of ``significantly hindering or 
preventing'' the

[[Page 66036]]

complainant from providing satellite cable programming or satellite 
broadcast programming. As noted in the 2010 Program Access Order, it is 
not our intent to remove incentives for MVPDs to improve their program 
offerings in order to differentiate themselves in the marketplace as 
long as their efforts to do so do not have the purpose or effect of 
significantly hindering or preventing an MVPD from providing satellite 
cable programming or satellite broadcast programming. In this regard, 
as previously noted in the 2010 Program Access Order, it is highly 
unlikely that an unfair act involving local news and local community or 
educational programming will have the prescribed purpose or effect 
under section 628(b). As the Commission noted, local news and local 
community or educational programming is readily replicable by 
competitive MVPDs and exclusivity has played an important role in the 
growth and viability of local cable news networks.
    53. The Commission has not adopted specific evidentiary 
requirements with respect to proof that the defendant's alleged 
activities have the ``purpose or effect'' of ``significantly hindering 
or preventing'' the complainant from providing satellite cable 
programming or satellite broadcast programming. Rather, the evidence 
required to satisfy this burden will vary based on the facts and 
circumstances of each case and may depend on, among other things, 
whether the complainant is a new entrant or an established competitor 
and whether the programming the complainant seeks to access is new or 
existing programming.\28\ Illustrative examples of evidence that a 
complainant may provide include: (i) An appropriately crafted 
regression analysis that estimates what the complainant's market share 
in the MVPD market would be if it had access to the programming and how 
that compares to its actual market share; or (ii) statistically 
reliable survey data indicating the likelihood that customers would 
choose not to subscribe to or not to switch to an MVPD that did not 
carry the withheld programming.\29\ We will assess the reliability of 
any evidence presented, such as the regression analysis, survey data, 
or other empirical data, on a case-by-case basis. The discovery process 
will enable parties to obtain additional evidence to assist in making 
these showings.
---------------------------------------------------------------------------

    \28\ Comcast maintains that section 628(b) cannot be read to 
mean that every exclusive contract involving satellite-delivered, 
cable-affiliated programming would violate the ``hinder 
significantly or prevent'' prong of section 628(b) because the 
contract would ``prevent'' an MVPD from providing the particular 
satellite-delivered programming subject to the exclusive contract. 
We agree. As the Commission and the DC Circuit have explained 
previously, the ``hinder significantly or prevent'' prong of section 
628(b) focuses on how the withholding at issue impacts the MVPD's 
ability to provide a competing video service, not particular video 
programming.
    \29\ We recognize that not all potential complainants will have 
the resources to perform a regression analysis or market survey and 
reiterate that these examples are illustrative only.
---------------------------------------------------------------------------

    54. We also establish a rebuttable presumption that an exclusive 
contract involving a satellite-delivered, cable-affiliated RSN has the 
``purpose or effect'' of ``significantly hindering or preventing'' the 
complainant from providing satellite cable programming or satellite 
broadcast programming, as set forth in section 628(b). The record in 
this proceeding supports the conclusion that RSNs are non-replicable 
and, in many cases, critically important to consumers. We note that in 
the 2010 Program Access Order the Commission adopted a similar 
rebuttable presumption for terrestrially delivered, cable-affiliated 
RSNs, relying on Commission precedent and record evidence that 
demonstrated that RSNs are likely to be both non-replicable and highly 
valued by consumers. The DC Circuit upheld the Commission's decision to 
establish this rebuttable presumption under both First Amendment and 
APA review. The same analysis and findings from the 2010 Program Access 
Order supporting a rebuttable presumption for terrestrially delivered, 
cable-affiliated RSNs apply equally to satellite-delivered, cable-
affiliated RSNs. Indeed, commenters in this proceeding have not 
provided any evidence or suggested any basis for having a rebuttable 
presumption of ``significant hindrance'' for terrestrially delivered, 
cable-affiliated RSNs, but not for satellite-delivered, cable-
affiliated RSNs.\30\ Moreover, real-world evidence of withholding of 
RSNs, as well as the data in our record showing the increase of 
regional clusters, demonstrate that cable-affiliated programmers may 
still have an incentive to enter into exclusive contracts for 
satellite-delivered RSNs in some markets.\31\ Accordingly, we believe 
that the record justifies the establishment of a rebuttable presumption 
that an exclusive contract involving a satellite-delivered, cable-
affiliated RSN has the purpose or effect set forth in section 
628(b).\32\
---------------------------------------------------------------------------

    \30\ To be sure, some vertically integrated cable operators and 
cable-affiliated programmers claim that there is no basis to presume 
that exclusive contracts for any RSNs significantly hinder MVPDs 
from providing a competing video service, noting that certain MVPDs 
do not carry one or more RSNs in certain markets and that DBS 
operators' collective market share in Philadelphia (where they do 
not carry a Comcast-affiliated RSN) is higher than in some other 
markets where DBS operators carry some or all of the applicable 
RSNs. We find that this evidence fails to refute the existing 
precedent and evidence concerning the importance of RSNs, including 
the rigorous empirical analysis set forth in the Adelphia Order.
    \31\ See supra paragraphs 18-20.
    \32\ A defendant may overcome this presumption by establishing 
that the exclusive contract does not have the purpose or effect of 
significantly hindering or preventing the MVPD from providing 
satellite cable programming or satellite broadcast programming. As 
the Commission and the DC Circuit have explained, ``a rebuttable 
presumption does not shift the burden of proof to defendants; 
rather, it requires defendants to come forward with evidence that 
rebuts or meets the presumption.''
---------------------------------------------------------------------------

    55. For purposes of this rebuttable presumption, we will define the 
term ``RSN'' in the same way the Commission defined that term in the 
2010 Program Access Order and in previous merger proceedings that have 
adopted program access conditions:

Any non-broadcast video programming service that (1) provides live 
or same-day distribution within a limited geographic region of 
sporting events of a sports team that is a member of Major League 
Baseball, the National Basketball Association, the National Football 
League, the National Hockey League, NASCAR, NCAA Division I 
Football, NCAA Division I Basketball, Liga de B[eacute]isbol 
Profesional de Puerto Rico, Baloncesto Superior Nacional de Puerto 
Rico, Liga Mayor de F[uacute]tbol Nacional de Puerto Rico, and the 
Puerto Rico Islanders of the United Soccer League's First Division, 
and (2) in any year, carries a minimum of either 100 hours of 
programming that meets the criteria of subheading 1, or 10% of the 
regular season games of at least one sports team that meets the 
criteria of subheading 1.

A complainant will have the burden of showing that the network at issue 
satisfies this definition.
    56. Given consumers' growing preference for HD programming, we will 
analyze the HD version of a network separately from the standard 
definition (``SD'') version of the network for purposes of determining 
whether an exclusive contract involving satellite-delivered, cable-
affiliated programming has the purpose or effect set forth in section 
628(b). The Commission has recognized that consumers are increasingly 
demanding HD programming and do not view the SD version of a particular 
network to be an acceptable substitute for the HD version due to the 
different technical characteristics and sometimes different content of 
these versions. The DC Circuit upheld under both First Amendment and 
APA review the Commission's decision in the 2010 Program Access Order 
to analyze the HD and SD versions of a network separately when 
evaluating section

[[Page 66037]]

628(b) complaints involving terrestrially delivered programming. The 
same analysis and findings from the 2010 Program Access Order 
pertaining to the distinction between HD and SD versions of a network 
apply here. Thus, in considering a complaint regarding an exclusive 
contract involving a satellite-delivered, cable-affiliated HD network, 
the mere fact that the complainant offers the SD version of the network 
to subscribers will not alone be sufficient to refute a claim under 
section 628(b). In cases involving an RSN, there will be a rebuttable 
presumption that an exclusive contract involving the HD version of the 
RSN results in ``significant hindrance'' even if the complainant offers 
the SD version of the RSN to subscribers.
    57. We decline to establish a rebuttable presumption of 
``significant hindrance'' for any categories of satellite-delivered, 
cable-affiliated programming other than RSNs.\33\ Several commenters 
offer examples of networks and programming that they consider to be 
``must have'' programming. These commenters, however, fail to provide 
empirical data supporting their positions, nor do they offer a rational 
and workable definition of such programming that can be applied 
objectively. Accordingly, we conclude that there is insufficient 
evidence in the record to support adoption of a rebuttable presumption 
for any other categories of satellite-delivered, cable-affiliated 
programming.\34\
---------------------------------------------------------------------------

    \33\ The Commission also sought comment in the NPRM on whether 
to establish a rebuttable presumption that, once a complainant 
succeeds in demonstrating an exclusive contract involving a 
satellite-delivered, cable-affiliated programming network violates 
section 628(b) or section 628(c)(2)(B), any other exclusive contract 
involving the same network violates section 628(b) or section 
628(c)(2)(B). While we have received a few ex parte submissions on 
this issue, we do not believe the record on this issue is 
sufficiently developed and thus decline to adopt this rebuttable 
presumption at this time.
    \34\ This lack of record evidence supporting a rebuttable 
presumption for this programming should not be read to state or 
imply that a complainant could not show that withholding of such 
programming results in significant hindrance under section 628(b) 
based on the facts presented in a complaint proceeding.
---------------------------------------------------------------------------

(ii) 45-Day Answer Period
    58. We amend our rules to provide for the same 45-day answer period 
for all complaints alleging a violation of section 628(b), regardless 
of whether the complaint involves satellite-delivered or terrestrially 
delivered programming. While our current program access procedural 
rules require a defendant to a complaint involving satellite-delivered 
programming to file an answer within 20 days after service, the 
Commission allows a defendant to a complaint involving terrestrially 
delivered programming 45 days after service to file an answer. The 
Commission determined that additional time is appropriate because, 
unlike complaints alleging a violation of the prohibitions set forth in 
section 628(c), a complaint alleging a violation of section 628(b) 
entails additional factual inquiries, including whether the allegedly 
``unfair act'' at issue has the purpose or effect set forth in section 
628(b). Although one commenter expresses concern that a 45-day answer 
period will lead to delays in resolving complaints, we conclude that 
the same 45-day answer period should apply in all complaint proceedings 
alleging a violation of section 628(b) because all such complaints will 
involve the factual issue of whether the challenged conduct has the 
purpose or effect set forth in section 628(b). To the extent a 
complaint alleges a violation of both section 628(b) and section 
628(c), the longer (45-day) answer period will apply.
b. Section 628(c)(2)(B) Discrimination Complaints
    59. Price and non-price discrimination complaints under section 
628(c)(2)(B) of the Act will also continue to protect MVPDs in their 
efforts to compete following expiration of the exclusive contract 
prohibition. With respect to non-price discrimination, the sunset of 
the exclusive contract prohibition does not impact the ability of MVPDs 
to challenge selective refusals to license under section 628(c)(2)(B), 
which does not contain a sunset provision. In addition, the statute and 
our precedent provide that an exclusive ``arrangement'' (as opposed to 
an exclusive ``contract'') may violate section 628(c)(2)(B) of the 
Act.\35\
---------------------------------------------------------------------------

    \35\ The Commission also sought comment in the NPRM on whether 
an exclusive contract can be challenged post-sunset as an 
unreasonable refusal to license in violation of section 
628(c)(2)(B). The record on this issue, however, is not well 
developed. Accordingly, we defer consideration of this issue. We 
will instead assess this issue based on the facts presented in an 
individual adjudication.
---------------------------------------------------------------------------

    60. As described in the NPRM, a selective refusal to license occurs 
when a satellite-delivered, cable-affiliated programmer singles out a 
particular MVPD (such as a satellite provider or a small, rural, or new 
entrant MVPD) for differential treatment by refusing to license its 
content to the MVPD while simultaneously licensing its content to other 
MVPDs competing in the same geographic area. Commission precedent 
establishes that a selective refusal to license is a violation of the 
discrimination provision in section 628(c)(2)(B), unless the programmer 
can establish a ``legitimate business reason'' for the conduct. Thus, 
if a satellite-delivered, cable-affiliated programmer discriminates 
against an MVPD in this manner, the expiration of the exclusive 
contract prohibition does not limit the existing right of an MVPD to 
file a complaint challenging the selective refusal to license as a form 
of non-price discrimination in violation of section 628(c)(2)(B).\36\
---------------------------------------------------------------------------

