**[Retransmission consent and Exclusivity Rules:]{.smallcaps}**

**[Report to Congress]{.smallcaps}**

**[Pursuant to Section 208 of the]{.smallcaps}**

**[Satellite Home Viewer Extension and]{.smallcaps}**

**[Reauthorization Act of 2004]{.smallcaps}**

September 8, 2005

Table of Contents

Paragraph \#

I. INTRODUCTION 1

II\. BACKGROUND 3

A. Retransmission Consent and Mandatory Carriage 4

B. Exclusivity Rules 17

1\. Network Non-Duplication 18

2\. Syndicated Exclusivity 23

3\. Sports Blackout 28

III\. discussion 32

A. Retransmission Consent 35

1\. Comments 36

2\. Discussion 44

B. Exclusivity Rules 46

1\. Network Non-Duplication and Syndicated Exclusivity Rules 46

a\. Comments 46

b\. Discussion 49

2\. Sports Blackout Rule 54

a\. Comments 54

b\. Discussion 58

C. Parity Between the Cable and DBS Regulatory Structures 61

1\. Comments 62

2\. Discussion 65

D. Rural Cable and Digital Broadcast Signals 76

1\. Comments 77

2\. Discussion 82

E. Other Issues 84

IV\. Conclusion 86

# INTRODUCTION

1.  The Satellite Home Viewer Extension and Reauthorization Act of 2004
    ("SHVERA")[^1] directs the Commission, within nine months after
    enactment, to complete an inquiry and submit a report to Congress
    "regarding the impact on competition in the multichannel video
    programming distribution market of the current retransmission
    consent, network non-duplication, syndicated exclusivity, and sports
    blackout rules, including the impact of those rules on the ability
    of rural cable operators to compete with direct broadcast satellite
    ("DBS") industry in the provision of digital broadcast television
    signals to consumers."[^2] SHVERA also directs the Commission to
    "include such recommendations for changes in any statutory
    provisions relating to such rules as the Commission deems
    appropriate."[^3]

2.  In accordance with this directive, the Media Bureau issued a Public
    Notice on January 25, 2005, requesting comment, information, and
    analysis on how the retransmission consent, network non-duplication,
    syndicated exclusivity, and sports blackout rules affect
    competition, both generally and specifically, in the multichannel
    video programming distribution ("MVPD") market.[^4] The Notice also
    sought comment on the impact of these rules on rural cable
    operators' ability to compete with DBS operators in the provision of
    digital broadcast signals. In this Report, we address and analyze
    the comments we received and discuss potential areas for
    Congressional action.[^5] At this time, we find that it is not
    necessary to recommend specific statutory amendments.

# BACKGROUND

3.  Carriage of the signals of broadcast television stations and the
    content contained in those signals is governed by three separate but
    interrelated regimes: (1) the retransmission consent and mandatory
    carriage provisions of the Communications Act of 1934, as amended
    (the "Act"), which govern carriage of television broadcast signals
    by cable and DBS operators;[^6] (2) copyright law, which protects
    copyrighted material within broadcast signals;[^7] and (3) the
    Commission's exclusivity rules, which protect exclusive rights to
    distribute certain content.[^8] We discuss below the provisions of
    the Act and Commission regulations at issue in this report. In
    addition, to the extent relevant to our analysis, we address certain
    aspects of the copyright laws governing retransmission of the
    copyrighted material in television broadcast signals.

## Retransmission Consent and Mandatory Carriage

4.  As described below, the laws and regulations governing carriage of
    broadcast signals were enacted or adopted over a number of years.
    While the rules differ somewhat for cable and satellite providers,
    pursuant to statutory directive, the Commission has adopted rules
    for satellite providers regarding mandatory carriage of broadcast
    signals and retransmission consent that closely parallel the
    requirements for cable providers.[^9]

5.  *Cable*. Originally, the primary function of cable television was to
    facilitate reception of local television stations by persons who
    could not receive a satisfactory over-the-air signal because of
    their location.[^10] Cable television transmission evolved into
    providing signals from distant television stations to areas where
    the signals would not otherwise be available over the air. The
    majority of cable television programming initially consisted of the
    retransmission of signals broadcast by others rather than programs
    originated by cable systems or other non-broadcasters.[^11] Today,
    most cable programming originates from sources other than
    over-the-air broadcast signals.

6.  As the cable industry grew, disputes arose between cable operators
    and copyright owners of broadcast material regarding whether cable
    operators were entitled to retransmit the material contained in a
    broadcaster's signal without first obtaining a copyright
    license.[^12] In 1976, in order to address the tensions between
    cable operators and copyright owners, Congress revised the Copyright
    Act.[^13] Pursuant to the amendments, unlicensed retransmission of
    the copyrighted material in a broadcast signal constitutes copyright
    infringement.[^14] Cable systems were granted a statutory or
    compulsory license for the retransmission of all local broadcast
    signals and distant signals that the Commission permitted them to
    carry.[^15] The compulsory licensing scheme established by the 1976
    amendments took into consideration the Commission's rules that: (1)
    defined the term "local broadcast station;" (2) limited to some
    degree the number of distant signals that a cable operator could
    import (the distant signal rule);[^16] (3) permitted a local
    broadcaster to require a cable operator to delete duplicative
    programming for which the station had obtained exclusive rights (the
    network non-duplication and syndicated exclusivity rules); and (4)
    required the carriage of certain signals.[^17]

7.  Historically, the Commission's rules provided mandatory carriage
    rights to local broadcast stations and permitted carriage of distant
    broadcast signals.[^18] Local stations were defined in terms of
    mileage zones around the station's community of license, generally
    35 or 55 miles, depending on the market size, or by Grade B
    contours, areas that approximated the area reached by the station's
    over-the-air signal. In addition, certain out-of-market stations
    were deemed "significantly viewed" based on over-the-air viewing and
    treated as local for carriage purposes. The Commission's mandatory
    carriage rules were twice struck down by the Court of Appeals as
    violating the First Amendment.[^19]

8.  The repeal of the Commission's must-carry rules led Congress to
    enact provisions in the Cable Television Consumer Protection and
    Competition Act of 1992 ("1992 Act"), which established mandatory
    carriage of television broadcast stations within their local
    markets.[^20] In adopting the mandatory carriage provisions of the
    1992 Act, Congress recognized the importance of local television
    broadcast stations as providers of local news and public affairs
    programming.[^21] Congress found that cable service was rapidly
    penetrating television households, and increasingly was competing
    with free over-the-air television for advertising dollars.[^22]
    Congress recognized that television broadcast stations rely on
    advertising dollars to provide free over-the-air local service and
    that competition from cable television posed a threat to the
    economic viability of television broadcast stations. It therefore
    mandated cable carriage to ensure the continued economic viability
    of free local broadcast television.[^23]

