**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | MB Docket No. 06-92          |
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| Farm Journal, Inc.               | ** |                              |
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| Petition For Declaratory Ruling  | *  |                              |
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**ORDER AND DECLARATORY RULING**

**Adopted: November 28, 2006 Released: December 4, 2006**

**By the Commission:**

# INTroduction

1.  In this Order, we grant the Petition for Declaratory Ruling filed by
    Farm Journal, Inc. ("Farm Journal") seeking a finding that RFD-TV, a
    programming service owned and operated by RFD Communications, Inc.,
    fails to qualify for carriage by direct broadcast satellite ("DBS")
    providers in fulfillment of their public interest obligations under
    47 C.F.R. § 25.701. Specifically, Farm Journal alleges that RFD-TV's
    programming contains commercial advertisements and is therefore
    ineligible for carriage on channels that DBS providers reserve for
    qualified nonprofit organizations or noncommercial educational
    entities.[^1] For the reasons discussed below, based upon the
    specific facts and circumstances found in this matter before us, we
    find that RFD-TV does not qualify for carriage on capacity set aside
    by DBS providers pursuant to section 25.701(f)(1) of our rules when
    it acts like a commercial entity and favors certain programming.
    Accordingly, we conclude that, so long as it engages in this
    conduct, RFD-TV does not meet the criteria to be classified as a
    programmer qualified to be carried on any DBS channel capacity so
    reserved under the Commission's Part 25 rules.

    **II. BACKGROUND**

2.  In the Cable Television Consumer Protection and Competition Act of
    1992 ("1992 Cable Act"), Congress directed the Commission to impose
    certain public interest obligations on DBS providers, including a
    set-aside of channel capacity for noncommercial educational or
    informational programming.[^2] Section 25.701(f)(1) of the
    Commission's rules, which implements this statutory provision,
    requires DBS providers to reserve four percent of their channel
    capacity exclusively for use by "qualified programmers for
    noncommercial programming of an educational or informational
    nature."[^3] Section 25.701(f)(2) of the rules sets forth the
    definition of what constitutes a "qualified programmer" for the
    purposes of this carriage obligation.[^4] Pursuant to this rule, a
    "qualified programmer" is either: (a) a noncommercial educational
    broadcast station as defined in section 397(6) of the Communications
    Act of 1934, as amended; (b) a public telecommunications entity as
    defined in section 397(12) of the Communications Act of 1934, as
    amended; (c) an accredited nonprofit educational institution or a
    governmental organization engaged in the formal education of
    enrolled students; (d) a nonprofit organization whose purposes are
    educational and include providing educational and instructional
    television material to such accredited institutions and governmental
    organizations; or (e) an other noncommercial entity with an
    educational mission.[^5] An entity being carried on a DBS provider's
    set-aside capacity must air only "noncommercial programming of an
    educational or informational nature."[^6]

3.  On November 28, 2005, Farm Journal filed a Petition for Declaratory
    Ruling asking the Commission to find that RFD-TV fails to satisfy
    the eligibility requirements of an educational programming supplier
    for purposes of carriage by DBS providers in fulfillment of their
    public interest obligations under 47 C.F.R. § 25.701.[^7] Farm
    Journal alleges that RFD-TV's programming contains commercial
    advertisements and is therefore ineligible for carriage on channels
    that DBS providers reserve for qualified nonprofit organizations or
    noncommercial educational entities.[^8] By Public Notice released on
    April 20, 2006, the Media Bureau established that comments should be
    filed by May 22, 2006, and replies by June 6, 2006.[^9] These dates
    were later extended.[^10]

4.  A number of parties, including Farm Journal and Free Press, argue
    that RFD-TV is abusing the DBS set-aside rules by airing commercial
    programming.[^11] In its comments, Farm Journal alleges that RFD-TV
    airs on its DBS set-aside channel live, for-profit livestock
    auctions conducted by a large for-profit livestock company called
    Superior Livestock Auctions, Inc. ("Superior").[^12] Likewise, Free
    Press argues that "RFD-TV has been airing impermissible commercial
    programming" on channel capacity that should be reserved exclusively
    for non-commercial programming.[^13] Both Farm Journal and Free
    Press generally argue that the Commission should prohibit DBS
    providers from carrying RFD-TV programming pursuant to the
    Commission's Part 25 set-aside rules. In effect, these parties argue
    that RFD-TV is acting like a commercial enterprise, and so the
    Commission should more carefully scrutinize RFD-TV's actions and
    programming before allowing RFD-TV to take advantage of the Part 25
    set-aside requirements for DBS providers.