    \36\ Complaints alleging a violation of section 628(c)(2)(B) do 
not require a showing of harm to the complainant.
---------------------------------------------------------------------------

    61. As described in the NPRM, an exclusive ``arrangement'' exists 
when a satellite-delivered, cable-affiliated programmer unilaterally 
refuses to license its programming to all MVPDs competing in a 
geographic area except for one (such as its affiliated cable operator), 
without any exclusive contract with the MVPD. While the expiration of 
the exclusive contract prohibition in section 628(c)(2)(D) will 
generally permit ``exclusive contracts'' between cable operators and 
satellite-delivered, cable-affiliated programmers,\37\ it does not 
permit the unilateral action of the programmer described here, unless 
the programmer can establish a ``legitimate business reason'' for the 
conduct. Accordingly, the expiration of the exclusive contract 
prohibition does not limit the existing right of an MVPD to challenge 
the unilateral action of a satellite-delivered, cable-affiliated 
programmer to refuse to license its programming to all MVPDs in a 
market except for one as a form of non-price discrimination in 
violation of section 628(c)(2)(B).\38\
---------------------------------------------------------------------------

    \37\ Section 628(c)(2)(D) of the Act prohibits ``exclusive 
contracts * * * between a cable operator and a satellite cable 
programming vendor in which a cable operator has an attributable 
interest.'' 47 U.S.C. 548(c)(2)(D). This language presumes that an 
agreement exists between the cable operator and the satellite-
delivered, cable-affiliated programmer that would provide the cable 
operator with exclusivity.
    \38\ This scenario assumes that a satellite-delivered, cable-
affiliated programmer licenses its programming to one MVPD in a 
geographic area, to the exclusion of all other MVPDs competing in 
that geographic area. Conversely, as discussed above, a selective 
refusal to license assumes that a satellite-delivered, cable-
affiliated programmer licenses its programming to more than one MVPD 
competing in a geographic area, but refuses to license its 
programming to one or more other MVPDs competing in the same 
geographic area. In either scenario, an aggrieved MVPD can challenge 
this conduct as a form of non-price discrimination in violation of 
section 628(c)(2)(B).

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[[Page 66038]]

c. Deadline for Media Bureau Action on Complaints Alleging a Denial of 
Programming
    62. We adopt a six-month deadline (calculated from the date of 
filing of the complaint) for the Media Bureau to act on a complaint 
alleging a denial of programming. This deadline will apply regardless 
of whether the programming subject to the exclusive contract is 
terrestrially delivered or satellite-delivered. As noted above, some 
commenters claim that a case-by-case complaint process is burdensome 
and time-consuming. We believe that codifying a specific deadline in 
our rules for the Media Bureau to act on a complaint alleging a denial 
of programming will help to resolve disputes quickly and efficiently, 
provide certainty to all parties to the complaint, and fulfill our 
statutory mandate to ``provide for expedited review'' of program access 
complaints.
    63. A complainant alleging a denial of programming may bring a 
claim pursuant to section 628(b) or section 628(c) or both. For 
complaints brought pursuant to section 628(b), an initial 60-day 
pleading cycle applies. For complaints brought pursuant to section 
628(c), an initial 35-day pleading cycle applies.\39\ After the close 
of the pleading cycle, the parties may elect to engage in discovery and 
then file post-discovery pleadings.\40\ Although the length of the 
discovery process will necessarily vary on a case-by-case basis, given 
our experience in other complaint proceedings, we expect that parties 
will agree on the scope of discovery and complete discovery and post-
discovery briefing within approximately 60 days. When combined with the 
initial 60-day pleading cycle (in a section 628(b) complaint) or 35-day 
pleading cycle (in a section 628(c) complaint), this would provide the 
Media Bureau with the complete record on which to base its decision 
approximately four months (in a section 628(b) complaint) or three 
months (in a section 628(c) complaint) after the filing of the 
complaint. Thus, based on these assumptions, the Media Bureau would 
have approximately two months (in a section 628(b) denial of 
programming complaint) or three months (in a section 628(c) denial of 
programming complaint) to reach a decision once the record closes. We 
believe this timeframe is sufficient to allow for the Media Bureau to 
review the record and draft and release a decision while also providing 
for the ``expedited review'' required by Congress and ensuring fairness 
to all parties.\41\
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    \39\ As stated above, to the extent a complaint alleges a 
violation of both section 628(b) and section 628(c), the longer (45-
day) answer period will apply.
    \40\ In light of the expedited timeframe for the Media Bureau's 
decision adopted herein, we emphasize that complainants should not 
raise new matters in a reply.
    \41\ We will allow the Media Bureau to extend these deadlines 
under exceptional circumstances, such as where the parties jointly 
agree to toll the deadline.
---------------------------------------------------------------------------

d. Petitions for Exclusivity
    64. We retain our exclusivity petition process, whereby a cable 
operator or satellite-delivered, cable-affiliated programmer may file a 
Petition for Exclusivity seeking a Commission ruling that an exclusive 
contract involving satellite-delivered, cable-affiliated programming 
serves the public interest. To be sure, post-sunset, there is no 
requirement for a cable operator or a satellite-delivered, cable-
affiliated programmer to seek prior approval for an exclusive contract. 
However, should a cable operator or satellite-delivered, cable-
affiliated programmer elect to pursue a Petition for Exclusivity, grant 
of such a petition will immunize the contract from potential complaints 
alleging a violation of section 628(c)(2)(B), as required by the terms 
of section 628(c)(2)(B)(iv).
e. First Amendment
    65. We conclude that addressing complaints challenging exclusive 
contracts for satellite-delivered, cable-affiliated programming on a 
case-by-case basis comports with the First Amendment. As explained 
below, the case-by-case process we adopt for exclusive contracts 
involving satellite-delivered, cable-affiliated programming satisfies 
intermediate scrutiny.
    66. Although we conclude herein that changes in the video 
programming market warrant the expiration of the broad, prophylactic 
exclusive contract prohibition, regulation of exclusive contracts 
involving satellite-delivered, cable-affiliated programming on a case-
by-case basis is still necessary to preserve and promote competition 
and diversity in the video distribution market. Cable operators 
continue to control 57.4 percent of MVPD subscribers nationwide and 
have an overwhelming share of subscribers in many regional markets, in 
the 80 percent range in some cases. Moreover, there is evidence that 
cable prices have risen in excess of inflation. In addition, as 
discussed above, the record indicates that vertically integrated cable 
operators may still have an incentive and ability to enter into 
exclusive contracts for satellite-delivered, cable-affiliated 
programming in some cases, and there may be instances where this 
programming is necessary for competition and has no good substitutes. 
In rejecting a First Amendment challenge to the case-by-case approach 
adopted by the Commission for considering unfair acts involving 
terrestrially delivered, cable-affiliated programming, the D.C. Circuit 
in Cablevision II stated that ``[t]he Commission has no obligation to 
establish that vertically integrated cable companies retain a 
stranglehold on competition nationally or that all withholding of 
terrestrially delivered programming negatively affects competition.'' 
Rather, the Commission ``need only show that vertically integrated 
cable operators remain dominant in some video distribution markets, 
that the withholding of highly desirable terrestrially delivered cable 
programming, like RSNs, inhibits competition in those markets, and that 
providing other MVPDs access to such programming will `promot[e] * * * 
fair competition in the video marketplace.''' Given the clear evidence 
in the record that cable operators remain dominant in some regional 
markets and in some cases may enter into exclusive contracts for 
satellite-delivered, cable-affiliated programming that is necessary for 
competition and has no good substitutes, we find that the case-by-case 
approach adopted in this Order serves an important governmental 
interest.
    67. Our decision to address exclusive contracts involving 
satellite-delivered, cable-affiliated programming on a case-by-case 
basis is not based on programming content but rather is intended to 
address the impact on competition in the video distribution market. 
Because the regulations we adopt herein respond to concerns about 
competition, not content, they are content-neutral and unrelated to the 
suppression of free speech. Similarly, our decision to adopt a 
rebuttable presumption that an exclusive contract involving a 
satellite-delivered, cable-affiliated RSN has the prohibited purpose or 
effect set forth in section 628(b) is based not on content but on the 
existing precedent and record evidence before us regarding the 
importance of RSNs for competition. As the DC Circuit explained in 
upholding a similar rebuttable presumption for terrestrially delivered, 
cable-affiliated RSNs, the ``clear and undisputed evidence shows that 
the Commission established presumptions for RSN programming due to that 
programming's economic characteristics, not to its communicative 
impact.''

[[Page 66039]]

    68. Finally, we conclude that any incidental restriction on speech 
which may result from our decision to adopt a case-by-case process to 
address exclusive contracts involving satellite-delivered, cable-
affiliated programming ``is no greater than is essential to the 
furtherance'' of Congress' interest in promoting competition in the 
video distribution market. The court in Cablevision II explained that, 
``[b]y imposing liability only when complainants demonstrate that a 
company's unfair act has the `purpose or effect' of `hinder[ing] 
significantly or * * * prevent[ing] the provision of satellite 
programming, * * * the Commission's terrestrial programming rules 
specifically target activities where the governmental interest is 
greatest.'' Similarly, the tailored case-by-case process for addressing 
exclusive contracts involving satellite-delivered, cable-affiliated 
programming targets activities where the governmental interest is 
greatest by limiting liability to cases where a complainant 
demonstrates that an exclusive contract is an ``unfair act'' that has 
the ``purpose or effect'' of ``significantly hindering or preventing'' 
the provision of satellite programming in violation of section 
628(b).\42\ Moreover, with respect to the rebuttable presumption for 
satellite-delivered, cable-affiliated RSNs adopted herein, the DC 
Circuit has explained regarding a similar rebuttable presumption for 
terrestrially delivered, cable-affiliated RSNs that ``[g]iven record 
evidence demonstrating the significant impact of RSN programming 
withholding, the Commission's presumptions represent a narrowly 
tailored effort to further the important governmental interest of 
increasing competition in video programming.''
---------------------------------------------------------------------------

    \42\ Some vertically integrated cable operators suggest that the 
program access rules are underinclusive because they apply to cable-
affiliated programmers but not other MVPD-affiliated or unaffiliated 
programmers. As an initial matter, we note that the issue of whether 
to extend certain program access rules to programmers affiliated 
with non-cable MVPDs is pending before the Commission. With respect 
to unaffiliated programmers, the Commission in the 2007 Extension 
Order found no record evidence to conclude that exclusive 
arrangements involving unaffiliated programmers have harmed 
competition in the video distribution market, and commenters offer 
no evidence in the record of this proceeding that would cause us to 
revisit this conclusion. In any event, the DC Circuit in Cablevision 
II rejected claims that the program access rules were 
underinclusive, explaining that these rules ``focus on vertically 
integrated cable companies due to their ``special characteristics'' 
and their unique ability to impact competition.'' Cablevision II, 
649 F.3d at 713 (citing Time Warner, 93 F.3d at 978 (quoting Turner 
Broad. Sys., 512 U.S. at 660-61, 114 S.Ct. 2445)). Moreover, the 
court explained that ``[w]ere the Commission to persist in 
regulating only the conduct of cable operators in the face of 
evidence that exclusive dealing arrangements involving other MVPDs 
have similar negative impacts on competition, then our analysis 
would necessarily change. But nothing in the present record suggests 
such unjustified discrimination.'' Id. The same conclusion applies 
based on the record in this proceeding.
---------------------------------------------------------------------------

C. Subdistribution Agreements

    69. Consistent with our decision to decline to extend the exclusive 
contract prohibition beyond its sunset date, we eliminate the 
restrictions on exclusive subdistribution agreements in served areas 
between cable operators and satellite-delivered, cable-affiliated 
programmers. The Commission's rules define a subdistribution agreement 
as ``an arrangement by which a local cable operator is given the right 
by a satellite cable programming vendor or a satellite broadcast 
programming vendor to distribute the vendor's programming to competing 
multichannel video programming distributors.'' Based on the exclusive 
contract prohibition, the Commission adopted certain restrictions on 
exclusive subdistribution agreements in the 1993 Program Access Order 
to ``address any incentives for a subdistributor to refuse to sell to a 
competing MVPD that may be inherent in such rights'' and to ensure 
``appropriate safeguards to limit the potential for anticompetitive 
behavior.'' Because we have concluded that the exclusive contract 
prohibition in served areas is no longer necessary to preserve and 
protect competition and diversity in the video distribution market, we 
conclude that the restrictions on exclusive subdistribution agreements 
in served areas are likewise no longer necessary and we accordingly 
eliminate them. In addition, as proposed in the NPRM, we conform Sec.  
76.1002(c)(3) as it pertains to exclusive subdistribution agreements in 
unserved areas to the amendments previously adopted in the 1994 Program 
Access Order.