9.  In the 1992 Act, Congress also granted broadcasters retransmission
    consent rights. Prior to the 1992 Act, cable operators were not
    required to seek the permission of a broadcaster before carrying its
    signal nor were they required to compensate the broadcaster for the
    value of its signal. Congress found that this created a "distortion
    in the video marketplace which threatens the future of over-the-air
    broadcasting."[^24] Congress acted to remedy the situation by giving
    broadcasters control over the use of their signals and permitting
    broadcasters to seek compensation from cable operators and other
    MVPDs for carriage of their signals. Congress noted that some
    broadcasters might find that carriage itself was sufficient
    compensation for the use of their signal by an MVPD while other
    broadcasters might seek monetary compensation and still others might
    negotiate for in-kind consideration such as joint marketing efforts,
    the opportunity to provide news inserts on cable channels, or the
    right to program an additional channel on a cable system. Congress
    emphasized that it intended "to establish a marketplace for the
    disposition of the rights to retransmit broadcast signals" but did
    not intend "to dictate the outcome of the ensuing marketplace
    negotiations."[^25]

10. During the first round of retransmission consent negotiations,
    broadcasters initially sought cash compensation in return for
    retransmission consent.[^26] However, most cable
    operators---particularly the largest multiple system operators
    ("MSOs")---were not willing to enter into agreements for cash, and
    instead sought to compensate broadcasters through the purchase of
    advertising time, cross-promotions, and carriage of affiliated
    channels.[^27] Many broadcasters were able to reach agreements that
    involved in-kind compensation by affiliating with an existing
    non-broadcast network[^28] or by securing carriage of their own
    newly-formed non-broadcast networks.[^29] Broadcast stations that
    insisted on cash compensation were forced to either lose cable
    carriage or grant extensions allowing cable operators to carry their
    signals at no charge until negotiations were complete.[^30] Twelve
    years later, cash still has not emerged as a principal form of
    consideration for retransmission consent. Today, virtually all
    retransmission consent agreements involve a cable operator providing
    in-kind consideration to the broadcaster.[^31]

11. Within local market areas,[^32] commercial television stations may
    elect cable carriage under either the retransmission consent or
    mandatory carriage requirements created by the 1992 Act.[^33] As a
    general rule, the 1992 Act requires cable operators to obtain
    authorization before they carry the signal of commercial television
    stations, either directly through retransmission consent, or through
    the invocation of mandatory carriage.[^34]

12. *Satellite.* While the first cable carriage rules were adopted by
    the Commission over 40 years ago,[^35] the satellite carriage rules
    were adopted much more recently. Satellite television began
    primarily as a rural service to provide non-broadcast signals to
    households in areas that could not otherwise receive such signals
    because cable service was unavailable. In 1988, Congress enacted the
    Satellite Home Viewer Act ("SHVA"), the first satellite compulsory
    copyright law.[^36] It granted direct-to-home ("DTH")[^37] satellite
    providers a compulsory copyright license to retransmit television
    signals of distant network stations[^38] to "unserved
    households"[^39] and superstations (non-network stations) to any
    household.[^40] The license authorized by SHVA, codified as section
    119 of the Copyright Act, generally applies to the signals of
    superstations and network stations retransmitted by satellite
    carriers to the public for private home viewing, and the license to
    retransmit the signals of network stations is further limited to
    persons who are in "unserved households."[^41]

13. During the mid- to late-1990s, the satellite industry evolved and
    found more success in marketing service to subscribers. In 1999,
    Congress enacted the Satellite Home Viewer Improvement Act
    ("SHVIA"), which extended the compulsory copyright license for
    distant signals granted to satellite carriers until December 31,
    2004, and enacted a permanent compulsory copyright license for local
    signals. SHVIA also extended the retransmission consent exemption
    for satellite carriage of distant signals. Most significantly, SHVIA
    created a new statutory copyright license for satellite carriage of
    stations to any subscriber within a station's local market, without
    distinction between network and non-network signals or served or
    unserved households.[^42] Retransmission consent is required for
    such "local-into-local" carriage.[^43] Through SHVIA, Congress
    sought to enable satellite providers to become a viable alternative
    MVPD to cable operators. Congress intended SHVIA to place satellite
    carriers on an equal footing with local cable operators when it
    comes to the availability of local broadcast programming, and thus
    to give consumers more and better choices in selecting a
    multichannel video program distributor.[^44]

14. Unlike cable providers, however, satellite carriers are not required
    to provide subscribers with a basic service tier that includes local
    broadcast stations under the Communications Act.[^45] The statute
    does not require satellite carriers to carry television stations in
    markets where they do not choose to offer local-into-local service
    pursuant to the statutory license.[^46] However, if a satellite
    carrier chooses to carry a local station in a particular DMA
    pursuant to the statutory copyright license, it generally must carry
    any qualified local television station in the same DMA that has made
    a timely election for mandatory carriage.[^47] This is commonly
    referred to as the "carry one, carry all" requirement.

15. In 2004, SHVERA extended the retransmission consent exemption for
    distant signals to December 31, 2009. It also modified the
    compulsory copyright license for such signals and extended it to
    December 31, 2009.[^48] The copyright provisions in SHVERA prohibit
    the retransmission of distant analog signals to unserved households
    where analog local-into-local service is offered, unless the
    subscriber was receiving the signal as of December 8, 2004, or prior
    to the commencement of local-into-local service. SHVERA also granted
    satellite carriers the right to offer Commission-determined
    "significantly viewed" signals to subscribers, creating a
    distinction between "local" though out-of-market signals and
    "distant" signals.[^49] Pursuant to SHVERA, DBS operators were
    granted the right to retransmit out-of-market significantly viewed
    stations to subscribers in the community in which the station is
    deemed significantly viewed, provided the local station affiliated
    with the same network as the significantly viewed station is offered
    to subscribers.[^50] SHVERA provided that, as in the cable context,
    satellite carriers would pay reduced copyright royalty fees for
    retransmission of significantly viewed stations.[^51] Satellite
    carriers are not required to carry out-of-market significantly
    viewed stations, and, if they do carry them, retransmission consent
    is required.

16. SHVERA expands the copyright license to make express provision for
    distant digital signals. In general, if a satellite carrier offers
    local-into-local digital signals in a market, it is not allowed to
    offer distant digital signals to subscribers in that market, unless
    it was offering such distant digital signals prior to commencing
    local-into-local digital service. If a household is predicted to be
    unserved by the analog signals of a network station, it can qualify
    for the distant digital signal of the network with which the station
    is affiliated if it is offered by the subscriber's satellite
    carrier. If the satellite carrier offers local-into-local analog
    service, a subscriber must receive that service in order to qualify
    for distant digital signals. A household that qualifies for distant
    signal service can receive only signals from stations located in the
    same time zone or in a later time zone, not in an earlier time zone.
    SHVERA also provides for signal testing at a household to determine
    if it is "served" by a digital signal over-the-air. In some cases,
    if a household is shown to be unserved, it would be eligible for
    distant digital signals, provided the household subscribes to
    local-into-local analog service, if it is offered. However, this
    digital testing option is not available until April 30, 2006, in the
    top 100 television markets, and July 15, 2007, in all other
    television markets. Such digital tests also are subject to waivers
    that the Commission may issue for stations that meet specified
    statutory criteria.