5.  RFD-TV responds that it is the only nationally-distributed
    television network devoted exclusively to serving the needs and
    interests of the nation's rural community.[^14] In particular,
    RFD-TV argues that its programming "provides specific educational or
    informational value to its viewers," and that it "provides coverage
    of various auctions of livestock in order to inform viewers, and not
    . . . to facilitate a commercial transaction."[^15] According to
    RFD-TV, these auctions provide ranchers and other individuals with
    "valuable, real-time information" on factors that affect the
    economic health of the cattle industry.[^16]

6.  Superior creates its own video content through Superior Productions,
    a division of Superior Film Productions, L.L.C.[^17] According to
    Superior's web site, Superior Productions has been the broadcast and
    production division of Superior Livestock Auction since 1993, and
    annually produces and broadcasts over 500 hours of live television
    for Superior Livestock Auction.[^18]

    **III. DISCUSSION**

7.  Under the Commission's rules, a "qualified programmer" is
    either: (a) a noncommercial educational broadcast station as defined
    in section 397(6) of the Communications Act of 1934, as amended; (b)
    a public telecommunications entity as defined in section 397(12) of
    the Communications Act of 1934, as amended; (c) an accredited
    nonprofit educational institution or a governmental organization
    engaged in the formal education of enrolled students; (d) a
    nonprofit organization whose purposes are educational and include
    providing educational and instructional television material to such
    accredited institutions and governmental organizations; or (e) an
    other noncommercial entity with an educational mission.[^19] RFD-TV
    does not claim to be a noncommercial educational broadcast station
    (given that it is not a licensed television station at all,
    noncommercial or otherwise); an accredited educational institution;
    or an educational organization that provides educational and
    instructional television programming to educational
    institutions.[^20] RFD-TV does argue that it meets the criteria
    established in section 25.701(f)(2) of the Commission's rules
    because it is a "public charity organized for the purpose of
    delivering educational and instruction programming to rural
    America."[^21] Even if RFD-TV should be considered a noncommercial
    entity with an educational mission under section 25.701(f)(2)(e) of
    the Commission's rules, however, we find that it is not acting like
    a noncommercial entity with an educational mission in this instance.
    Because RFD-TV favors certain programming, maintains a significant
    exclusive relationship with Superior, a commercial enterprise, and
    acts as if it is a commercial enterprise, we conclude that RFD-TV
    cannot avail itself of the DBS set-aside provisions contained in
    section 25.701 of the Commission's rules at this time.

8.  Although airing auctions may have educational and informational
    benefit to some viewers, we find that, in this case, any such
    benefits are secondary to RFD-TV's primary purpose behind airing
    these livestock auctions, which, as noted, is to increase revenue
    for Superior. In reaching this conclusion, we have taken particular
    notice of the fact that: (1) RFD-TV maintains a direct, exclusive
    relationship with Superior; (2) Superior is a commercial
    enterprise; (3) RFD-TV promotes Superior livestock auctions to the
    exclusion of those of competing livestock auction companies; and (4)
    Superior provides the largest source of funding for RFD-TV's
    sponsorship revenue. The fact that auctions performed by other
    livestock auctioneers are not featured on RFD-TV further leads us to
    conclude that the primary purpose of such Superior auctions
    programming is commercial, and not educational or informational in
    nature. In short, RFD-TV and Superior act as if they are partners
    working in unison and engaged in a single commercial enterprise.
    Some commenters point to the existence of a special relationship
    between RFD-TV and Superior, and the record and public sources of
    information indicate that there is a significant and ongoing
    relationship between RFD-TV and Superior.[^22] Indeed, RFD-TV
    acknowledges that Superior provides a regular source of funding to
    RFD-TV in the form of sponsorship payments, and these payments
    amount to a significant portion of RFD-TV's total revenue derived
    from sponsorship payments.[^23]