D. Common Carriers and Open Video Systems

    70. The Commission's rules contain provisions pertaining to 
exclusive contracts involving common carriers or OVS and their 
affiliated programmers in served areas that mirror the rules applicable 
to exclusive contracts involving cable operators and their affiliated 
programmers in served areas. We conclude that the amendments adopted 
herein to the rules pertaining to exclusive contracts between cable 
operators and satellite-delivered, cable-affiliated programmers in 
served areas will apply equally to common carriers and OVS. Thus, with 
respect to common carriers, the prohibition on exclusive contracts in 
served areas between a satellite-delivered, common carrier-affiliated 
programmer and a common carrier or its affiliate that provides video 
programming by any means directly to a subscriber will expire. 
Similarly, the exclusive contract prohibition in served areas will 
expire as to exclusive contracts (i) between a satellite-delivered, 
OVS-affiliated programmer and an OVS or its affiliate that provides 
video programming on its OVS; and (ii) between a satellite-delivered, 
cable-affiliated programmer and an OVS video programming provider in 
which a cable operator has an attributable interest. Instead, we will 
rely on the protections provided by the case-by-case complaint process 
described above. We also conform the rules pertaining to exclusive 
subdistribution agreements involving common carriers and OVS to the 
rules adopted herein for cable operators by eliminating the 
restrictions on such agreements in served areas. In addition, as 
proposed in the NPRM, we conform Sec.  76.1507 as it pertains to 
exclusive subdistribution agreements involving OVS in unserved areas to 
the amendments previously adopted in the 1994 Program Access Order.

E. Liberty Media Order Merger Conditions

    71. We modify the exclusivity conditions adopted in the Liberty 
Media Order, which prohibit certain programmers affiliated with Liberty 
Media and DIRECTV from entering into exclusive contracts. DIRECTV, the 
only commenter to address this issue, states that if the Commission 
declines to extend the exclusive contract prohibition beyond its sunset 
date, conforming modifications to the exclusivity conditions in the 
Liberty Media Order would be appropriate.\43\ We agree. The merger 
conditions adopted in the Liberty Media Order provide that ``if the 
program access rules are modified these commitments shall be modified, 
as the Commission deems appropriate, to conform to any revised rules 
adopted by the Commission.'' \44\ Consistent with our decision not to 
extend the exclusive contract

[[Page 66040]]

prohibition beyond its sunset date, we modify the exclusivity 
conditions in the Liberty Media Order to provide that exclusive 
contracts will not be subject to a preemptive prohibition. No commenter 
opposed this proposal as set forth in the NPRM. Because our rules will 
allow an exclusive contract involving cable-affiliated programming to 
be challenged on a case-by-case basis post-sunset, however, we further 
modify these conditions to provide that an exclusive contract involving 
programming covered by these conditions may be challenged as violating 
section 628(b) of the Act and Sec.  76.1001(a) of the Commission's 
rules.\45\ Specifically, we modify Conditions III.1 and III.2 in the 
Liberty Media Order to state as follows:
---------------------------------------------------------------------------

    \43\ The Commission also sought comment on the impact of an 
expiration of the exclusive contract prohibition on merger 
conditions applicable to TWC adopted in the Adelphia Order. These 
conditions, however, expired in July 2012, after release of the NPRM 
and before adoption of this Order.
    \44\ In contrast to the Liberty Media Order, there is no 
provision in the Comcast/NBCU Order requiring the conditions adopted 
therein to be modified to conform to changes the Commission makes to 
the program access rules. See Comcast/NBCU Order, 26 FCC Rcd at 
4381, Appendix A, Condition XX). Accordingly, the conditions adopted 
in the Comcast/NBCU Order will not be affected by the rule changes 
adopted in this proceeding.
    \45\ As discussed above, we defer consideration of whether an 
exclusive contract can be challenged post-sunset as an unreasonable 
refusal to license in violation of section 628(c)(2)(B). We will 
instead assess this issue based on the facts presented in an 
individual adjudication. We also note that ``Liberty Media RSNs,'' 
as defined in the Liberty Media Order, will continue to be subject 
to the arbitration condition set forth in the Liberty Media Order 
until February 27, 2014, unless the arbitration condition is 
modified earlier in response to a petition.

    Condition III.1: Liberty Media shall continue to make its 
existing or future national and regional programming services 
available to all MVPDs on nondiscriminatory terms and conditions. 
Notwithstanding the foregoing, Liberty Media may enter into an 
exclusive contract for any of these services with any MVPD, provided 
that the exclusive contract may be challenged as violating section 
628(b) of the Act and Sec.  76.1001(a) of the Commission's 
rules.\46\
---------------------------------------------------------------------------

    \46\ See Revision of the Commission's Program Access Rules, et 
al., Report and Order and Order on Reconsideration, FCC 12-123, at 
paragraphs 72-73 (2012) (``2012 Program Access Order''). The term 
``Liberty Media'' as used in this Appendix includes any entity or 
program rights holder in which Liberty Media or John Malone holds an 
attributable interest. Thus, the term ``Liberty Media'' includes 
Discovery Communications. Liberty Media and DIRECTV are prohibited 
from acquiring an attributable interest in any non-broadcast 
national or regional programming service while these conditions are 
in effect if the programming service is not obligated to abide by 
such conditions.
---------------------------------------------------------------------------

    Condition III.2: DIRECTV may enter into an exclusive contract 
with any Affiliated Program Rights Holder,\47\ provided that the 
exclusive contract may be challenged as violating section 628(b) of 
the Act and Sec.  76.1001(a) of the Commission's rules.\48\
---------------------------------------------------------------------------

    \47\ The term ``Affiliated Program Rights Holder'' includes (i) 
any program rights holder in which Liberty Media or DIRECTV holds a 
non-controlling `attributable interest' (as determined by the FCC's 
program access attribution rules) or in which any officer or 
director of Liberty Media, DIRECTV, or of any other entity 
controlled by John Malone holds an attributable interest; and (ii) 
any program rights holder in which an entity or person that holds an 
attributable interest also holds a non-controlling attributable 
interest in Liberty Media or DIRECTV, provided that Liberty Media or 
DIRECTV has actual knowledge of such entity's or person's 
attributable interest in such program rights holder.
    \48\ See 2012 Program Access Order, FCC 12-123, at paragraphs 
72-73.

    72. To the extent that any programming covered under such an 
exclusive contract is cable-affiliated, the exclusive contract may also 
be assessed on a case-by-case basis in response to a program access 
complaint alleging a violation of section 628(b) or, potentially, 
section 628(c)(2)(B) of the Act.\49\
---------------------------------------------------------------------------

    \49\ In addition, regardless of whether the programming is 
cable-affiliated, the Commission has not foreclosed a challenge 
under section 628(b) to an exclusive contract with a cable operator 
involving non-cable-affiliated programming.
---------------------------------------------------------------------------

III. Order on Reconsideration in MB Docket No. 07-29

A. Background

    73. For the reasons discussed below, we grant in part and deny in 
part a Petition for Reconsideration of the 2007 Extension Order filed 
by Fox Entertainment Group, Inc. (``Fox'') pertaining to the 
Commission's program access discovery procedures. In the 2007 Extension 
Order, the Commission revised these procedures to ``ensure that the 
Commission has the information necessary to expeditiously resolve 
program access complaints.'' The Commission codified its requirement 
that a respondent must attach to its answer all documents that it 
expressly references or relies upon in defending a program access 
claim. In addition, the Commission expanded the discovery procedures to 
permit party-to-party discovery. Under the expanded discovery 
procedures, parties to a program access complaint may serve requests 
for discovery directly on opposing parties and file a copy of the 
request with the Commission. The respondent has the opportunity to 
object to any request for documents that are not in its control or 
relevant to the dispute, and the obligation to produce the documents is 
suspended until the Commission rules on the objection. Recognizing that 
the expanded discovery approach requires the submission of confidential 
and competitively sensitive information, the Commission also revised 
the standard protective order for use in program access complaint 
proceedings to ensure that confidential business information is not 
improperly used for competitive business purposes. Specifically, the 
Commission modified the language of the protective order to reflect 
that any counsel or other persons, including in-house counsel, that are 
involved in ``competitive decision-making'' are prohibited from access 
to confidential material.
    74. Fox filed a petition for reconsideration of the 2007 Extension 
Order, arguing that the Commission's decision to permit party-to-party 
discovery constituted an unexplained departure from agency policy in 
contravention of the Administrative Procedure Act. AT&T and DISH filed 
oppositions to Fox's petition for reconsideration, and Time Warner Inc. 
filed a reply in support of Fox's petition.

B. Discussion

    75. We reject Fox's argument that the Commission failed to 
adequately explain its decision to permit party-to-party discovery. Fox 
asserts that the Commission departed without explanation from the 1998 
Program Access Order, where the Commission declined to permit party-
directed discovery out of concern that it could result in disputes over 
the production of documents and lengthen resolution times for program 
access complaints. We disagree. The Commission carefully weighed 
commenters' arguments in support of and in opposition to expanded 
discovery and concluded that ``expanded discovery will improve the 
quality and efficiency of the Commission's resolution of program access 
complaints.'' In this regard, a number of non-incumbent MVPDs raised 
concerns that documents necessary for complainants to establish 
discrimination, including programmers' carriage contracts, are not made 
available in complaint proceedings. The Commission agreed with these 
commenters ``that the availability of programmers' carriage contracts, 
subject to confidential treatment, [is] essential for determining 
whether the programmer is discriminating in price, terms and 
conditions.'' The Commission thus found that ``it would be unreasonable 
for a respondent not to produce all the documents requested by the 
complainant or ordered by the Commission, provided that such documents 
are in its control and relevant to the dispute.'' As DISH notes in its 
opposition, the record in this proceeding reflected ongoing concerns 
from MVPDs about the availability of relevant documents. Moreover, DISH 
states that the Commission also had ``an additional ten years of 
experience with the program access complaint process and discovery 
rules from which to determine that the existing discovery rules were 
insufficient.'' Accordingly, the Commission reasonably concluded that 
party-directed discovery will facilitate the expeditious resolution of 
program access complaints by ensuring