## Exclusivity Rules

17. A broadcaster can carry network and syndicated programming on its
    local television station(s) only with the permission of the networks
    or syndicators that own or hold the rights to that programming. In
    addition, the ability of broadcasters to grant retransmission
    consent for MVPD carriage may be governed by the network/affiliate
    agreement or by the syndication agreement.[^52] The Commission has
    concluded that the network non-duplication and syndicated
    exclusivity rules should serve primarily as a means of enforcing
    contractual exclusivity agreements entered into between
    broadcasters, which purchase the distribution rights to programming,
    and networks and syndicators, which supply the programming.[^53]
    Thus, the network non-duplication and syndicated exclusivity rules
    require that the broadcaster possess a legitimate exclusivity
    contract prior to requesting a blackout.[^54] The rules may be
    invoked by stations that elect must carry as well as by those that
    elect retransmission consent in their local markets, even if they
    are not actually carried by the cable operator.[^55] By requiring
    MVPDs to black out duplicative programming carried on any distant
    signals they may import into a local market, the Commission's
    network non-duplication and syndicated exclusivity rules provide a
    regulatory means for broadcasters to prevent MVPDs from undermining
    their contractually negotiated exclusivity rights. The Commission's
    sports blackout rule protects a sports team's or sports league's
    distribution rights to a live sporting event taking place in a local
    market. As with the network non-duplication and syndicated
    exclusivity rules, the sports blackout rule applies only to the
    extent the rights holder has contractual rights to limit viewing of
    sports events.

### Network Non-Duplication 

18. The network non-duplication rules protect a local commercial or
    non-commercial broadcast television station's right to be the
    exclusive distributor of network programming within a specified
    zone, and require programming subject to the rules to be blacked out
    when carried on another station's signal imported by an MVPD into
    the local station's zone of protection.[^56] A television station's
    rights under the network non-duplication rules are limited by the
    terms of the contractual agreement between the station and the
    holder of the rights to the program. The Commission's rules allow
    commercial and non-commercial television stations to protect the
    exclusive distribution rights they have negotiated with broadcast
    networks, not to exceed a specified geographic zone of 35 miles (55
    miles for network programming in smaller markets).[^57] For purposes
    of these rules, it is these specified zones that distinguish between
    "local" and "distant."

19. *Cable*. Network non-duplication rules for cable were first
    promulgated by the Commission in 1965.[^58] Throughout the 1960s and
    1970s the Commission continually refined the rules, but the policy
    behind them remained the same.[^59] The purpose of the rules was to
    protect the exclusive contractual rights of local broadcasters in
    network programming from the importation of non-local network
    stations by cable systems and thus to provide appropriate
    protections and incentives to program producers and distributors to
    provide the programming desired by viewers.[^60] Prior to 1988,
    network non-duplication protection applied only to programming being
    broadcast simultaneously in the local market by a distant
    signal.[^61] In 1988, the Commission modified the rule to remove
    this limitation and extend exclusivity protection to any time period
    specified in the contractual agreement between the network and the
    affiliate.[^62]

20. Because a station's zone of protection[^63] under the network
    non-duplication rules may not exceed the area agreed upon by the
    station and its network or the area within which the station has
    acquired broadcast territorial exclusivity rights,[^64] the concept
    of a DMA and its boundaries is entirely irrelevant for purposes of
    the network non-duplication rules. Thus, a station subject to
    program deletions could be another network affiliate in the same
    DMA.

21. There are several exceptions to application of the network
    non-duplication rules. First, because of the cost of the equipment
    necessary to carry out deletions, the Commission exempts cable
    systems having fewer than 1,000 subscribers.[^65] The rule also does
    not apply if the out-of-market station's signal is deemed
    "significantly viewed" in a relevant community.[^66] This exception
    was first adopted to ensure that cable subscribers receive the same
    programming that would be available to over-the-air viewers in their
    communities.[^67]

22. *Satellite*. SHVIA required the Commission to extend the network
    non-duplication rule to DBS in 2000, but only with respect to the
    retransmission of nationally distributed superstations.[^68] These
    nationally distributed superstations may be offered to any satellite
    subscriber, without the "unserved" restriction that applies to
    distant network stations. SHVIA directed the Commission to implement
    new exclusivity rules for satellite that would be "as similar as
    possible" to the rules applicable to cable operators.[^69] In
    general, the network non-duplication rules apply when a satellite
    carrier retransmits a nationally distributed superstation to a
    household within a local broadcaster's zone of protection[^70] and
    the nationally distributed superstation carries a program to which
    the local station has exclusive rights.[^71] In contrast to the
    mileage-based specified zones used in the cable context, zip codes
    are used to determine the areas to which the zone of protection
    applies for satellite carriers.[^72] As in the cable context, the
    broadcast station licensees may exercise their network
    non-duplication rights in accordance with the terms specified in a
    contractual agreement between the network and its affiliate.[^73]
    The rules for satellite carriers also have exceptions for
    significantly viewed stations and for areas in which the satellite
    carrier has fewer than 1,000 subscribers in a protected zone.[^74]

### Syndicated Exclusivity 

23. The syndicated exclusivity rules are similar in operation to the
    network non-duplication rules, but they apply to exclusive contracts
    for syndicated programming, rather than for network
    programming.[^75] In addition, the syndicated exclusivity rules
    apply only to commercial stations. The syndicated exclusivity rules
    allow a local commercial broadcast television station or a
    distributor of syndicated programming to protect its exclusive
    distribution rights within a 35-mile geographic zone surrounding a
    television station's city of license, although the zone may not be
    greater than that provided for in the exclusivity contract between
    the station and syndicator.[^76] Unlike the network non-duplication
    rule, however, the zone of protection is the same for smaller
    markets as it is for the top-100 markets.[^77] With only a few
    exceptions, a station that has obtained syndicated exclusivity
    rights in a program may request a cable operator to black out that
    program as broadcast by any other television station, and may
    request a satellite operator to provide such protection against any
    nationally distributed superstation. The cable or satellite system
    must comply if properly notified in accordance with the rules.[^78]

24. *Cable*. The first syndicated exclusivity rule was promulgated by
    the Commission in 1972, adopted as a result of a "Consensus
    Agreement" that was negotiated among the cable, broadcast, and
    program production industries in order to facilitate the passage of
    copyright legislation.[^79] Shortly after Congress established a
    compulsory license system in 1976, the Commission began an inquiry
    to review the "purpose, effect, and desirability of" the syndicated
    exclusivity rules.[^80] In 1979, the Commission adopted the Report
    on Cable Television Syndicated Exclusivity Rules, which performed a
    cost-benefit analysis to determine whether retaining the syndicated
    exclusivity rules would be in the public interest.[^81] The
    Commission found that eliminating the rules would have negligible
    effects on the size of local station audiences and consequently
    would not significantly harm any broadcaster.[^82] The Commission
    concluded that, when weighed against the minimal negative impact on
    broadcasters and program supply, the increase in diversity and
    number of new cable systems that the rules' elimination would allow
    supported their repeal. Therefore, in 1980, the Commission repealed
    the syndicated exclusivity rules.[^83]

25. In 1988, however, the Commission reversed its decision, finding that
    the reasoning that shaped the 1980 decision to repeal the syndicated
    exclusivity rules was flawed in two significant respects.[^84]
    First, the Commission found that its prior inquiry had incorrectly
    examined the effects of repeal or retention on individual
    competitors rather than how the competitive process operates.[^85]
    Second, the Commission found that it had failed to analyze the
    effects on the local television market of denying broadcasters the
    ability to enter into contracts with enforceable exclusive
    exhibition rights when they had to compete with cable operators, who
    could enter into such contracts.[^86] The Commission therefore
    reinstated its syndicated exclusivity rules.