9.  RFD-TV's web site indicates that RFD-TV airs only those livestock
    auctions conducted by Superior, to the exclusion of livestock
    auctions performed by other auctioneers.[^24] This undercuts
    RFD-TV's claim that its airing of these auctions is for educational
    or informational purposes. Moreover, such transmissions are not
    intermittent; an analysis of RFD-TV's web site indicates that RFD-TV
    appears to broadcast Superior auctions from around the country on a
    regularly-scheduled basis. By airing the programming of Superior to
    the exclusion of others, RFD-TV provides the livestock auctions of
    one company a leg up on the livestock auctions conducted by other
    companies. Moreover, RFD-TV's provision of such an improper
    advantage to Superior indicates that RFD-TV maintains an interest
    in, and is likely invested in the success of, this commercial
    enterprise. Publicly-available sources of information confirm the
    special relationship between RFD-TV and Superior and tout it as a
    competitive advantage for Superior.[^25] Third, the relationship
    between RFD-TV and Superior is significant and appears to extend
    beyond the mere airing of livestock auctions.[^26] For example,
    RFD-TV's senior management includes the former Sales Director of
    Superior.[^27] RFD-TV provides substantial information on its web
    site about Superior's business (including direct contact
    information), how a Superior livestock auction works (including
    definitions of commonly-used terms), and how to participate in a
    Superior livestock auction. Indeed, RFD-TV's web site acknowledges
    that it maintains a special relationship with Superior, noting that
    the commercial enterprise "teamed up with RFD-TV" and touting that,
    through programming distributed by RFD-TV, Superior "sells over 1.3
    million head of cattle a year over the television." [^28] Likewise,
    the record and publicly-available information also indicate that
    Superior informs the viewing public of its special relationship with
    RFD-TV.[^29] For example, Superior describes itself in an
    agricultural publication as engaged in "\[c\]ommercial cattle
    marketing through the use of bi-weekly satellite video auctions
    broadcast on RFD-TV, daily Internet auctions, private treaty listing
    services." [^30] This apparent affiliation serves as just one more
    signal that RFD-TV is acting like a commercial enterprise.

10. For these reasons, we find that RFD-TV is acting like a commercial
    enterprise instead of a noncommercial entity with an educational
    mission. This is the type of conduct that noncommercial educational
    broadcast stations, public telecommunications entities, accredited
    nonprofit educational institutions or governmental organizations
    engaged in the formal education of enrolled students \--nonprofit
    organizations whose purposes are educational and include providing
    educational and instructional television material to accredited
    institutions and governmental organizations \-- do not undertake.
    Nor do we expect noncommercial entities with an educational mission
    to engage in this type of inherently commercial activity.

11. Thus, we conclude that RFD-TV may not use DBS set-aside capacity to
    air the Superior livestock auctions. In reaching our decision, we
    are informed by the basic purpose underlying the DBS set-aside rule,
    namely, that programming suppliers offer educational and
    informational content without a commercial purpose, either on the
    part of the content provider or the programming supplier itself. In
    this case, the record is replete with evidence of RFD-TV's
    connection and interest in promoting Superior's livestock auctions
    to the exclusion of other livestock auctions.

12. In addition, Farm Journal cites a number of other shows aired by
    RFD-TV that it alleges contain commercial advertisements promoting
    for-profit products and services, including the HorseCity.com,
    Gaither Homecoming Hour, Big Joe Show, RV Today, and Living the
    Country Life programs.[^31] According to Farm Journal, these
    programs exhibit and tout merchandise, direct viewers to commercial
    websites, or seek to sell products such as music CDs.[^32] Because
    we grant Farm Journal's Petition based on the specific facts and
    circumstances related to RFD-TV's airing of the Superior livestock
    auctions and its interest in and connection to this commercial
    venture, we do not address at this time the question of whether this
    other conduct disqualifies RFD-TV as a qualified programmer under
    section 25.701 of the Commission's rules. We recognize the
    seriousness of these allegations, however, and emphasize that we may
    address these issues at a later date.

# IV. ORDERING CLAUSES {#iv.-ordering-clauses .unnumbered}

13. Accordingly, IT IS ORDERED that, pursuant to Sections 1, 4(i) and
    (j), and 335 of the Communications Act of 1934, as amended, 47
    U.S.C. §§ 151, 154(i) and (j), and 335, and section 25.701 of the
    Commission's rules, 47 C.F.R. § 25.701, Farm Journal, Inc.'s
    Petition for Declaratory Ruling is HEREBY GRANTED to the extent
    discussed herein.

> **FEDERAL COMMUNICATIONS COMMISSION**
>
> Marlene H. Dortch

Secretary

[^1]: Petition for Declaratory Ruling of Farm Journal Inc. (Nov. 28,
    2005) ("Farm Journal Petition").

