If HBO gets into a contract dispute with EchoStar, the satellite company would have compulsory access to HBO’s other distribution contracts under proposed rules supported by Federal Communications Commission chairman Kevin Martin, according to communications lawyers familiar with the plan.
Martin’s proposal would create an expansive discovery right under the agency’s program-access rules, which provide cable’s pay TV rivals with the ability to license on reasonable terms any satellite-delivered network with at least 5% cable operator ownership.
The requirement that cable operators must sell certain networks, also called the exclusivity ban, is to sunset on Oct. 5 if not extended by the FCC. Created by 1992 Cable Act, the program-access mandates were extended for the first time in July 2002, an effort Martin (then just a commissioner) barely, if not grudgingly, supported. The 2002 vote was 3-1. Had Martin dissented, there would not have been a majority for a five-year extension.
Now Martin is proposing a second five-year extension, giving AT&T, Verizon, DirecTV and EchoStar ongoing distribution rights, for example, to Time Warner’s CNN, Comcast’s Golf Channel, and Cablevision’s Madison Square Garden Network.
In the event of a dispute, Martin is proposing that either the FCC or the complaining party may compel access to all programming contracts between the cable-affiliated network and other multichannel video programming distributors (MVPD). Disputes may also be resolved by baseball-style arbitration, with the FCC’s Media Bureau acting as umpire, lawyers said.
The FCC’s next public meeting is Sept. 11 but an agenda has not been released. The FCC has five members, three Republicans and two Democrats. Only Republican Martin and Democrat Michael Copps were around in 2002 for the first extension vote.
In other proposals, Martin is seeking support for a notice of proposed rulemaking to examine whether the exclusivity ban should include terrestrially delivered, cable-affiliated networks.
EchoStar, in particular, has repeatedly called for closure of the so-called terrestrially loophole, usually in the context of its inability to distribute Comcast SportsNet Philadelphia.
The notice is expected to explore an American Cable Association-supported matter, one that involves the business relationship between programming giants like Disney and Viacom and their pay-TV distributors. ACA has complained that programmers lean on their distributors to license a suite of channels regardless of consumer demand for a specific channel.
“We call it tying and bundling,” ACA president Matt Polka said Friday, adding that his organization asked the FCC to look into the issue in a 2002 petition for inquiry.
Viacom and Disney have rejected ACA’s claims in filings at the FCC.