[[Page 66041]]

that all relevant documents are available to Commission staff and the 
parties, without the need for the Commission to take action to order 
the production of such documents. The modifications to the discovery 
rules were thus appropriate and adequately supported.
    76. Contrary to Fox's arguments, the Commission also considered 
concerns raised by commenters that party-controlled discovery could 
give rise to overly broad discovery requests and ``fishing 
expeditions'' for confidential and competitively-sensitive information, 
which could lead to disputes over discovery and prolong resolution of 
program access complaints. The Commission adopted several safeguards to 
address these concerns. For example, the Commission determined that 
parties should have the opportunity to object to any request for 
documents that are not in their control or relevant to the dispute and 
that the obligation to produce the documents would be suspended until 
the Commission rules on the objection. Moreover, the Commission 
modified the standard protective order to further limit the individuals 
who may access competitively sensitive documents, thereby ensuring that 
confidential business information is not improperly used for 
competitive business purposes. The Commission emphasized that it has 
full authority to impose sanctions for violations of its protective 
orders, including but not limited to suspension or disbarment of 
attorneys from practice before the Commission, forfeitures, cease and 
desist orders, and denial of further access to confidential information 
in Commission proceedings. Further, the Commission cautioned that it 
intends to vigorously enforce any transgressions of the provisions of 
its protective orders.
    77. We are unpersuaded by Fox's assertion that, notwithstanding 
these safeguards, expanded discovery ``is virtually certain to lengthen 
significantly the time it takes for the Commission to resolve program 
access complaints'' because the Commission will have to address each 
disputed discovery demand. Because each party to a program access 
dispute must respond to discovery requests from the other party, the 
parties have mutual incentives to avoid overbroad requests and to come 
to an agreement on the scope of discovery. Indeed, in program access 
complaint proceedings that have gone to discovery since the expanded 
discovery rules have been in effect, the parties have generally settled 
discovery disputes without Commission intervention and, to the extent 
that they have been unable to resolve discrete issues on their own, the 
Commission has quickly resolved these issues.
    78. Fox also argues that the expanded discovery process fails to 
adequately protect highly confidential and competitively sensitive 
documents and urges the Commission, if it continues to allow party-
directed discovery, to revise the standard protective order to provide 
more stringent protection of highly confidential information. Fox 
acknowledges that the Commission revised the standard protective order 
to prohibit access to confidential information to individuals who are 
involved in competitive decision-making, but asserts that there is 
currently no mechanism for ensuring compliance with this requirement in 
advance. According to Fox, any ex post facto sanction imposed by the 
Commission for violating a protective order could likely never mitigate 
the damage to a programmer's business if confidential information falls 
into the hands of a competitor. Fox argues that the Commission should 
therefore revise the protective order to permit parties to object if 
they have concerns about the individuals who seek access to 
confidential information. Under Fox's proposal, an individual seeking 
access to confidential information would be required to provide at 
least five business days' notice to a programmer prior to accessing any 
protected documents to give the programmer the opportunity to object. 
If there is an objection, access would not be provided until the 
Commission rules on the objection. Fox also asserts that the Commission 
should revise the standard protective order to permit parties to limit 
access to certain highly confidential information to outside counsel, 
and to provide parties the right to prohibit copying of highly 
sensitive documents.
    79. We modify the standard protective order as requested by Fox to 
include a right to object provision. We note that parties are free to 
negotiate their own protective orders to include a right to object 
provision and any other protections they deem necessary, and have done 
so successfully in program access complaint proceedings that have been 
initiated since the 2007 Extension Order. Nevertheless, a right to 
object provision is commonly included in protective orders, and we 
agree that adding a right to object provision to the standard 
protective order will further ensure that confidential information is 
not improperly used for competitive business purposes. Thus, under the 
revised standard protective order, an individual seeking access to 
confidential information will be required to provide at least five 
business days' notice to the submitting party prior to accessing any 
protected documents to provide the submitting party the opportunity to 
object. If the submitting party objects, the individual will not be 
provided access to the protected documents until the Commission rules 
on the objection. We decline, however, to modify the standard 
protective order at this time to permit parties to limit access to 
certain ``highly confidential'' information to outside counsel only. 
Whether certain categories of confidential information require an 
enhanced level of protection, and therefore should be restricted to 
outside counsel, depends on the facts presented in an individual 
adjudication. Moreover, because protective orders commonly restrict 
copying of only a subset of ``highly confidential'' documents that are 
particularly sensitive, we also decline to modify the standard 
protective order to provide parties the right to prohibit copying of 
certain documents. Rather, as with the issue of whether certain 
categories of confidential information require an enhanced level of 
protection, the issue of whether to preclude copying of certain 
documents depends on the facts presented in an individual adjudication.
    80. Fox further argues that the Commission should expand the rights 
of a discovery target to object to the scope of a request for 
documents. Fox states that the 2007 Extension Order provides that 
recipients of a discovery request may object ``to any request for 
documents that are not in its control or relevant to the dispute,'' and 
asserts that this narrow basis for an objection would preclude opposing 
a demand for materials that are subject to the attorney-client or 
attorney work product privileges or that represent confidential 
exchanges between programmers and their accountants or experts. We 
clarify that the language referenced by Fox, which is codified in Sec.  
76.1003(j) of the Commission's rules, was not intended to preclude the 
right to assert the attorney-client privilege or the attorney work 
product privilege for materials subject to a discovery request in a 
program access complaint proceeding. We amend this rule to reflect this 
clarification. The work product privilege may also extend to 
confidential exchanges between programmers and their accountants or 
experts if these materials are prepared in anticipation of litigation. 
We note that the adjudicator in a program access complaint proceeding 
may order the production of documents for which a privilege is asserted 
for in camera inspection to determine whether the

[[Page 66042]]

attorney-client or work product privileges apply.
    81. Finally, Fox asserts that the Commission should consider 
imposing sanctions against program access complainants that make 
frivolous discovery requests for information that is clearly not 
relevant or that is outside the scope of the complaint proceeding. As 
discussed above, we think it is unlikely that parties will use 
discovery to engage in ``fishing expeditions.'' We will, however, take 
appropriate action if we find that any party to a program access 
complaint proceeding is abusing the discovery process.

IV. Procedural Matters

A. Final Regulatory Flexibility Act Analysis

    82. As required by the Regulatory Flexibility Act of 1980 
(``RFA''), the Commission has prepared a Final Regulatory Flexibility 
Analysis (``FRFA'') relating to this Report and Order in MB Docket No. 
12-68 et al. and Order on Reconsideration in MB Docket No. 07-29.
    83. As required by the RFA, an Initial Regulatory Flexibility 
Analysis (``IRFA'') was incorporated in the Notice of Proposed 
Rulemaking (``NPRM'') in MB Docket Nos. 12-68, 07-18, and 05-192. The 
Commission sought written public comment on the proposals in the NPRM, 
including comment on the IRFA. The Organization for the Promotion and 
Advancement of Small Telecommunications Companies and the National 
Telecommunications Cooperative Association (collectively, ``OPASTCO/
NTCA'') filed comments directed toward the IRFA and these comments are 
discussed below. This Final Regulatory Flexibility Analysis (``FRFA'') 
conforms to the RFA.
Need for, and Objectives of, the Report and Order
    84. In areas served by a cable operator, section 628(c)(2)(D) of 
the Communications Act of 1934, as amended (the ``Act''), generally 
prohibits exclusive contracts for satellite cable programming or 
satellite broadcast programming between any cable operator and any 
cable-affiliated programming vendor (the ``exclusive contract 
prohibition''). The exclusive contract prohibition applies to all 
satellite-delivered, cable-affiliated programming and preemptively bans 
all exclusive contracts for such programming with cable operators, 
regardless of the popularity of the programming at issue. The exclusive 
contract prohibition applies only to programming that is delivered via 
satellite; it does not apply to programming delivered via terrestrial 
facilities. In section 628(c)(5) of the Act, Congress provided that the 
exclusive contract prohibition would cease to be effective on October 
5, 2002, unless the Commission found that it ``continues to be 
necessary to preserve and protect competition and diversity in the 
distribution of video programming.'' On two previous occasions, first 
in 2002 and again in 2007, the Commission renewed the prohibition for 
five years, with the latest extension expiring on October 5, 2012. The 
NPRM initiated the third review of the necessity of the exclusive 
contract prohibition.
    85. The Report and Order concludes that the exclusive contract 
prohibition is no longer necessary to preserve and protect competition 
and diversity in the distribution of video programming considering that 
a case-by-case process will remain in place after the prohibition 
expires to assess the impact of individual exclusive contracts. 
Accordingly, the Commission declines to extend the exclusive contract 
prohibition beyond its October 5, 2012 sunset date. Post-sunset, the 
Commission will rely on existing protections provided by the program 
access rules to protect multichannel video programming distributors 
(``MVPDs'') in their efforts to compete in the video distribution 
market, including the case-by-case consideration of exclusive contracts 
pursuant to section 628(b) of the Act.
    86. The Report and Order extends the case-by-case complaint process 
previously adopted to address section 628(b) complaints involving 
terrestrially delivered, cable-affiliated programming to section 628(b) 
complaints challenging exclusive contracts involving satellite 
delivered, cable-affiliated programming. Under this case-by-case 
process, the complainant will have the burden of proving that the 
exclusive contract (i) is ``unfair'' based on the facts and 
circumstances presented; and (ii) has the ``purpose or effect'' of 
``significantly hindering or preventing'' the MVPD from providing 
satellite cable programming or satellite broadcast programming in 
violation of section 628(b). There will be a rebuttable presumption 
that an exclusive contract involving a satellite-delivered, cable-
affiliated Regional Sports Network (``RSN'') has the purpose or effect 
set forth in section 628(b). A defendant may overcome this presumption 
by demonstrating that the exclusive contract does not have the purpose 
or effect of significantly hindering or preventing the MVPD from 
providing satellite cable programming or satellite broadcast 
programming. The Commission will analyze the HD version of a network 
separately from the SD version of the network in evaluating whether an 
exclusive contract involving satellite-delivered programming has the 
purpose or effect set forth in section 628(b). In cases involving an 
RSN, there will be a rebuttable presumption that an exclusive contract 
involving the HD version of the RSN results in significant hindrance 
even if the complainant offers the SD version of the RSN to 
subscribers. In addition to claims under section 628(b) of the Act, 
additional causes of action under section 628 will continue to apply 
after expiration of the exclusive contract prohibition, including 
claims alleging undue influence under section 628(c)(2)(A) and claims 
alleging discrimination under section 628(c)(2)(B).
    87. The Report and Order retains the exclusivity petition process, 
whereby a cable operator or satellite-delivered, cable-affiliated 
programmer may file a Petition for Exclusivity seeking Commission 
approval for an exclusive contract involving satellite-delivered, 
cable-affiliated programming by demonstrating that the contract serves 
the public interest. Grant of a Petition for Exclusivity will immunize 
an exclusive contract from potential complaints alleging a violation of 
section 628(c)(2)(B) of the Act, as required by the terms of section 
628(c)(2)(B)(iv).
    88. Finally, the Report and Order adopts a 45-day answer period for 
complaints alleging a violation of section 628(b); establishes a six-
month deadline (calculated from the date of filing of the complaint) 
for the Media Bureau to act on a complaint alleging a denial of 
programming; eliminates restrictions on subdistribution agreements 
involving satellite-delivered, cable-affiliated programming in served 
areas; determines that the rules applicable post-sunset to exclusive 
contracts between cable operators and satellite-delivered, cable-
affiliated programmers will apply equally to common carriers and Open 
Video Systems; and modifies the exclusivity conditions set forth in the 
Liberty Media Order to conform those conditions to the Commission's 
decision to decline to extend the exclusive contract prohibition beyond 
its October 5, 2012 sunset date.
    89. The Order on Reconsideration in MB Docket No. 07-29 (i) affirms 
the expanded discovery procedures for program access complaints adopted 
in the 2007 Extension Order; (ii) modifies the standard protective 
order for use in program access complaint proceedings

