Cable Hears It From Feds On Program-Carriage Rules - Multichannel

Cable Hears It From Feds On Program-Carriage Rules

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WASHINGTON — It was a mixed but generally positive outcome for cable operators in several federal appeals courts proceedings last week.

The 2nd Circuit U.S. Court of Appeals rejected Time Warner Cable and the National Cable & Telecommunications Associations’ First Amendment challenge to the Federal Communications Commission’s program-carriage regime, a ruling that seemed like a long shot anyway.

But it did find that the FCC’s imposition of a standstill on prices, terms and conditions of a contract for which a complainant was seeking renewal violated the Administrative Procedures Act.

In the nation’s capital, the U.S. Court of Appeals for the D.C. Circuit declined to review the Tennis Channel decision. (A three-judge panel had ruled that Comcast did not violate the FCC’s program-carriage rules by keeping Tennis on a sports tier, per a long-standing contract, rather than give it the wider distribution the programmer had sought.)

The FCC had argued that the standstill was needed because without it, operators could retaliate against a complainant by dropping its programming. But cable operators have argued that with the standstill, programmers could extend carriage on the same terms by filing a complaint at the end of a current contract — complaints can take months or years to resolve.

The NCTA had argued that the standstill needed more public vetting before the FCC adopted it, and the court agreed, though it said the agency could take another crack at vetting and reimposing it. The court pointed out that the FCC itself had suggested it was not sure it had the authority to impose a standstill in some cases, which suggested to the court that the regulator should have collected more input before deciding to impose it. “Even if the FCC has issued standstill orders in other contexts, it is not clear that it has the authority to issue such an order under the program carriage regime,” the 2nd Circuit said.

The First Amendment argument did not persuade the court. Time Warner Cable had argued that the rules are content-based and needed to be subject to strict First Amendment scrutiny they had not gotten. The FCC had countered that the rules do not disfavor speech based on content, but instead regulate speech based on “affiliation with a cable operator,” which, the commission pointed out, are the same grounds on which the D.C. Circuit upheld leased access. The court agreed with the FCC on that score.

The court said that the FCC’s program-carriage rules do not run afoul of the First Amendment because they are “content- and speaker-neutral” and thus warrant intermediate, rather than strict, scrutiny.

But there were some positives. Both the NCTA and TWC praised the standstill decision, and latched on to the court’s language about MVPD competition.

“We are pleased with the court’s decision to reject the FCC’s attempted expansion of the program-carriage rules, and with its statement encouraging the FCC to ‘reevaluate the program-carriage regime as warranted by increased competition in the video programming industry,’ ” the NCTA said in a statement.

TWC said, “We’re gratified that the court has called into question the future viability of the entire program-carriage regime as competition in the MVPD marketplace continues to become more and more vibrant.”

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