[^2]: 47 U.S.C. § 335(a). *See Implementation of Section 25 of the Cable
    Television Consumer Protection and Competition Act of 1992, Direct
    Broadcast Satellite Public Interest Obligations*, Report and Order,
    13 FCC Rcd 23254 (1998) ("First Report and Order"), *on recon.*, 19
    FCC Rcd 5854 (2004), *vacated in limited part*, 19 FCC Rcd 5647
    (2004). As part of the set aside requirement, Congress mandated that
    DBS providers offer access to educational programmers at reasonable
    prices, terms, and conditions. 47 U.S.C. § 335(b)(3).

[^3]: 47 C.F.R. § 25.701(f)(1). In making the required reserved capacity
    available, DBS providers may not charge rates that "exceed costs
    that are directly related to making the capacity available to
    qualified programmers." 47 C.F.R. § 25.701(f)(5)(i).

[^4]: 47 C.F.R. § 25.701(f)(2).

[^5]: *Id*.

[^6]: 47 C.F.R. § 25.701(f)(1).

[^7]: *See* Farm Journal Petition at 4-13. While Farm Journal also asks
    the Commission to find that RFD-TV is not a qualified programmer
    under 47 C.F.R. § 25.701, there is not an adequate record for the
    Commission to reach such a decision at this time.

[^8]: *See* Farm Journal Petition at 4-13.

[^9]: *Request For Comment On Petition For Declaratory Ruling Regarding
    RFD Communications, Inc. and Its Eligibility To Be Carried as a DBS
    Public Interest Noncommercial Programmer*, MB Docket No. 06-92,
    Public Notice, DA 06-906 (rel. Apr. 20, 2006).

[^10]: *Farm Journal, Inc.*, MB Docket No. 06-92, Order, DA 06-1088
    (rel. May 24, 2006).

[^11]: Farm Journal Reply at 1-6; Free Press Comments at 5-9.

[^12]: Farm Journal Reply at 3-6.

[^13]: Free Press Comments at 3.

[^14]: Opposition of RFD Communications, Inc. to Farm Journal, Inc.
    Petition for Declaratory Ruling ("RFD Opposition") at 1.

[^15]: *Id.* at 4.

[^16]: *Id*.

[^17]: *See* <http://www.superiorlivestock.com/Superior.sla?sp=spa>.

[^18]: *Id*.

[^19]: 47 C.F.R. § 25.701(f)(2).

[^20]: *See* Farm Journal Petition at 4-5; RFD Opposition.

[^21]: RFD-TV Opposition at 2-3.

[^22]: *See, e.g.*, Free Press Comments at 9, Ex. A.

[^23]: *See* RFD-TV Opposition at 17, n.23. We understand their
    sponsorship payments constitute approximately 20 percent of RFD-TV's
    total revenue derived from sponsorship payments and has been as high
    as 60 percent.

[^24]: *See* Farm Journal Comments at Ex. D (describing Superior
    livestock auctions); Farm Journal Reply at 3-6; Western Video
    Comments at 1 (arguing that Superior uses carriage on RFD-TV to
    create "a non-level playing field"); Intermountain Comments at 2
    (arguing that RFD-TV has abused its non-profit status by providing
    Superior "with the ability to artificially lower their prices
    creating an unfair competitive advantage"); Turner Media Group
    Comments at 4 (arguing that RFD-TV has "abused its non-profit status
    by carrying for-profit auctions provided exclusively by Superior").

[^25]: *See* Chris Clayton, *Council Bluffs, Iowa, Cattle Auction Cashes
    In on Technology, Casino*, OMAHA WORLD-HERALD, June 26, 2003. In
    this article, Superior senior management is quoted as saying that
    RFD-TV "expands the buyers" and "gives the ability for people to see
    what the market trends are." *Id.* at 1. In fact, in at least one
    newspaper article, the senior management of RFD-TV noted that
    "\[p\]robably 98 percent of the cattle will be sold today to people
    watching at home or in their offices." *Id.*

[^26]: *See* <http://www.rfdtv.com/shows/superior.asp>.

[^27]: *See* <http://www.fcc.gov/cgb/rural/bios/patrickgottsch.html>.
    The publicly available biography notes both the commercial focus of
    Superior livestock auctions and the use of satellite television as
    the means for delivering such programming in the marketplace.

[^28]: *See* <http://www.rfdtv.com/shows/superior.asp>.

[^29]: Farm Journal Reply at 5 (quoting Superior employees during on-air
    auctions as they make references about the arrangement with RFD-TV).

[^30]: 43 Agri Marketing, E-commerce/E-Business 10, ¶ 6, available at
    2006 Westlaw 3639491 (Jan. 1, 2006).

[^31]: Farm Journal Petition at 8-12.

[^32]: *Id*.