[[Page 66043]]

to include a provision allowing a party to object to the disclosure of 
confidential information based on concerns about the individual seeking 
access; and (iii) clarifies that a party may object to any request for 
documents that are protected from disclosure by the attorney-client 
privilege, the work-product doctrine, or other recognized protections 
from disclosure.
Summary of Significant Issues Raised by Public Comments in Response to 
the IRFA
    90. OPASTCO/NTCA filed comments specifically directed toward the 
IRFA. In addition, several other commenters addressed the effects of 
the expiration of the exclusive contract prohibition on small 
businesses in their comments. OPASTCO/NTCA argues that expiration of 
the exclusive contract prohibition would have a particularly harmful 
impact on small and rural MVPDs, which lack the resources to produce 
alternative programming or engage in effective counter-measures. 
Therefore, OPASTCO/NTCA argues, ``it is particularly imperative to 
extend the exclusive contract prohibition to avoid the disproportionate 
consequences that the rule's expiration would impose on the markets 
served by small MVPDs.'' Several commenters also argue that small MVPDs 
do not have the resources to litigate complaints involving exclusive 
contracts on a case-by-case basis.
    91. The Report and Order concludes that the case-by-case approach 
for considering exclusive contracts will be sufficient to protect 
MVPDs, including small, rural, and new entrant MVPDs, in their efforts 
to compete. The Report and Order also finds that the following 
additional factors will mitigate the risk of any potentially adverse 
impact of the expiration of the exclusive contract prohibition: (i) A 
significant percentage of satellite-delivered, cable-affiliated 
programming is subject until January 2018 to program access merger 
conditions adopted in the Comcast/NBCU Order, which require Comcast/
NBCU to make these networks available to competitors even after the 
expiration of the exclusive contract prohibition; (ii) the Commission 
expects that any enforcement of exclusive contracts in the near term 
will be limited by the terms of existing affiliation agreements; (iii) 
even after the expiration of the exclusive contract prohibition, a 
satellite-delivered, cable-affiliated programmer's refusal to license 
its content to a particular MVPD (such as a small, rural, or new 
entrant MVPD), while simultaneously licensing its content to other 
MVPDs competing in the same geographic area, will continue to be a 
violation of the discrimination provision in section 628(c)(2)(B), 
unless the programmer can establish a ``legitimate business reason'' 
for the conduct in response to a program access complaint challenging 
the conduct; and (iv) if the expiration of the exclusive contract 
prohibition results in harm to consumers or competition, the Commission 
has statutory authority pursuant to section 628(b) of the Act to take 
remedial action by adopting rules, including a prohibition on certain 
types of exclusive contracts involving cable-affiliated programming, to 
address these concerns.
    92. Moreover, the Report and Order notes that certain factors will 
help to minimize the costs of the complaint process. The Report and 
Order establishes a rebuttable presumption that an exclusive contract 
involving a satellite-delivered, cable-affiliated RSN has the purpose 
or effect set forth in section 628(b). This presumption will reduce 
costs by eliminating the need for litigants and the Commission to 
undertake repetitive examinations of Commission precedent and empirical 
evidence on RSNs. Moreover, the Report and Order establishes a six-
month deadline (calculated from the date of filing of the complaint) 
for the Media Bureau to act on a complaint alleging a denial of 
programming. In addition, to the extent that MVPDs are concerned with 
the costs of pursuing a program access complaint, they may seek to join 
with other MVPDs in pursuing a complaint.
Description and Estimate of the Number of Small Entities to Which Rules 
Will Apply
    93. The RFA directs agencies to provide a description of, and, 
where feasible, an estimate of, the number of small entities that may 
be affected by the rules adopted herein. The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A ``small business concern'' is one which: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the Small Business 
Administration (SBA). Below, we provide a description of such small 
entities, as well as an estimate of the number of such small entities, 
where feasible.
    94. Wired Telecommunications Carriers. The 2007 North American 
Industry Classification System (``NAICS'') defines ``Wired 
Telecommunications Carriers'' as follows: ``This industry comprises 
establishments primarily engaged in operating and/or providing access 
to transmission facilities and infrastructure that they own and/or 
lease for the transmission of voice, data, text, sound, and video using 
wired telecommunications networks. Transmission facilities may be based 
on a single technology or a combination of technologies. Establishments 
in this industry use the wired telecommunications network facilities 
that they operate to provide a variety of services, such as wired 
telephony services, including VoIP services; wired (cable) audio and 
video programming distribution; and wired broadband Internet services. 
By exception, establishments providing satellite television 
distribution services using facilities and infrastructure that they 
operate are included in this industry.'' The SBA has developed a small 
business size standard for wireline firms within the broad economic 
census category, ``Wired Telecommunications Carriers.'' Under this 
category, the SBA deems a wireline business to be small if it has 1,500 
or fewer employees. Census Bureau data for 2007, which now supersede 
data from the 2002 Census, show that there were 3,188 firms in this 
category that operated for the entire year. Of this total, 3,144 had 
employment of 999 or fewer, and 44 firms had employment of 1,000 
employees or more. Thus under this category and the associated small 
business size standard, the majority of these firms can be considered 
small.
    95. Cable Television Distribution Services. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined above. The 
SBA has developed a small business size standard for this category, 
which is: All such firms having 1,500 or fewer employees. Census Bureau 
data for 2007, which now supersede data from the 2002 Census, show that 
there were 3,188 firms in this category that operated for the entire 
year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms 
had employment of 1,000 employees or more. Thus under this category and 
the associated small business size standard, the majority of these 
firms can be considered small.
    96. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for

[[Page 66044]]

the purpose of cable rate regulation. Under the Commission's rules, a 
``small cable company'' is one serving 400,000 or fewer subscribers 
nationwide. Industry data indicate that all but ten cable operators 
nationwide are small under this size standard. In addition, under the 
Commission's rules, a ``small system'' is a cable system serving 15,000 
or fewer subscribers. Industry data indicate that, of 6,101 systems 
nationwide, 4,410 systems have under 10,000 subscribers, and an 
additional 258 systems have 10,000-19,999 subscribers. Thus, under this 
standard, most cable systems are small.
    97. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that an operator serving 
fewer than 677,000 subscribers shall be deemed a small operator if its 
annual revenues, when combined with the total annual revenues of all 
its affiliates, do not exceed $250 million in the aggregate. Industry 
data indicate that all but nine cable operators nationwide are small 
under this subscriber size standard. We note that the Commission 
neither requests nor collects information on whether cable system 
operators are affiliated with entities whose gross annual revenues 
exceed $250 million, and therefore we are unable to estimate more 
accurately the number of cable system operators that would qualify as 
small under this size standard.
    98. Direct Broadcast Satellite (``DBS'') Service. DBS service is a 
nationally distributed subscription service that delivers video and 
audio programming via satellite to a small parabolic ``dish'' antenna 
at the subscriber's location. DBS, by exception, is now included in the 
SBA's broad economic census category, ``Wired Telecommunications 
Carriers,'' which was developed for small wireline firms. Under this 
category, the SBA deems a wireline business to be small if it has 1,500 
or fewer employees. Census Bureau data for 2007, which now supersede 
data from the 2002 Census, show that there were 3,188 firms in this 
category that operated for the entire year. Of this total, 3,144 had 
employment of 999 or fewer, and 44 firms had employment of 1,000 
employees or more. Thus under this category and the associated small 
business size standard, the majority of these firms can be considered 
small. Currently, only two entities provide DBS service, which requires 
a great investment of capital for operation: DIRECTV and DISH Network). 
Each currently offers subscription services. DIRECTV and DISH Network 
each report annual revenues that are in excess of the threshold for a 
small business. Because DBS service requires significant capital, we 
believe it is unlikely that a small entity as defined by the SBA would 
have the financial wherewithal to become a DBS service provider.
    99. Satellite Master Antenna Television (SMATV) Systems, also known 
as Private Cable Operators (PCOs). SMATV systems or PCOs are video 
distribution facilities that use closed transmission paths without 
using any public right-of-way. They acquire video programming and 
distribute it via terrestrial wiring in urban and suburban multiple 
dwelling units such as apartments and condominiums, and commercial 
multiple tenant units such as hotels and office buildings. SMATV 
systems or PCOs are now included in the SBA's broad economic census 
category, ``Wired Telecommunications Carriers,'' which was developed 
for small wireline firms. Under this category, the SBA deems a wireline 
business to be small if it has 1,500 or fewer employees. Census Bureau 
data for 2007, which now supersede data from the 2002 Census, show that 
there were 3,188 firms in this category that operated for the entire 
year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms 
had employment of 1,000 employees or more. Thus, under this category 
and the associated small business size standard, the majority of these 
firms can be considered small.
    100. Home Satellite Dish (``HSD'') Service. HSD or the large dish 
segment of the satellite industry is the original satellite-to-home 
service offered to consumers, and involves the home reception of 
signals transmitted by satellites operating generally in the C-band 
frequency. Unlike DBS, which uses small dishes, HSD antennas are 
between four and eight feet in diameter and can receive a wide range of 
unscrambled (free) programming and scrambled programming purchased from 
program packagers that are licensed to facilitate subscribers' receipt 
of video programming. Because HSD provides subscription services, HSD 
falls within the SBA-recognized definition of Wired Telecommunications 
Carriers. The SBA has developed a small business size standard for this 
category, which is: all such firms having 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer, and 44 firms had employment of 1,000 employees or more. Thus, 
under this category and the associated small business size standard, 
the majority of these firms can be considered small.
    101. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service systems, previously referred to as Multipoint 
Distribution Service (MDS) and Multichannel Multipoint Distribution 
Service (MMDS) systems, and ``wireless cable,'' transmit video 
programming to subscribers and provide two-way high speed data 
operations using the microwave frequencies of the Broadband Radio 
Service (BRS) and Educational Broadband Service (EBS) (previously 
referred to as the Instructional Television Fixed Service (ITFS)). In 
connection with the 1996 BRS auction, the Commission established a 
small business size standard as an entity that had annual average gross 
revenues of no more than $40 million in the previous three calendar 
years. The BRS auctions resulted in 67 successful bidders obtaining 
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67 
auction winners, 61 met the definition of a small business. BRS also 
includes licensees of stations authorized prior to the auction. At this 
time, we estimate that of the 61 small business BRS auction winners, 48 
remain small business licensees. In addition to the 48 small businesses 
that hold BTA authorizations, there are approximately 392 incumbent BRS 
licensees that are considered small entities. After adding the number 
of small business auction licensees to the number of incumbent 
licensees not already counted, we find that there are currently 
approximately 440 BRS licensees that are defined as small businesses 
under either the SBA or the Commission's rules. In 2009, the Commission 
conducted Auction 86, the sale of 78 licenses in the BRS areas. The 
Commission offered three levels of bidding credits: (i) A bidder with 
attributed average annual gross revenues that exceed $15 million and do 
not exceed $40 million for the preceding three years (small business) 
received a 15 percent discount on its winning bid; (ii) a bidder with 
attributed average annual gross revenues that exceed $3 million and do 
not exceed $15 million for the preceding three years (very small 
business) received a 25 percent discount on its winning bid; and (iii) 
a bidder

[[Page 66045]]