26. The Commission's current cable syndicated program exclusivity rule
    allows local commercial stations to protect their exclusive
    distribution rights for syndicated programming on local cable
    systems in a local market.[^87] Distributors of syndicated
    programming are allowed to seek protection for one year from the
    initial licensing of such programming anywhere in the United States,
    except where the relevant programming has already been
    licensed.[^88] The exceptions to application of the syndicated
    program exclusivity rule are similar to those that apply to the
    network non-duplication rule. Cable systems with fewer than 1,000
    subscribers are exempt because of the cost of the equipment
    necessary to carry out deletions.[^89] The rule also does not apply
    if the distant station's signal is "significantly viewed" in a
    relevant cable community.[^90] In addition, the syndicated
    programming of a distant station need not be blacked out if that
    station's Grade B signal encompasses the relevant cable
    community.[^91]

27. *Satellite*. SHVIA required the Commission to extend its cable
    exclusivity rules, including syndicated exclusivity, to DBS
    providers only with respect to retransmission of nationally
    distributed superstations.[^92] The Commission implemented this
    using zip codes rather than community units to determine zones of
    protection.[^93] The rules for satellite carriers also provide
    exceptions for significantly viewed stations and for areas in which
    the satellite carrier has fewer than 1,000 subscribers in a
    protected zone.[^94]

### Sports Blackout 

28. The Commission's sports blackout rule protects a sports team's or
    sports league's distribution rights to a live sporting event taking
    place in a local market.[^95] As with the network non-duplication
    and syndicated exclusivity rules, the rule applies only to the
    extent the rights holder has contractual rights to limit viewing of
    sports events. The sports blackout rules are applied only if a local
    station is not broadcasting the local sporting event. If a local
    station does not have permission to broadcast the local game, then
    no other broadcaster's signal displaying the game can be carried by
    a cable or satellite operator to subscribers in the protected local
    blackout zone.[^96] The purpose of the sports blackout rule is to
    ensure the continued general availability of sports programming to
    the public. The Commission adopted this rule, which pre-dates
    retransmission consent, based on a concern that sports teams would
    refuse to sell the rights to their local games to television
    stations serving distant markets due to their fear of losing gate
    receipts if the local cable system imported the local sporting event
    carried on a distant station.[^97]

29. *Cable*. The Commission originally adopted the sports blackout rules
    in 1975.[^98] The rules apply to any television broadcast station,
    not just network stations. The rules are triggered when a subject
    sporting event will not be aired live by any local television
    station carried on a cable system.[^99] Under the cable sports
    blackout rule, the holder of the rights to the event (*e.g.*, a
    sports team or league, rather than a broadcaster) has the right to
    prohibit cable carriage inside the zone of protection of a live
    sporting event broadcast by a station outside the specified zone of
    protection when that event is played locally, but the team or league
    does not permit the local broadcast stations to televise the event.
    The zone of protection for the sports blackout rule is generally 35
    miles surrounding the broadcast station's community of license in
    which the live sporting event is taking place.[^100] The sports
    blackout rules do not apply to any community unit with fewer than
    1,000 subscribers.[^101]

30. *Satellite*. SHVIA directed the Commission to extend the sports
    blackout rules to satellite carriers.[^102] The satellite sports
    blackout rule applies to retransmission of both nationally
    distributed superstations and network stations.[^103] As in the
    cable context, the satellite sports blackout rule applies when a
    subject sporting event will not be aired live by any local
    television station, and a satellite carrier retransmits a nationally
    distributed superstation or a network station carrying that sporting
    event to a household within the zone of protection of the holder of
    exclusive distribution rights to the event.[^104] In these cases,
    the television broadcast station or other rights holder may require
    the satellite carrier to black out these particular programs for the
    satellite subscriber households within the protected zone.[^105]

31. As with the network non-duplication and syndicated exclusivity
    rules, the sports blackout rules are applied to satellite carriers
    by reference to zip codes rather than community units.[^106] A
    satellite carrier is not required to black out a sports event to a
    subscriber who lives outside the specified zone but within an area
    defined in terms of an excluded zip code.[^107] Also, a satellite
    carrier is not required to black out a sports event if the carrier
    has fewer than 1,000 subscribers within the specified zone.[^108]

# discussion

32. The rules examined in this report were adopted to ensure that
    broadcasters are compensated fairly for MVPDs' retransmission of
    their signals, that MVPD retransmission of distant signals does not
    undermine exclusivity protections negotiated by broadcasters and
    their programming suppliers, and that sports leagues' contractual
    arrangements for the exhibition of sporting events are preserved.
    All of these rules have been adapted over time in response to new
    technologies and changing market conditions, as well as to balance
    various public policy goals. Since 1992, technological advances,
    increased channel capacity, and the introduction of DBS as a
    competitor to cable have been accompanied by revisions in the rules
    to: (1) enhance the viability of over-the-air broadcasting; (2)
    promote localism; and (3) advance regulatory parity between cable
    and DBS, while taking account of their different operational
    structures.

33. It is essential to bear in mind that the four rules considered in
    this Report do not operate in a vacuum. They are part of a mosaic of
    other regulatory and statutory provisions (*e.g.*, territorial
    exclusivity, copyright compulsory licensing, and mandatory carriage)
    to implement key policy goals. For example, territorial exclusivity
    protects localism by preventing local broadcasters from contracting
    for exclusivity outside their local markets, while network
    non-duplication and syndicated exclusivity protect localism by
    facilitating enforcement of contractual arrangements that limit
    importation of duplicative distant broadcast signals into local
    markets.[^109] Thus, these rules complement one another. Similarly,
    copyright law and retransmission consent rules operate in a
    complementary fashion. The statutory compulsory license compensates
    rights holders for use of their property, while permitting MVPDs to
    retransmit their programming without costly and time-consuming
    negotiations with individual copyright holders. Further, the
    government-established copyright fee for distant signals, which is
    higher than that for local stations, operates together with the
    network non-duplication and syndicated exclusivity rules to
    encourage MVPD carriage of local broadcast signals.[^110] Finally,
    broadcast mandatory carriage rights, which promote localism and
    ensure the viability of free, over-the-air television, complement
    the retransmission consent regime. Together, must-carry and
    retransmission consent provide that all local stations are assured
    of carriage even if their audience is small, while also allowing
    more popular stations to seek compensation (cash or in-kind) for the
    audience their programming will attract for the cable or satellite
    operator. Must-carry alone would fail to provide stations with the
    opportunity to be compensated for their popular programming.
    Retransmission consent alone would not preserve local stations that
    have a smaller audience yet still offer free over-the-air
    programming and serve the public in their local areas.[^111] Because
    of the interplay among these various laws and rules, when any piece
    of the legal landscape governing carriage of television broadcast
    signals is changed, other aspects of that landscape also require
    careful examination.

