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Some MFNs Could Be DOA

10/03/2016 8:00 AM Eastern

WASHINGTON — As expected, the Federal Communications Commission has proposed extending some Charter Communications- Time Warner Cable merger conditions industrywide to promote access to independent programming.

 

The FCC has decided, at least tentatively, that unconditional most favored nation clauses (MFNs) and alternative delivery mechanism (ADM) restrictions should be prohibited when they are between MVPDs and independent programmers. The proposal tracks with conditions in the Charter-Time Warner Cabledeal.

 

By independent, the FCC means not just independent from MVPDs but from any major Hollywood studio.

 

That decision came in a Notice of Proposed Rulemaking approved on a 3-2 party-line vote last week.

 

The NPRM stemmed from a notice of inquiry issued at the request of Democratic commissioner Mignon Clyburn after she voted to approve the Charter-TWC merger despite having concerns about access to programming.

 

The Republicans voting against the item cited many reasons. One was the fulfillment of their prediction that the FCC would eventually impose the Charter conditions on the industry at large. Another was that they were not convinced the FCC had the authority under its program-carriage rules to prohibit such contract terms.

 

The NPRM sought input on the impact of program bundling on access to programming, but did not presumptively conclude it was anticompetitive.

 

FCC chairman Tom Wheeler said it was only a proposal and that any final order would reflect input from stakeholders. But the Republican commissioners said they thought the FCC had already reached the conclusion that the contract terms would be prohibited. Commissioner Ajit Pai called it an order masquerading as an NPRM.

 

The Republicans also argued that the prohibition could hurt independent programmers, saying MVPDs might be discouraged from striking deals — they are under no obligation to do so — by the contractual limits.

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