with attributed average annual gross revenues that do not exceed $3 
million for the preceding three years (entrepreneur) received a 35 
percent discount on its winning bid. Auction 86 concluded in 2009 with 
the sale of 61 licenses. Of the ten winning bidders, two bidders that 
claimed small business status won 4 licenses; one bidder that claimed 
very small business status won three licenses; and two bidders that 
claimed entrepreneur status won six licenses.
    102. In addition, the SBA's Cable Television Distribution Services 
small business size standard is applicable to EBS. There are presently 
2,032 EBS licensees. All but 100 of these licenses are held by 
educational institutions. Educational institutions are included in this 
analysis as small entities. Thus, we estimate that at least 1,932 
licensees are small businesses. Since 2007, Cable Television 
Distribution Services have been defined within the broad economic 
census category of Wired Telecommunications Carriers; that category is 
defined as follows: ``This industry comprises establishments primarily 
engaged in operating and/or providing access to transmission facilities 
and infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired telecommunications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies.'' The SBA has developed a small 
business size standard for this category, which is: all such firms 
having 1,500 or fewer employees. Census Bureau data for 2007, which now 
supersede data from the 2002 Census, show that there were 3,188 firms 
in this category that operated for the entire year. Of this total, 
3,144 had employment of 999 or fewer, and 44 firms had employment of 
1,000 employees or more. Thus, under this category and the associated 
small business size standard, the majority of these firms can be 
considered small.
    103. Fixed Microwave Services. Microwave services include common 
carrier, private-operational fixed, and broadcast auxiliary radio 
services. They also include the Local Multipoint Distribution Service 
(LMDS), the Digital Electronic Message Service (DEMS), and the 24 GHz 
Service, where licensees can choose between common carrier and non-
common carrier status. At present, there are approximately 31,428 
common carrier fixed licensees and 79,732 private operational-fixed 
licensees and broadcast auxiliary radio licensees in the microwave 
services. There are approximately 120 LMDS licensees, three DEMS 
licensees, and three 24 GHz licensees. The Commission has not yet 
defined a small business with respect to microwave services. For 
purposes of the IRFA, we will use the SBA's definition applicable to 
Wireless Telecommunications Carriers (except satellite)--i.e., an 
entity with no more than 1,500 persons. Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), Census data for 2007, 
which supersede data contained in the 2002 Census, show that there were 
1,383 firms that operated that year. Of those 1,383, 1,368 had fewer 
than 1000 employees, and 15 firms had 1000 employees or more. Thus 
under this category and the associated small business size standard, 
the majority of firms can be considered small. We note that the number 
of firms does not necessarily track the number of licensees. We 
estimate that virtually all of the Fixed Microwave licensees (excluding 
broadcast auxiliary licensees) would qualify as small entities under 
the SBA definition.
    104. Open Video Systems. The open video system (``OVS'') framework 
was established in 1996, and is one of four statutorily recognized 
options for the provision of video programming services by local 
exchange carriers. The OVS framework provides opportunities for the 
distribution of video programming other than through cable systems. 
Because OVS operators provide subscription services, OVS falls within 
the SBA small business size standard covering cable services, which is 
``Wired Telecommunications Carriers.'' The SBA has developed a small 
business size standard for this category, which is: all such firms 
having 1,500 or fewer employees. Census Bureau data for 2007, which now 
supersede data from the 2002 Census, show that there were 3,188 firms 
in this category that operated for the entire year. Of this total, 
3,144 had employment of 999 or fewer, and 44 firms had employment of 
1,000 employees or more. Thus, under this category and the associated 
small business size standard, the majority of these firms can be 
considered small. In addition, we note that the Commission has 
certified approximately 42 OVS operators, with some now providing 
service. Broadband service providers (``BSPs'') are currently the only 
significant holders of OVS certifications or local OVS franchises. 
Affiliates of Residential Communications Network, Inc. (``RCN'') 
received approval to operate OVS systems in New York City, Boston, 
Washington, DC, and other areas. RCN has sufficient revenues to assure 
that they do not qualify as a small business entity. The Commission 
does not have financial or employment information regarding the other 
entities authorized to provide OVS, some of which may not yet be 
operational. Thus, up to 41 of the OVS operators may qualify as small 
entities.
    105. Cable and Other Subscription Programming. The Census Bureau 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in operating studios and facilities 
for the broadcasting of programs on a subscription or fee basis * * *. 
These establishments produce programming in their own facilities or 
acquire programming from external sources. The programming material is 
usually delivered to a third party, such as cable systems or direct-to-
home satellite systems, for transmission to viewers.'' The SBA has 
developed a small business size standard for this category, which is: 
all such firms having $15 million dollars or less in annual revenues. 
To gauge small business prevalence in the Cable and Other Subscription 
Programming industries, the Commission relies on data currently 
available from the U.S. Census for the year 2007. Census Bureau data 
for 2007, which now supersede data from the 2002 Census, show that 
there were 396 firms in this category that operated for the entire 
year. Of that number, 325 operated with annual revenues of $9,999,999 
dollars or less. Seventy-one (71) operated with annual revenues of 
between $10 million and $100 million or more. Thus, under this category 
and associated small business size standard, the majority of firms can 
be considered small.
    106. Small Incumbent Local Exchange Carriers. We have included 
small incumbent local exchange carriers in this present RFA analysis. A 
``small business'' under the RFA is one that, inter alia, meets the 
pertinent small business size standard (e.g., a telephone 
communications business having 1,500 or fewer employees), and ``is not 
dominant in its field of operation.'' The SBA's Office of Advocacy 
contends that, for RFA purposes, small incumbent local exchange 
carriers are not dominant in their field of operation because any such 
dominance is not ``national'' in scope. We have therefore included 
small incumbent local exchange carriers in this RFA analysis, although 
we emphasize that this RFA action has no effect on Commission analyses 
and determinations in other, non-RFA contexts.

[[Page 66046]]

    107. Incumbent Local Exchange Carriers (``LECs''). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census Bureau data for 
2007, which now supersede data from the 2002 Census, show that there 
were 3,188 firms in this category that operated for the entire year. Of 
this total, 3,144 had employment of 999 or fewer, and 44 firms had 
employment of 1,000 employees or more. According to Commission data, 
1,307 carriers reported that they were incumbent local exchange service 
providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or 
fewer employees and 301 have more than 1,500 employees. Thus, under 
this category and the associated small business size standard, the 
majority of these firms can be considered small.
    108. Competitive Local Exchange Carriers, Competitive Access 
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees. Census 
Bureau data for 2007, which now supersede data from the 2002 Census, 
show that there were 3,188 firms in this category that operated for the 
entire year. Of this total, 3,144 had employment of 999 or fewer, and 
44 firms had employment of 1,000 employees or more. Thus, under this 
category and the associated small business size standard, the majority 
of these firms can be considered small. Consequently, the Commission 
estimates that most providers of competitive local exchange service, 
competitive access providers, ``Shared-Tenant Service Providers,'' and 
``Other Local Service Providers'' are small entities.
    109. Motion Picture and Video Production. The Census Bureau defines 
this category as follows: ``This industry comprises establishments 
primarily engaged in producing, or producing and distributing motion 
pictures, videos, television programs, or television commercials.'' We 
note that firms in this category may be engaged in various industries, 
including cable programming. Specific figures are not available 
regarding how many of these firms produce and/or distribute programming 
for cable television. The SBA has developed a small business size 
standard for this category, which is: all such firms having $29.5 
million dollars or less in annual revenues. To gauge small business 
prevalence in the Motion Picture and Video Production industries, the 
Commission relies on data currently available from the U.S. Census for 
the year 2007. Census Bureau data for 2007, which now supersede data 
from the 2002 Census, show that there were 9,095 firms in this category 
that operated for the entire year. Of these, 8995 had annual receipts 
of $24,999,999 or less, and 100 had annual receipts ranging from not 
less that $25,000,000 to $100,000,000 or more. Thus, under this 
category and associated small business size standard, the majority of 
firms can be considered small.
    110. Motion Picture and Video Distribution. The Census Bureau 
defines this category as follows: ``This industry comprises 
establishments primarily engaged in acquiring distribution rights and 
distributing film and video productions to motion picture theaters, 
television networks and stations, and exhibitors.'' We note that firms 
in this category may be engaged in various industries, including cable 
programming. Specific figures are not available regarding how many of 
these firms produce and/or distribute programming for cable television. 
The SBA has developed a small business size standard for this category, 
which is: all such firms having $29.5 million dollars or less in annual 
revenues. To gauge small business prevalence in the Motion Picture and 
Video Distribution industries, the Commission relies on data currently 
available from the U.S. Census for the year 2007. Census Bureau data 
for 2007, which now supersede data from the 2002 Census, show that 
there were 450 firms in this category that operated for the entire 
year. Of these, 434 had annual receipts of $24,999,999 or less, and 16 
had annual receipts ranging from not less that $25,000,000 to 
$100,000,000 or more. Thus, under this category and associated small 
business size standard, the majority of firms can be considered small.
Description of Reporting, Recordkeeping, and Other Compliance 
Requirements
    111. Following the expiration of the exclusive contract 
prohibition, the Commission will rely on existing protections in the 
program access rules to protect MVPDs in their efforts to compete in 
the video distribution market. An MVPD will have the option to file a 
complaint with the Commission alleging that an exclusive contract 
between a cable operator and a satellite-delivered, cable-affiliated 
programmer involving satellite-delivered, cable-affiliated programming 
violates section 628(b) of the Act. The Report and Order extends the 
case-by-case complaint process previously adopted by the Commission to 
address unfair acts involving terrestrially delivered, cable-affiliated 
programming that allegedly violate section 628(b) to section 628(b) 
complaints challenging exclusive contracts involving satellite-
delivered, cable-affiliated programming. In addition to claims under 
section 628(b) of the Act, additional causes of action under section 
628 will continue to apply after expiration of the exclusive contract 
prohibition, including claims alleging undue influence under section 
628(c)(2)(A) and claims alleging discrimination under section 
628(c)(2)(B). The Report and Order also adopts a 45-day answer period 
in complaint proceedings alleging a violation of section 628(b) and 
establishes a six-month deadline (calculated from the date of filing of 
the complaint) for the Media Bureau to act on a complaint alleging a 
denial of programming. Moreover, the Order on Reconsideration (i) 
modifies the standard protective order for use in program access 
complaint proceedings to include a provision allowing a party to object 
to the disclosure of confidential information based on concerns about 
the individual seeking access; and (ii) clarifies that a party may 
object to any request for documents that are protected from disclosure 
by the attorney-client privilege, the work-product doctrine, or other 
recognized protections from disclosure.
Steps Taken To Minimize Significant Impact on Small Entities and 
Significant Alternatives Considered
    112. The RFA requires an agency to describe any significant 
alternatives that it has considered in developing its approach, which 
may include the following four alternatives (among others): ``(1) the 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rule for such small 
entities; (3) the use of performance rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
such small entities.'' The

[[Page 66047]]

NPRM invited comment on issues that had the potential to have 
significant impact on some small entities.
    113. In the Report and Order, the Commission declines to extend the 
exclusive contract prohibition beyond its October 5, 2012 sunset date. 
The Commission will instead rely on existing protections in the program 
access rules to protect MVPDs, including small entities, in their 
efforts to compete in the video distribution market. Small MVPDs will 
have the option to file a complaint alleging that an exclusive contract 
between a cable operator and a satellite-delivered, cable-affiliated 
programmer involving satellite-delivered, cable-affiliated programming 
violates section 628(b) of the Act. In addition to claims under section 
628(b) of the Act, additional causes of action under section 628 will 
continue to apply after expiration of the exclusive contract 
prohibition, including claims alleging undue influence under section 
628(c)(2)(A) and claims alleging discrimination under section 
628(c)(2)(B).
    114. The Report and Order notes that certain factors will help to 
minimize the costs of the complaint process. The Report and Order 
establishes a rebuttable presumption that an exclusive contract 
involving a satellite-delivered, cable-affiliated RSN has the purpose 
or effect set forth in section 628(b). This presumption will reduce 
costs by eliminating the need for litigants and the Commission to 
undertake repetitive examinations of Commission precedent and empirical 
evidence on RSNs. Moreover, the Report and Order establishes a six-
month deadline (calculated from the date of filing of the complaint) 
for the Media Bureau to act on a complaint alleging a denial of 
programming. To the extent that MVPDs are concerned with the costs of 
pursuing a program access complaint, they may seek to join with other 
MVPDs in pursuing a complaint.
    115. Finally, the Report and Order revises the procedural rules for 
program access complaints to adopt a 45-day answer period for 
complaints alleging a violation of section 628(b). The standard answer 
period for other program access complaints is only 20 days. Small 
entities may benefit from a lengthier 45-day period within which to 
file an answer.
    116. The Order on Reconsideration (i) modifies the standard 
protective order for use in program access complaint proceedings to 
include a provision allowing a party to object to the disclosure of 
confidential information based on concerns about the individual seeking 
access; and (ii) clarifies that a party may object to any request for 
documents that are protected from disclosure by the attorney-client 
privilege, the work-product doctrine, or other recognized protections 
from disclosure. Small entities may benefit from having the right to 
object to the disclosure of confidential information.
Report to Congress
    117. The Commission will send a copy of the Report and Order in MB 
Docket Nos. 12-68, 07-18, and 05-192, and Order on Reconsideration in 
MB Docket No. 07-29, including this FRFA, in a report to be sent to 
Congress and the Government Accountability Office pursuant to the 
Congressional Review Act. In addition, the Commission will send a copy 
of the Report and Order in MB Docket Nos. 12-68, 07-18, and 05-192, and 
Order on Reconsideration in MB Docket No. 07-29, including this FRFA, 
to the Chief Counsel for Advocacy of the SBA. A copy of the Report and 
Order in MB Docket Nos. 12-68, 07-18, and 05-192, the Order on 
Reconsideration in MB Docket No. 07-29, and FRFA (or summaries thereof) 
will also be published in the Federal Register.