34. Cable commenters in particular advocate substantial modification of
    the regulations governing retransmission consent, as well as
    significant reduction or even elimination of network
    non-duplication, syndicated exclusivity, and sports blackout rules.
    For the most part, these commenters' objections to the current rules
    focus on how they impact the relative market power of broadcasters
    and cable operators -- *i.e.*, which party has the upper hand when
    negotiating retransmission consent, the prices (monetary and
    in-kind) MVPDs pay for retransmission consent, the use of
    retransmission consent to facilitate carriage of affiliated
    non-broadcast networks, and the prices consumers pay for popular
    tiers of MVPD programming. Although we have examined the arguments
    and proposals advanced in the record, we do not believe comments
    directed at the foregoing concerns can be properly considered within
    the scope of our examination. Underlying these comments, however, is
    an implication that the current rules impede cable operators'
    ability to compete with DBS, which cable commenters appear to view
    as subject to more lenient requirements. Consistent with the scope
    of our mandate, we focus on these concerns in detail. For the
    reasons set forth herein, we do not recommend specific statutory
    revisions or propose to revise related Commission regulations at
    this time.

## Retransmission Consent 

35. Of the four rules examined in this report, retransmission consent is
    the most recent right granted. Prior to 1992, when the policy goal
    was to ensure the continued viability of local broadcasters and
    thereby to enable more households to receive local broadcast
    programming through cable carriage, broadcasters did not have the
    right to negotiate retransmission consent. In 1992, however,
    Congress enacted a statutory provision to address broadcasters'
    longstanding claim for fair compensation for retransmission of their
    signals by MVPDs.[^112] Retransmission consent replaced the pre-1992
    free use of the broadcaster's signal with the post-1992 scheme in
    which signals may be retransmitted pursuant to the broadcaster's
    consent in exchange for negotiated compensation. Although
    retransmission consent does not guarantee that a broadcaster will
    receive fair compensation from an MVPD for retransmission of its
    broadcast signal, it does provide a broadcaster with the opportunity
    to negotiate for compensation. Notably, Congress chose not to
    "dictate the outcome of the ensuing marketplace negotiations."[^113]
    Many expected that cable operators would compensate broadcasters
    with cash in return for retransmission consent. In reality, much of
    the compensation for retransmission consent has been in-kind,
    including carriage of an affiliated non-broadcast channel, or other
    consideration such as the purchase of advertising time,
    cross-promotions, and carriage of local news channels. While many of
    the comments in this proceeding focus on retransmission consent
    agreements that involve carriage of affiliated non-broadcast
    networks as a form of compensation for carriage of network owned and
    operated stations, little or no information has been provided
    regarding other types of retransmission consent agreements. As we
    discuss below, our review of the record does not lead us to
    recommend any changes to the retransmission consent regime at this
    time.

### Comments

36. Several commenters complain that broadcasters link retransmission
    consent for carriage of their broadcast stations to carriage of
    affiliated non-broadcast networks or other content.[^114] MVPDs
    claim that this results in a variety of harms and consequences
    unintended by Congress.[^115] MVPDs claim that conditioning
    retransmission consent on the carriage of non-broadcast networks
    increases the size and the price of the extended basic tier and
    occupies capacity that could be used to carry DTV signals and
    independent networks.[^116] Joint Cable Commenters argue that
    retransmission consent has become the principal driver of cable rate
    increases, an unanticipated consequence.[^117] Joint Cable
    Commenters further argue that another unintended result of the
    retransmission consent regime is that broadcast networks have become
    the dominant providers of video programming.[^118]

37. Several commenters express concerns about broadcasters' ability to
    exercise market power to fill up MVPD channel capacity with their
    affiliated programming.[^119] Commenters state that the Commission
    itself has recognized that the signals of local broadcast television
    stations are without close substitutes and has previously held that
    News Corp.'s Fox network stations possess market power in the
    broadcast station segment of the video programming market.[^120]
    Joint Cable Commenters contend that a broadcaster's threat to
    withhold its signal during retransmission negotiations represents an
    exercise of market power, even if the broadcaster itself is not
    affiliated with any non-broadcast networks, because an MVPD cannot
    afford to risk subscriber defections to alternative MVPDs.[^121]
    Broadcasters are further strengthened in retransmission consent
    negotiations, according to Joint Cable Commenters, by the network
    non-duplication rule and the syndicated exclusivity rule, which
    prevent MVPDs from obtaining a substitute for the local broadcast
    station.[^122]

38. EchoStar states that the exchange of retransmission consent for
    carriage of affiliated non-broadcast networks constitutes a *per se*
    illegal tie under the antitrust laws because local broadcast
    stations carrying network programming are critical to MVPD offerings
    and stations are using their bargaining power to insist on
    conditions that are anti-competitive.[^123] Time Warner states that
    any compensation paid to broadcasters for retransmission consent,
    whether cash or carriage of affiliated programming, is greater than
    can be justified by the policies underlying retransmission
    consent.[^124] As a practical matter, cable systems that have not
    increased their capacity to keep pace with competitors may have the
    most difficulty accommodating requests for the carriage of
    additional networks in exchange for consent to retransmit broadcast
    signals. In particular, small cable operators with limited channel
    capacity contend that such conditioning harms their ability to
    compete against DBS operators with much larger channel
    capacity.[^125] Joint Cable Commenters and Time Warner state that
    retransmission consent was not expected to have these various
    negative effects, but instead was intended to strengthen the ability
    of local broadcasters to compete against MVPDs.[^126]

39. MVPDs propose several potential remedies to the problems they
    discuss in their comments. EchoStar requests that the Commission
    abolish any presumption that retransmission consent arrangements
    that link carriage of broadcast station signals to carriage of
    affiliated content are consistent with competitive marketplace
    considerations.[^127] EchoStar also asks that third parties be
    prohibited from negotiating retransmission consent agreements.[^128]
    The Joint Cable Commenters propose that before a broadcaster can
    initiate a service disruption by withholding retransmission consent,
    it must make an offer that is not linked to the carriage of national
    or regional networks.[^129] Several commenters recommend that the
    Commission require television stations and MVPDs to undertake
    mandatory arbitration, similar to that imposed in the *News-Hughes
    Order*, before a station is permitted to withdraw or withhold
    retransmission consent for its local signal, and to meet other
    conditions imposed in the *News-Hughes Order*.[^130] BellSouth urges
    the Commission to prohibit a television broadcast station from
    requiring the carriage of its digital signal as a condition for
    retransmission consent for the carriage of its analog signal.[^131]
    BellSouth also requests that the Commission include program access
    non-discrimination principles in the retransmission consent rules in
    order to help MVPDs with small subscriber bases obtain broadcast
    signals at lower prices.[^132] EchoStar urges that the statutory ban
    on exclusive retransmission consent agreements (which expires on
    January 1, 2010) be made permanent in order to ensure that all MVPDs
    have access to all local broadcast signals.[^133]

