News

Viacom to FCC: Go Slow on Access

9/06/1998 8:00 PM Eastern

Washington -- Viacom Inc. is urging the Federal
Communications Commission to ignore calls for broader program-access rules that would
cover networks that are unaffiliated with cable operators.

Viacom -- owner of MTV: Music Television, Nickelodeon and
Showtime -- was covered by federal program-access rules until it sold off its cable
systems to Tele-Communications Inc. in 1996.

Since then, Viacom has been able to sell its networks to
any distributor on an exclusive basis. But for practical business reasons, Viacom has
opted to sell only TV Land -- a network that the company launched in 1996 -- on a limited
exclusive basis to cable operators.

The FCC is coming under pressure from Ameritech New Media
and the Wireless Communications Association International (WCA) to expand program-access
rules to cover cable networks that are unaffiliated with operators in a bid to abolish
virtually all forms of exclusivity that involve incumbent cable operators.

In comments filed last week, Viacom told the FCC that the
expansion proposals were unwarranted because all of its networks except TV Land were made
available to all multichannel distributors.

"In fact, Ameritech itself carries these Viacom
services under negotiated agreements," the network said.

ANM called for expansion of the rules on the grounds that
Viacom could, at any moment, refuse to sell its popular networks to cable competitors.
Viacom replied that its interests were best served by selling to all.

"As a non-vertically integrated programmer, Viacom
profits from robust competition among [multichannel distributors], which creates more
distributors for the delivery of its program services," Viacom said.

Regarding TV Land, Viacom said it agreed to limited
exclusivity with incumbent cable operators as a launch strategy, and not as a long-term
option. While Viacom refuses to sell TV Land to ANM, it told the FCC that TV Land is
distributed by direct-broadcast satellite carriers.

Viacom said that after TV Land has an established
subscriber base and after it has begun to recoup the typical $100 million to $125 million
in start-up costs, it would sell to ANM.

"Viacom eagerly awaits the day when TV Land, like its
mature sister networks, will enjoy a solid base of subscribers so that it, too, will be
licensed for carriage by all distribution technologies," Viacom said.

Lawyers debated whether the FCC has the statutory authority
under current law to fold Viacom into its program-access rules. Two bills are pending in
the House that would abolish exclusivity rights for Viacom.

In other comments, the National Cable Television
Association said the FCC should similarly ignore calls to extend program-access rules to
cable-owned networks that are distributed terrestrially. The current rules apply only to
satellite-delivered programming.

The NCTA reminded the FCC that just last month, in an order
adopting tougher program-access-enforcement measures, the agency found "no evidence
of any significant problem" showing that cable operators have been migrating
affiliated programming from satellite to microwave to evade program-access requirements.

Like Viacom, the NCTA filed comments with the FCC hoping to
influence the agency's annual competition study and the scope of any recommendations
to Congress included therein.

The NCTA declared that cable competition is
"flourishing," pointing to the fact that the DBS industry is adding about 6,000
subscribers per day.

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