FCC Launches Program-Access Ruling
By Ted Hearn -- Multichannel News, 10/11/2001 11:52:00 AM
At a time when the program-distribution market could tip in favor of the direct-broadcast satellite industry, the Federal Communications Commission is examining whether to continue to force cable operators to sell their programming to DBS rivals.
On Thursday, the FCC voted 4-0 to launch a rulemaking on whether to sunset so-called program-access rules. Under the rules, satellite-delivered cable networks are banned from signing exclusive deals with cable operators -- even MSOs that have no ownership interest in the cable networks.
As a result, those cable networks must be sold to DBS, and the rules are widely credited with giving birth to the rapidly growing DBS industry. Although Congress imposed the rules in 1992 as part of a broad reregulation of cable operators, it permitted the FCC to lift the exclusivity ban Oct. 5, 2002.
'What we will be looking at is whether, in fact, there are still opportunities for vertically integrated programmers and cable operators to skew the market with exclusive contracts,' said W. Kenneth Ferree, chief of the FCC's Cable Service Bureau.
Ferree -- whose staff will make recommendations to the four FCC members -- added: 'The idea in this notice is to find out whether that is still a threat, and if it is, then we would still presumably need to maintain the prohibition on exclusivity. If it's not, then we would have to re-examine that.'
At the meeting, FCC chairman Michael Powell withheld comment. But earlier this year, Powell indicated that the program-access rules had slightly more merit than other mass-media rules he views as no longer necessary to enforce.
The other FCC members urged interested parties to file comments on a range of topics related to the impact the exclusivity provision has had on the cable and DBS industries. None of them made statements indicating which way they were leaning.
'We need solid information on what effect this prohibition has had on competition and diversity,' commissioner Kathleen Abernathy said.
The FCC could come under heavy pressure not to sunset the exclusivity provision from the member of Congress who was instrumental in enacting the program-access law -- House Energy and Commerce Committee chairman Billy Tauzin (R-La.).
Tauzin spokesman Ken Johnson said the commission can expect to hear from Tauzin on the rulemaking.
'You can count on it,' Johnson said. 'We have not seen any developments in the marketplace today to suggest that the program-access rules are no longer necessary.'
Over the past decade, the program-ownership market has undergone substantial change. Although AOL Time Warner Inc. and other MSOs own a large stable of networks, FCC data show that vertical integration in the cable industry has declined sharply.
In 1994 -- two years after the program-access law passed -- cable operators had an ownership stake in 53 percent of national cable networks. Last year, the percentage dropped to 35 percent of 285 national programming networks. With AT&T Corp.'s recent spinoff of programming giant Liberty Media Corp., the level of vertical integration in the cable industry has dropped even more.
But consumer groups want the program-access rules extended despite the decline in vertical integration mainly because the cable operators still retain control over some of the most widely viewed cable networks that DBS cannot afford to lose.
The FCC's rulemaking could occur simultaneously with the acquisition of DirecTV Inc. -- the No. 1 DBS carrier, with 10 million subscribers -- by News Corp. and Liberty.
If the long-delayed deal were to happen, DirecTV would emerge as the most vertically integrated multichannel-video-programming distributor in the United States, and it would be under no obligation to sell its programming to cable operators.
None of the FCC officials addressed whether the program-access rules should be applied to vertically integrated DBS carriers in the event the agency decided to extend the cable rules beyond next October.
New Leased Access Rules Released By FCC
02/03/2008Target: Program Access
09/14/2009FCC Launches Program-Access Ruling
10/11/2001Martin Pushes For Network-Access Rules
12/06/2008FCC Reopens Program-Access File
10/14/2001