40. Broadcasters, on the other hand, argue that Congress believed that
    the pre-1992 regulatory scheme was unfair to broadcasters and
    enacted retransmission consent to provide broadcasters with the
    right to control the retransmission of their signals. Broadcasters
    believe Congress intended to establish a marketplace for the
    exchange (*i.e.*, retransmission) of broadcast signals, without
    dictating the outcome of the retransmission consent
    negotiations.[^134] They point out that Congress understood and
    approved of monetary compensation, carriage of affiliated
    non-broadcast networks, and other in-kind compensation as possible
    terms of retransmission consent.[^135] Broadcasters say the practice
    of conditioning broadcast station carriage on the carriage of
    non-broadcast networks developed after cable operators declined to
    pay cash for retransmission consent.[^136] Network Affiliates state
    that conditional carriage proposals are legal and are expected to
    become a common tool used by broadcasters for obtaining MVPD
    carriage of their digital signals.[^137] According to Network
    Affiliates, nothing would be more detrimental to the digital
    transition than for broadcasters to be denied dual must carry and
    then prohibited from negotiating for carriage of both signals under
    retransmission consent.[^138]

41. Broadcasters deny that retransmission consent is responsible for the
    increasing cable rates paid by subscribers,[^139] maintaining that
    non-programming costs, such as the investments associated with
    offering broadband services and digital television, are responsible
    for increasing cable rates.[^140] Broadcasters cite a recent GAO
    report as evidence that broadcast-affiliated networks receive
    license fees similar to the fees received by non-broadcast networks
    that are not affiliated with broadcasters.[^141] Broadcasters fear
    that prohibiting in-kind compensation arrangements would eliminate
    needed flexibility and may give rise to more frequent disputes
    leading to the withdrawal of broadcasters' signals during
    retransmission consent negotiations.[^142]

42. Finally, broadcasters deny that they have market power, asserting
    that so-called "must-have" programming is nothing more than
    programming that is currently popular, and that such temporary
    popularity among certain viewers is similar to the preference of a
    subset of consumers for a specific favorite restaurant, neither of
    which constitutes market power.[^143] Network Affiliates contend
    that the ability of local television stations to negotiate
    compensation from MVPDs does not imply market power in an economic
    sense.[^144] Rather, according to Network Affiliates, many
    non-broadcast networks are good substitutes for network broadcast
    signals, and nothing prevents cable operators from developing
    additional popular programming.[^145] Viacom asserts that the parent
    companies of the four major broadcast networks (Viacom, Disney, News
    Corp., and NBC-Universal) collectively own only 23 percent of the
    existing non-broadcast networks, making it unlikely that any one of
    these companies could exercise market power capable of producing
    anticompetitive effects.[^146] NAB says that prior to the launch of
    DBS, broadcasters were at the mercy of cable operators, which had
    monopoly power as the only broadcast retransmission system
    available.[^147] With the advent of competition in the MVPD market,
    NAB states that broadcasters are now beginning to obtain
    compensation that more accurately reflects the value of broadcast
    signals to MVPDs.[^148]

43. Broadcasters oppose the various MVPD proposals to modify the
    existing retransmission consent regime. They unanimously oppose the
    imposition of mandatory arbitration requirements, asserting that the
    circumstances presented by the News Corp./DirecTV transaction were
    unique, and that imposition of such conditions on all broadcasters
    would be unjustified.[^149] Broadcasters state that the Commission's
    program access rules are designed to address potential competitive
    harms arising from vertical integration of programmers and cable
    operators, and that BellSouth has not explained why the rules should
    apply to broadcasters that are not vertically integrated with cable
    operators.[^150] Broadcasters further assert that the good faith
    negotiation requirement in the retransmission consent rules permits
    BellSouth to seek relief where it can show that broadcasters seek to
    impose discriminatory retransmission consent terms and
    conditions,[^151] and that BellSouth fails to cite a single example
    of such discrimination.[^152] Viacom states that broadcasters have
    strong incentives to have their signals carried to as many
    households as possible and do not have incentives to offer
    anticompetitive carriage terms to small or alternative MVPDs.[^153]
    Broadcasters also oppose extension of the ban on retransmission
    consent agreements.[^154]

### Discussion 

44. We believe that, overall, the regulatory policies established by
    Congress when it enacted retransmission consent have resulted in
    broadcasters in fact being compensated for the retransmission of
    their stations by MVPDs, and MVPDs obtaining the right to carry
    broadcast signals. As we previously have stated, the retransmission
    consent process provides "incentives for both parties to come to
    mutually beneficial arrangements."[^155] The Commission has observed
    that both the broadcaster and MVPD benefit when carriage is arranged
    -- the station benefits from carriage because its programming and
    advertising will be carried as part of the MVPD's service, and the
    MVPD benefits because the station's programming makes the MVPD's
    offerings more appealing to consumers. Most importantly, consumers
    benefit by having access to such programming via an MVPD. Thus, as a
    general rule, the local television broadcaster and the MVPD
    negotiate in the context of a level playing field in which the
    failure to resolve local broadcast carriage disputes through the
    retransmission consent process potentially is detrimental to each
    side.[^156]

45. Nevertheless, we note cable operators' widespread concern that
    retransmission consent negotiations frequently involve broadcasters
    tying carriage of their broadcast signals to carriage of numerous
    affiliated non-broadcast programming networks. This process may
    produce results that go beyond what Congress envisioned. We note,
    though, that if Congress views the carriage of several of a
    broadcaster's non-broadcast programming networks as an unintended
    consequence of retransmission consent and seeks to address this
    practice, it is important that Congress also consider changes to
    other aspects of the broadcast signal carriage framework,
    specifically the mandatory carriage provisions. As we noted above,
    the retransmission consent rules are part of a carefully balanced
    combination of laws and regulations governing carriage of television
    broadcast signals, with the must-carry and retransmission consent
    regimes complementing one another. For example, since the
    Commission's decision to deny broadcasters the ability to assert
    dual and multicast must-carry, broadcasters have begun using their
    retransmission consent negotiations to negotiate carriage of their
    digital signals, thus furthering the digital transition by
    increasing the number of households with access to digital signals.
    If broadcasters are limited in their ability to accept in-kind
    compensation, they should be granted full carriage rights for their
    digital broadcast signals, including all free over-the-air digital
    multicast streams. Should Congress consider proposals circumscribing
    retransmission consent compensation, we encourage review of such
    related rules and policies, as well, in order to maintain a proper
    balance.

## Exclusivity Rules

### Network Non-Duplication and Syndicated Exclusivity Rules

#### Comments

46. Cable operators propose that the network non-duplication and
    syndicated exclusivity rules be made unenforceable with respect to
    stations that elect retransmission consent. Specifically, NCTA asks
    the Commission to initiate a rulemaking to exempt cable operators
    from compliance with these rules with respect to local broadcast
    stations that elect retransmission consent when the cable operator
    and broadcaster are unable to reach agreement and the cable operator
    seeks to carry a duplicating distant signal in lieu of the local
    broadcast signal.[^157] NCTA and ACA argue that local stations can
    use their exclusivity rights to prevent cable operators from
    providing their subscribers with network programming from distant
    affiliates.[^158] ACA claims that broadcasters use the exclusivity
    rules to raise the price of retransmission consent because, without
    the ability to carry distant signals, cable operators do not have an
    alternative source of network programming.[^159] ACA argues that
    this problem is exacerbated in smaller and rural markets that are
    underserved by over-the-air broadcasters.[^160]