B. Final Paperwork Reduction Act of 1995 Analysis

    118. This Report and Order in MB Docket No. 12-68 et al. and Order 
on Reconsideration in MB Docket No. 07-29 has been analyzed with 
respect to the Paperwork Reduction Act of 1995 (``PRA''), and does not 
contain any new or modified information collection requirements. In 
addition, therefore, it does not contain any new or modified 
``information collection burden for small business concerns with fewer 
than 25 employees,'' pursuant to the Small Business Paperwork Relief 
Act of 2002.

C. Congressional Review Act

    119. The Commission will send a copy of this Report and Order in MB 
Docket No. 12-68 et al. and Order on Reconsideration in MB Docket No. 
07-29 in a report to be sent to Congress and the Government 
Accountability Office, pursuant to the Congressional Review Act.

V. Ordering Clauses

    120. It is ordered that, pursuant to the authority found in 
sections 4(i), 4(j), 303(r), and 628 of the Communications Act of 1934, 
as amended, 47 U.S.C. 154(i), 154(j), 303(r), and 548, the Report and 
Order in MB Docket Nos. 12-68, 07-18, and 05-192 and Order on 
Reconsideration in MB Docket No. 07-29 Is Adopted.
    121. It is further ordered that, pursuant to the authority found in 
sections 4(i), 4(j), 303(r), and 628 of the Communications Act of 1934, 
as amended, 47 U.S.C. 154(i), 154(j), 303(r), and 548, the Commission's 
rules Are Hereby Amended as set forth in Appendix C.
    122. It is further ordered that the rules adopted herein Will 
Become Effective November 30, 2012.
    123. It is further ordered that, pursuant to sections 4(i), 4(j), 
309, and 310(d) of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 154(j), 309, and 310(d), the conditions previously 
adopted in the Liberty Media Order Are Hereby Modified as set forth in 
paragraph 72 of the Report and Order (FCC 12-123) in MB Docket Nos. 12-
68, 07-18, and 05-192 effective 30 days after the date of publication 
in the Federal Register.
    124. It is further ordered that, pursuant to the authority 
contained in section 405 of the Communications Act of 1934, as amended, 
47 U.S.C. 405, and Sec.  1.429 of the Commission's rules, 47 CFR 1.429, 
the Petition for Reconsideration of Fox Entertainment Group, Inc. in MB 
Docket No. 07-29 Is Granted in part and Denied in part as described 
herein.
    125. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, Shall Send a 
copy of this Report and Order in MB Docket Nos. 12-68, 07-18, and 05-
192 and Order on Reconsideration in MB Docket No. 07-29, including the 
Final Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.
    126. It is further ordered that the Commission Shall Send a copy of 
this Report and Order in MB Docket Nos. 12-68, 07-18, and 05-192 and 
Order on Reconsideration in MB Docket No. 07-29 in a report to be sent 
to Congress and the Government Accountability Office pursuant to the 
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

List of Subjects in 47 CFR Part 76

    Administrative practice and procedure, Cable television.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

    For the reasons discussed in the preamble, Part 76 of Title 47 of 
the Code of Federal Regulations is amended as follows:

[[Page 66048]]

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

0
1. The authority citation for Part 76 continues to read as follows:

    Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303, 
303a, 307, 308, 309, 312, 315, 317, 325, 339, 340, 341, 503, 521, 
522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 
552, 554, 556, 558, 560, 561, 571, 572, 573.


0
2. Section 76.1002 is amended by removing and reserving paragraph 
(c)(2), revising paragraphs (c)(3)(i) and (c)(3)(ii) introductory text, 
(c)(4) introductory text, and (c)(5) introductory text, and removing 
paragraph (c)(6).
    The revisions read as follows:


Sec.  76.1002  Specific unfair practices prohibited.

* * * * *
    (c) * * *
    (3) * * *
    (i) Unserved areas. No cable operator shall enter into any 
subdistribution agreement or arrangement for satellite cable 
programming or satellite broadcast programming with a satellite cable 
programming vendor in which a cable operator has an attributable 
interest or a satellite broadcast programming vendor in which a cable 
operator has an attributable interest for distribution to persons in 
areas not served by a cable operator as of October 5, 1992 unless such 
agreement or arrangement complies with the limitations set forth in 
paragraph (c)(3)(ii) of this section. (ii) Limitations on 
subdistribution agreements in unserved areas. No cable operator engaged 
in subdistribution of satellite cable programming or satellite 
broadcast programming may require a competing multichannel video 
programming distributor to
* * * * *
    (4) Public interest determination. In determining whether an 
exclusive contract is in the public interest for purposes of paragraph 
(c)(5) of this section, the Commission will consider each of the 
following factors with respect to the effect of such contract on the 
distribution of video programming in areas that are served by a cable 
operator:
* * * * *
    (5) Commission approval required. Any cable operator, satellite 
cable programming vendor in which a cable operator has an attributable 
interest, or satellite broadcast programming vendor in which a cable 
operator has an attributable interest must submit a ``Petition for 
Exclusivity'' to the Commission and receive approval from the 
Commission to preclude the filing of complaints alleging that an 
exclusive contract with respect to areas served by a cable operator 
violates section 628(c)(2)(B) of the Communications Act of 1934, as 
amended, and paragraph (b) of this section.
* * * * *

0
3. Section 76.1003 is amended by revising paragraphs (e)(1) and (j) and 
adding paragraph (m) to read as follows:


Sec.  76.1003  Program access proceedings.

* * * * *
    (e) * * *
    (1) Except as otherwise provided or directed by the Commission, any 
cable operator, satellite cable programming vendor or satellite 
broadcast programming vendor upon which a program access complaint is 
served under this section shall answer within twenty (20) days of 
service of the complaint, provided that the answer shall be filed 
within forty-five (45) days of service of the complaint if the 
complaint alleges a violation of section 628(b) of the Communications 
Act of 1934, as amended, or Sec.  76.1001(a). To the extent that a 
cable operator, satellite cable programming vendor or satellite 
broadcast programming vendor expressly references and relies upon a 
document or documents in asserting a defense or responding to a 
material allegation, such document or documents shall be included as 
part of the answer.
* * * * *
    (j) Discovery. In addition to the general pleading and discovery 
rules contained in Sec.  76.7, parties to a program access complaint 
may serve requests for discovery directly on opposing parties, and file 
a copy of the request with the Commission. The respondent shall have 
the opportunity to object to any request for documents that are not in 
its control or relevant to the dispute or protected from disclosure by 
the attorney-client privilege, the work-product doctrine, or other 
recognized protections from disclosure. Such request shall be heard, 
and determination made, by the Commission. Until the objection is ruled 
upon, the obligation to produce the disputed material is suspended. Any 
party who fails to timely provide discovery requested by the opposing 
party to which it has not raised an objection as described above, or 
who fails to respond to a Commission order for discovery material, may 
be deemed in default and an order may be entered in accordance with the 
allegations contained in the complaint, or the complaint may be 
dismissed with prejudice.
* * * * *
    (m) Deadline for Media Bureau Action on Complaints Alleging a 
Denial of Programming. For complaints alleging a denial of programming, 
the Chief, Media Bureau shall release a decision resolving the 
complaint within six (6) months from the date the complaint is filed.


0
4. Section 76.1004 is amended by revising paragraph (b) to read as 
follows:


Sec.  76.1004  Applicability of program access rules to common carriers 
and affiliates.

* * * * *
    (b) Sections 76.1002(c)(1) through (3) shall be applied to a common 
carrier or its affiliate that provides video programming by any means 
directly to subscribers as follows: No common carrier or its affiliate 
that provides video programming directly to subscribers shall engage in 
any practice or activity or enter into any understanding or 
arrangement, including exclusive contracts, with a satellite cable 
programming vendor or satellite broadcast programming vendor for 
satellite cable programming or satellite broadcast programming that 
prevents a multichannel video programming distributor from obtaining 
such programming from any satellite cable programming vendor in which a 
common carrier or its affiliate has an attributable interest, or any 
satellite broadcasting vendor in which a common carrier or its 
affiliate has an attributable interest for distribution to persons in 
areas not served by a cable operator as of October 5, 1992.


0
5. Section 76.1507 is amended by removing and reserving paragraph 
(a)(2) and revising paragraphs (a)(3), and (b) to read as follows:


Sec.  76.1507  Competitive access to satellite cable programming.

    (a) * * *
    (3) Section 76.1002(c)(3)(i) and (ii) shall only restrict the 
conduct of an open video system operator, its affiliate that provides 
video programming on its open video system and a satellite cable 
programming vendor in which an open video system operator has an 
attributable interest, as follows: No open video system operator shall 
enter into any subdistribution agreement or arrangement for satellite 
cable programming or satellite broadcast programming with a satellite 
cable programming vendor in which an open video system operator has an 
attributable interest or a satellite broadcast programming vendor in 
which an open video system operator has an attributable interest for 
distribution to persons in areas not served by a cable operator as of 
October

[[Page 66049]]

5, 1992 unless such agreement or arrangement complies with the 
limitations set forth in Sec.  76.1002(c)(3)(ii).
    (b) No open video system programming provider in which a cable 
operator has an attributable interest shall engage in any practice or 
activity or enter into any understanding or arrangement, including 
exclusive contracts, with a satellite cable programming vendor or 
satellite broadcast programming vendor for satellite cable programming 
or satellite broadcast programming that prevents a multichannel video 
programming distributor from obtaining such programming from any 
satellite cable programming vendor in which a cable operator has an 
attributable interest, or any satellite broadcasting vendor in which a 
cable operator has an attributable interest for distribution to person 
in areas not served by a cable operator as of October 5, 1992.
    The following Appendix will not appear in the Code of Federal 
Regulations (CFR):

Appendix

Standard Protective Order and Declaration for Use in Section 628 
Program Access Proceedings Before the Federal Communications Commission 
Washington, DC 20554

In the Matter of )
[Name of Proceeding] )
Docket No.