47. Broadcasters maintain that the network non-duplication and
    syndicated exclusivity rules are needed to protect programming for
    which broadcasters have exclusive rights. They state that
    elimination of the rules would harm localism, jeopardize broadcast
    networks, and undermine retransmission consent.[^161] According to
    broadcasters, the rules promote the long-standing goal of localism
    by: (1) providing MVPD subscribers with access to local content
    produced by broadcasters; and (2) maximizing local viewership and
    advertising revenues to support the development and airing of local
    content.[^162] They claim that the rules are necessary to permit
    broadcasters that have negotiated exclusivity rights with their
    programming suppliers to protect those rights against MVPD
    importation of duplicating distant signals and assert that the rules
    are intended to provide broadcasters with an incentive to invest in
    programming that serves their communities.[^163] To support their
    arguments, broadcasters note that in 1988, the Commission concluded
    that the exclusivity rules are necessary to preserve broadcasters'
    ability to compete against cable operators. They further point out
    that the Commission later rejected proposals to eliminate these
    rules when retransmission consent was implemented in 1993.[^164] NAB
    argues that the consequences of eliminating exclusivity protection
    would be especially dire in small and medium sized markets because
    the rules are needed to protect the audience base of stations in
    such markets.[^165]

48. Broadcasters fear that elimination of the rules with respect to
    stations that elect retransmission consent would endanger localism
    by subjecting local broadcasters to competition with out-of-market
    broadcasters. NAB indicates that many network affiliation agreements
    refer to the Commission's rules to define the parties' obligations
    with respect to exclusivity and to define the geographic scope of
    exclusivity.[^166] Thus, NAB argues that exempting some cable
    operators from application of the rules with respect to stations
    that elect retransmission consent could cause significant disruption
    of existing contractual relationships by forcing broadcasters and
    their programming suppliers to renegotiate existing contracts.[^167]
    NAB further contends that adoption of the proposed regulatory
    modifications may well lead to unintended consequences that cannot
    be anticipated on the basis of the existing record.[^168]

#### Discussion

49. Whether or not these rules remain in place, cable operators' ability
    to retransmit duplicative distant broadcast signals is governed in
    the first instance by the contract rights negotiated between
    broadcasters and their programming suppliers. If networks and
    syndicators have entered into contracts with broadcasters that limit
    broadcasters' exclusivity such that a duplicative distant signal
    could be imported by an MVPD without blacking out the duplicative
    programming, the Commission's rules would not prevent that result.
    Conversely, where exclusivity contracts exist, repeal of the
    Commission's rules would not necessarily be sufficient to enable the
    retransmission of duplicative programming. Moreover, to some extent,
    rural cable operators are already able to import distant signals
    without blacking out duplicative programming. The exclusivity rules
    already contain certain exceptions that should ameliorate rural
    cable operators' need for relief. Significantly viewed signals, for
    example, are not subject to these rules.[^169] The rules also do not
    apply to small cable systems serving fewer than 1,000 subscribers.
    According to ACA, approximately half of its members qualify for this
    exemption.[^170]

50. To the extent that cable operators are asking the Commission to
    modify the network non-duplication and syndicated exclusivity rules
    such that they would supersede contract arrangements between
    broadcasters and their programming suppliers that are permitted by
    the rules, we cannot endorse or recommend such modifications. The
    legislative history of the 1992 Act indicates that the network
    non-duplication and syndicated exclusivity rules were viewed as
    integral to achieving congressional objectives.[^171] Based on this
    legislative history, the Commission previously has refused to find
    that the network non-duplication rules do not apply to stations that
    elect to exercise retransmission consent rights with respect to a
    cable system.[^172] Moreover, the Commission has a longstanding
    policy favoring the provision of local broadcast service to
    communities, and the Commission expects and indeed requires
    broadcasters to serve the needs and interests of their local
    communities. Except in cases where a contract violates the
    Commission's rules, we do not deem it in the public interest to
    interfere with contractual arrangements that broadcasters have
    entered into for the very purpose of securing programming content
    that meets the needs and interests of their communities. Such
    interference would contradict our own requirements of broadcast
    licensees and would hinder our policy goals.

51. Accordingly, we decline to recommend at this time that the network
    non-duplication and syndicated exclusivity rules be modified as
    proposed by NCTA. Rather than risking the major disruption and
    possible unintended consequences of rendering these rules
    unenforceable with respect to broadcasters that elect retransmission
    consent, it may be appropriate to consider whether 1,000 subscribers
    remains the correct benchmark for defining a small system, but there
    is no record in this proceeding to make that determination. Any such
    consideration should be undertaken cautiously in view of the
    important role these rules play in enabling local broadcasters to
    provide robust local service**.**

52. *Geographic Zone of Exclusivity Protection*. We do not recommend
    that the applicable zones of protection for the network
    non-duplication and syndicated exclusivity rules be modified and
    made consistent with the DMAs used to determine local television
    markets for must carry and retransmission consent election rights
    for both cable and DBS.[^173] The geographic zones over which a
    broadcaster can request network non-duplication or syndicated
    exclusivity protection were originally adopted when determination of
    which broadcast stations were entitled to mandatory carriage rights
    on particular cable systems was based primarily on mileage zones. In
    applying network non-duplication and syndicated exclusivity
    protection to DBS, the Commission adopted the same exclusivity zones
    that were applicable to cable service consistent with Congress'
    directive in SHVIA.[^174] In 1992, when Congress enacted
    must-carry/retransmission consent for cable operators, it
    established the ADI, which was replaced by the DMA, as the local
    market for carriage rights.[^175] Similarly, when SHVIA was enacted,
    the local market for broadcast signal carriage was defined as the
    DMA.[^176]

53. Some broadcast stations provide a good quality signal to all
    households and cable operators throughout the entire DMA. However,
    some broadcasters may not provide a strong signal to all households
    and cable systems throughout the DMA. DMAs can extend for hundreds
    of miles, especially in the western states, and there may be
    multiple affiliates of an individual network in a DMA.[^177] In
    fact, Pioneer states that some broadcasters do not provide a strong
    signal to all households and cable systems where they currently
    assert network non-duplication and syndicated exclusivity protection
    under the current specified zone (*i.e.*, generally the 35/55
    limits).[^178] For these stations, extending exclusivity protection
    to an even larger geographic area, such as the entire DMA, would
    further the disparity between the actual footprint where the station
    provides a strong signal and the exclusivity protection. Such an
    approach would permit a broadcaster to assert exclusivity and block
    retransmission of duplicative programming on distant broadcast
    signals in areas where the broadcaster does not provide service.
    Moreover, in terms of actual location, a distant station may be
    closer to a viewer than the "local" station based on DMA
    definitions. Thus, the closer station would be disadvantaged, and
    this modification could impede that station's ability to provide
    local service.