PROTECTIVE ORDER

    1. This Protective Order is intended to facilitate and expedite 
the review of documents filed in this proceeding or obtained from a 
person in the course of discovery that contain trade secrets and 
privileged or confidential commercial or financial information. It 
establishes the manner in which ``Confidential Information,'' as 
that term is defined herein, is to be treated. The Order is not 
intended to constitute a resolution of the merits concerning whether 
any Confidential Information would be released publicly by the 
Commission upon a proper request under the Freedom of Information 
Act (``FOIA'') or other applicable law or regulation, including 47 
CFR 0.442.
    2. Definitions.
    a. Authorized Representative. ``Authorized Representative'' 
shall have the meaning set forth in Paragraph 7.
    b. Commission. ``Commission'' means the Federal Communications 
Commission or any arm of the Commission acting pursuant to delegated 
authority.
    c. Confidential Information. ``Confidential Information'' means 
(i) information submitted to the Commission by the Submitting Party 
that has been so designated by the Submitting Party and which the 
Submitting Party has determined in good faith constitutes trade 
secrets and commercial or financial information which is privileged 
or confidential within the meaning of Exemption 4 of the Freedom of 
Information Act, 5 U.S.C. 552(b)(4) and (ii) information submitted 
to the Commission by the Submitting Party that has been so 
designated by the Submitting Party and which the Submitting Party 
has determined in good faith falls within the terms of Commission 
orders designating the items for treatment as Confidential 
Information. Confidential Information includes additional copies of, 
notes, and information derived from Confidential Information.
    d. Declaration. ``Declaration'' means Attachment A to this 
Protective Order.
    e. Reviewing Party. ``Reviewing Party'' means a person or entity 
participating in this proceeding or considering in good faith filing 
a document in this proceeding.
    f. Submitting Party. ``Submitting Party'' means a person or 
entity that seeks confidential treatment of Confidential Information 
pursuant to this Protective Order.
    3. Claim of Confidentiality. The Submitting Party may designate 
information as ``Confidential Information'' consistent with the 
definition of that term in Paragraph 2.c of this Protective Order. 
The Commission may, sua sponte or upon petition, pursuant to 47 CFR 
0.459 and 0.461, determine that all or part of the information 
claimed as ``Confidential Information'' is not entitled to such 
treatment.
    4. Procedures for Claiming Information is Confidential. 
Confidential Information submitted to the Commission shall be filed 
under seal and shall bear on the front page in bold print, 
``CONTAINS CONFIDENTIAL INFORMATION--DO NOT RELEASE.'' Confidential 
Information shall be segregated by the Submitting Party from all 
non-confidential information submitted to the Commission. To the 
extent a document contains both Confidential Information and non-
confidential information, the Submitting Party shall designate the 
specific portions of the document claimed to contain Confidential 
Information and shall, where feasible, also submit a redacted 
version not containing Confidential Information. By designating 
information as Confidential Information, a Submitting Party 
signifies that it has determined in good faith that the information 
should be subject to protection under FOIA, the Commission's 
implementing rules, and this Protective Order.
    5. Storage of Confidential Information at the Commission. The 
Secretary of the Commission or other Commission staff to whom 
Confidential Information is submitted shall place the Confidential 
Information in a non-public file. Confidential Information shall be 
segregated in the files of the Commission, and shall be withheld 
from inspection by any person not bound by the terms of this 
Protective Order, unless such Confidential Information is released 
from the restrictions of this Order either through agreement of the 
parties, or pursuant to the order of the Commission or a court 
having jurisdiction.
    6. Commission Access to Confidential Information. Confidential 
Information shall be made available to Commission staff and 
Commission consultants. Consultants under contract to the Commission 
may obtain access to Confidential Information only if they have 
signed, as part of their employment contract, a non-disclosure 
agreement the scope of which includes the Confidential Information, 
or if they execute the attached Declaration.
    7. Disclosure. Subject to the requirements of Paragraph 9, 
Confidential Information may be reviewed by counsel to the Reviewing 
Parties, or if a Reviewing Party has no counsel, to a person 
designated by the Reviewing Party. Subject to the requirements of 
Paragraph 9, counsel to a Reviewing Party or such other person 
designated by the Reviewing Party may disclose Confidential 
Information to other Authorized Representatives only after advising 
such Authorized Representatives of the terms and obligations of the 
Order and provided that the Authorized Representatives have signed 
the Declaration and served it appropriately in accordance with 
paragraph 9, and the Authorized Representatives are of the type of 
persons listed in subparagraphs 8.a., b., and c.
    8. Authorized Representatives shall be limited to:
    a. Subject to Paragraph 8.d, counsel for the Reviewing Parties 
to this proceeding, including in-house counsel, actively engaged in 
the conduct of this proceeding and their associated attorneys, 
paralegals, clerical staff and other employees, to the extent 
reasonably necessary to render professional services in this 
proceeding;
    b. Subject to Paragraph 8.d, specified persons, including 
employees of the Reviewing Parties, requested by counsel to furnish 
technical or other expert advice or service, or otherwise engaged to 
prepare material for the express purpose of formulating filings in 
this proceeding; and
    c. Subject to Paragraph 8.d., any person designated by the 
Commission in the public interest, upon such terms as the Commission 
may deem proper; except that,
    d. Disclosure shall be prohibited to any persons in a position 
to use the Confidential Information for competitive commercial or 
business purposes, including persons involved in competitive 
decision-making, which includes, but is not limited to, persons 
whose activities, association or relationship with the Reviewing 
Parties or other Authorized Representatives involve rendering advice 
or participating in any or all of the Reviewing Parties', Authorized 
Representatives' or any other person's business decisions that are 
or will be made in light of similar or corresponding information 
about a competitor.
    9. Procedures for Obtaining Access to Confidential Information. 
In all cases where access to Confidential Information is permitted 
pursuant to paragraph 7, before reviewing or having access to any 
Confidential Information, each person seeking such access shall 
execute the Declaration in Attachment A and file it with the 
Commission and serve it upon the Submitting Party through their 
counsel, so that the Declaration is received by the Submitting Party 
at least five (5) business days prior to such person's reviewing or 
having access to Confidential Information. Each Submitting Party 
shall have an

[[Page 66050]]

opportunity to object to the disclosure of its Confidential 
Information to any such person. Any objection must be filed at the 
Commission and served on counsel for such person within three (3) 
business days after receipt of that person's Declaration. Until any 
such objection is resolved by the Commission and, if appropriate, 
any court of competent jurisdiction prior to any disclosure, and 
unless such objection is resolved in favor of the person seeking 
access, persons subject to an objection from a Submitting Party 
shall not have access to Confidential Information. If there is no 
objection or once such objection is resolved, the Submitting Party 
shall make such material available for review as set forth in 
Paragraph 10.
    10. Inspection of Confidential Information. Confidential 
Information shall be maintained by a Submitting Party for inspection 
at two or more locations, at least one of which shall be in 
Washington, D.C. Inspection shall be carried out by Authorized 
Representatives upon reasonable notice not to exceed one business 
day during normal business hours.
    11. Copies of Confidential Information. The Submitting Party 
shall provide a copy of the Confidential Material to Authorized 
Representatives upon request and may charge a reasonable copying fee 
not to exceed twenty five cents per page. Authorized Representatives 
may make additional copies of Confidential Information but only to 
the extent required and solely for the preparation and use in this 
proceeding. Authorized Representatives must maintain a written 
record of any additional copies made and provide this record to the 
Submitting Party upon reasonable request. The original copy and all 
other copies of the Confidential Information shall remain in the 
care and control of Authorized Representatives at all times. 
Authorized Representatives having custody of any Confidential 
Information shall keep the documents properly and fully secured from 
access by unauthorized persons at all times.
    12. Use of Confidential Information. Confidential Information 
shall not be used by any person granted access under this Protective 
Order for any purpose other than for use in this proceeding 
(including any subsequent administrative or judicial review), shall 
not be used for competitive business purposes, and shall not be used 
or disclosed except in accordance with this Order. This shall not 
preclude the use of any material or information that is in the 
public domain or has been developed independently by any other 
person who has not had access to the Confidential Information nor 
otherwise learned of its contents.
    13. Pleadings Using Confidential Information. Submitting Parties 
and Reviewing Parties may, in any pleadings that they file in this 
proceeding, reference the Confidential Information, but only if they 
comply with the following procedures:
    a. Any portions of the pleadings that contain or disclose 
Confidential Information must be physically segregated from the 
remainder of the pleadings and filed under seal;
    b. The portions containing or disclosing Confidential 
Information must be covered by a separate letter referencing this 
Protective Order;
    c. Each page of any Party's filing that contains or discloses 
Confidential Information subject to this Order must be clearly 
marked: ``Confidential Information included pursuant to Protective 
Order, [cite proceeding];'' and
    d. The confidential portion(s) of the pleading, to the extent 
they are required to be served, shall be served upon the Secretary 
of the Commission, the Submitting Party, and those Reviewing Parties 
that have signed the attached Declaration. Such confidential 
portions shall be served under seal, and shall not be placed in the 
Commission's Public File unless the Commission directs otherwise 
(with notice to the Submitting Party and an opportunity to comment 
on such proposed disclosure). A Submitting Party or a Reviewing 
Party filing a pleading containing Confidential Information shall 
also file a redacted copy of the pleading containing no Confidential 
Information, which copy shall be placed in the Commission's public 
files. A Submitting Party or a Reviewing Party may provide courtesy 
copies of pleadings containing Confidential Information to 
Commission staff so long as the notations required by this Paragraph 
13 are not removed.
    14. Violations of Protective Order. Should a Reviewing Party 
that has properly obtained access to Confidential Information under 
this Protective Order violate any of its terms, it shall immediately 
convey that fact to the Commission and to the Submitting Party. 
Further, should such violation consist of improper disclosure or use 
of Confidential Information, the violating party shall take all 
necessary steps to remedy the improper disclosure or use. The 
Violating Party shall also immediately notify the Commission and the 
Submitting Party, in writing, of the identity of each party known or 
reasonably suspected to have obtained the Confidential Information 
through any such disclosure. The Commission retains its full 
authority to fashion appropriate sanctions for violations of this 
Protective Order, including but not limited to suspension or 
disbarment of attorneys from practice before the Commission, 
forfeitures, cease and desist orders, and denial of further access 
to Confidential Information in this or any other Commission 
proceeding. Nothing in this Protective Order shall limit any other 
rights and remedies available to the Submitting Party at law or 
equity against any party using Confidential Information in a manner 
not authorized by this Protective Order.
    15. Termination of Proceeding. Within two weeks after final 
resolution of this proceeding (which includes any administrative or 
judicial appeals), Authorized Representatives of Reviewing Parties 
shall, at the direction of the Submitting Party, destroy or return 
to the Submitting Party all Confidential Information as well as all 
copies and derivative materials made, and shall certify in a writing 
served on the Commission and the Submitting Party that no material 
whatsoever derived from such Confidential Information has been 
retained by any person having access thereto, except that counsel to 
a Reviewing Party may retain two copies of pleadings submitted on 
behalf of the Reviewing Party. Any confidential information 
contained in any copies of pleadings retained by counsel to a 
Reviewing Party or in materials that have been destroyed pursuant to 
this paragraph shall be protected from disclosure or use 
indefinitely in accordance with Paragraphs 11 and 12 of this 
Protective Order unless such Confidential Information is released 
from the restrictions of this Order either through agreement of the 
parties, or pursuant to the order of the Commission or a court 
having jurisdiction.
    16. No Waiver of Confidentiality. Disclosure of Confidential 
Information as provided herein shall not be deemed a waiver by the 
Submitting Party of any privilege or entitlement to confidential 
treatment of such Confidential Information. Reviewing Parties, by 
viewing these materials: (a) agree not to assert any such waiver; 
(b) agree not to use information derived from any confidential 
materials to seek disclosure in any other proceeding; and (c) agree 
that accidental disclosure of Confidential Information shall not be 
deemed a waiver of the privilege.
    17. Additional Rights Preserved. The entry of this Protective 
Order is without prejudice to the rights of the Submitting Party to 
apply for additional or different protection where it is deemed 
necessary or to the rights of Reviewing Parties to request further 
or renewed disclosure of Confidential Information.
    18. Effect of Protective Order. This Protective Order 
constitutes an Order of the Commission and an agreement between the 
Reviewing Party, executing the attached Declaration, and the 
Submitting Party.
    19. Authority. This Protective Order is issued pursuant to 
sections 4(i) and 4(j) of the Communications Act as amended, 47 
U.S.C. 154(i), (j); 47 CFR 0.457(d) and 76.1003(k); and section 4 of 
the Freedom of Information Act, 5 U.S.C. 552(b)(4).

Attachment A to Standard Protective Order

DECLARATION

In the Matter of )
[Name of Proceeding] )
 Docket No.
    I, --------, hereby declare under penalty of perjury that I have 
read the Protective Order that has been entered by the Commission in 
this proceeding, and that I agree to be bound by its terms 
pertaining to the treatment of Confidential Information submitted by 
parties to this proceeding. I understand that the Confidential 
Information shall not be disclosed to anyone except in accordance 
with the terms of the Protective Order and shall be used only for 
purposes of the proceedings in this matter. I acknowledge that a 
violation of the Protective Order is a violation of an order of the 
Federal Communications Commission. I acknowledge that this 
Protective Order is also a binding agreement with the Submitting 
Party. I am not in a position to use the Confidential Information 
for competitive commercial or business purposes, including 
competitive decision-making, and my activities, association or 
relationship with the Reviewing Parties, Authorized

[[Page 66051]]

Representatives, or other persons does not involve rendering advice 
or participating in any or all of the Reviewing Parties', Authorized 
Representatives' or other persons' business decisions that are or 
will be made in light of similar or corresponding information about 
a competitor.

(signed)---------------------------------------------------------------
(printed name)---------------------------------------------------------
(representing)---------------------------------------------------------
(title)----------------------------------------------------------------
(employer)-------------------------------------------------------------
(address)--------------------------------------------------------------
(phone)----------------------------------------------------------------
(date)-----------------------------------------------------------------

[FR Doc. 2012-26456 Filed 10-30-12; 8:45 am]
BILLING CODE 6712-01-P