### Sports Blackout Rule

#### Comments

54. The Professional Sports Leagues favor retention of the current
    sports blackout rule.[^179] The Professional Sports Leagues state
    that the sports blackout rule does not impose any significant burden
    on cable or satellite operators and does not affect the ability of
    rural cable operators to compete with DBS in the provision of
    digital broadcast television signals to consumers.[^180]

55. The Professional Sports Leagues state that they routinely
    incorporate blackout provisions into their negotiated out-of-market
    rights agreements.[^181] However, they are unable to do so for
    broadcast stations carried pursuant to the statutory licenses
    granted by sections 111 and 119 of the Copyright Act.[^182] They
    explain that the statutory licenses enable cable operators and
    satellite carriers to retransmit sports from distant broadcast
    stations without obtaining the consent of the affected sports
    clubs.[^183] Those provisions, however, require MVPDs to comply with
    the sports blackout rule.[^184] Absent the sports blackout rule, the
    Professional Sports Leagues state that MVPDs would be able to
    exploit compulsory licensing to override a decision by the sports
    club not to televise a particular home game in the local market in
    which it is being played.[^185] In addition, the Professional Sports
    Leagues contend that absent the sports blackout rule, MVPDs could
    override a decision to provide exclusive rights to a non-broadcast
    regional sports network to televise that game within the club's home
    market.[^186]

56. The Professional Sports Leagues state that the sports blackout rule
    provides sports clubs narrow protection that requires MVPDs to black
    out only a handful of telecasts in approximately three dozen
    geographically-confined areas.[^187] They say the protection
    afforded by the sports blackout rule is more limited than the
    protection the Professional Sports Leagues routinely negotiate
    regarding games not covered by the sports blackout rule.[^188] For
    example, MVPDs may offer their subscribers a package, called MLB
    Extra Innings, of up to 60 out-of-market telecasts of Major League
    Baseball ("MLB") games each week.[^189] MVPDs, however, are
    contractually required to black out specific games on MLB Extra
    Innings throughout the home television territories of the teams
    participating in those games.[^190] In contrast to the sports
    blackout rule, which permits blackouts only in a limited 35-mile
    zone around a Commission-determined "reference point" for the home
    club, the contractually negotiated blackout throughout the home
    territories of Professional Sports teams generally extends well
    beyond 35 miles.[^191] In addition, the sports blackout rule affords
    blackout protection only to the home teams, while the Professional
    Sports Leagues often negotiate blackout protection for both the home
    and visiting teams.[^192] Furthermore, the sports blackout rule
    permits clubs to provide exclusivity for specific games only to
    non-broadcast distributors -- such as regional sports networks --
    and not to local broadcast stations.[^193] Thus, when a local
    broadcast station shows a club's home game, the sports blackout rule
    does not apply and, therefore, does not permit the club to require
    MVPDs to black out the retransmission of a distant broadcast signal
    carrying the same game. In contrast, the Professional Sports Leagues
    typically negotiate blackout provisions that provide exclusive
    licensing arrangements with both broadcasters and MVPDs.[^194] For
    example, MVPDs may not offer in either of the participating clubs'
    home territories any MLB Extra Innings game telecast involving those
    clubs, thus protecting those clubs' property rights (to broadcast or
    non-broadcast distribution) as the exclusive provider of their
    club's games.[^195]

57. NCTA states that the Commission "should exempt a cable operator from
    facing blackouts under the network non-duplication, syndicated
    exclusivity, and sports blackout rules so that it can fully serve
    consumers with distant stations that it brings to its community,"
    but NCTA does not address the sports blackout rule in any further
    detail.[^196] NCTA also claims that DBS operators may import
    "multiple sporting events" in areas where DBS retransmission of
    distant signals is exempt from blackout.[^197] The Professional
    Sports Leagues refute NCTA's claim that DBS may offer multiple
    sporting events to unserved households in areas that cable operators
    must black out pursuant to the sports blackout rule.[^198] As the
    Professional Sports Leagues note, the sports blackout rule imposes
    the same blackout obligations on all MVPDs.[^199] Thus, whenever a
    cable operator is required to black out a distant broadcast signal
    carrying a specific game under the sports blackout rule, the DBS
    operator serving subscribers in the same community must also black
    out that game.[^200]

#### Discussion

58. Having examined the sports blackout rule and comments in the record,
    we conclude that the rule does not affect competition among MVPDs
    and we do not recommend any changes to the relevant statutes or
    regulations. Like the network non-duplication and syndicated
    exclusivity rules, the sports blackout rule is intended to ensure
    that MVPDs do not undermine contractual arrangements between
    broadcasters and sports programming rights holders by importing
    sports programming that is subject to blackout in the local market.
    Although NCTA broadly advocates elimination of all of the
    Commission's exclusivity rules, including the sports blackout rule,
    commenters have not advanced any link between the rule and
    competition among MVPDs, and no commenter presses the case for
    repeal or modification of the sports blackout rules.[^201]

59. Sports leagues control both broadcast carriage and MVPD
    retransmission of their programming. A broadcaster cannot carry a
    sporting event on its local television stations without the
    permission of the sports leagues or clubs that own or hold the
    rights to the sports event. Under the current retransmission consent
    rules, MVPDs, with limited exceptions, cannot carry a broadcaster's
    signal without the permission of the broadcaster. Since the terms of
    carriage may include deletion of specific sports events, a sports
    league could prevent unwanted MVPD retransmission through
    contractual arrangements with broadcast stations. While the
    Professional Sports Leagues claim that the sports blackout rule
    gives them the additional ability to black out games being carried
    by MVPDs pursuant to the statutory licenses granted by sections 111
    and 119 of the Copyright Act,[^202] it appears that the same
    blackout protection can be obtained through their contracts with
    broadcast stations. Therefore, the sports blackout rule may serve
    primarily as an enforcement mechanism for existing contracts between
    broadcasters that purchase the distribution rights to the sports
    event and sports leagues or clubs that own the rights to the sports
    event.

60. Indeed, the sports leagues claim that they already negotiate
    contractual blackout protections that exceed the protections
    afforded by the Commission's rules, for example by extending the
    blackout zone to a team's entire home territory, as defined by the
    team or relevant sports league. Significantly, however, the Leagues
    do not request stronger rules. Moreover, any regulatory or statutory
    expansion of the blackout zone would require a careful consideration
    of the impact of such action on consumers. In the absence of any
    request that we consider such measures, or any evidence in the
    record concerning the relationship of the rule to competition among
    MVPDs, we are not recommending regulatory or statutory revisions to
    modify the protections afforded to the holders of sports programming
    rights.

## Parity Between the Cable and DBS Regulatory Structures 

61. Some commenters have objected to certain disparities between the
    retransmission consent and program exclusivity rules as they apply
    to cable and DBS. Having recommended that major changes to the
    existing rules not be pursued for the reasons discussed above, we
    now turn to the question of whether disparities between the existing
    rules for cable and DBS should be eliminated. For reasons discussed
    further below, we conclude that although establishing parity in the
    laws and regulations governing DBS and cable carriage of television
    broadcast signals is a worthy goal, a comprehensive analysis of
    regulatory disparities and possible measures to achieve greater
    parity should await the results of the companion Copyright Office
    review of related copyright law which is being undertaken pursuant
    to SHVERA.

### Comments

62. Cable commenters state that rural cable operators face increasing
    competitive pressure from satellite providers and ask the Commission
    to adopt or recommend various measures to remedy the perceived
    competitive imbalance. Specifically, NCTA explains that for unserved
    households DBS operators may import two distant broadcast signals
    affiliated with each broadcast network without retransmission
    consent, and without being subject to the network non-duplication
    and syndicated exclusivity rules.[^203] In contrast, NCTA explains,
    for the same unserved households, cable operators must obtain
    retransmission consent to import distant broadcast signals, and
    these signals are subject to the network non-duplication and
    syndicated exclusivity rules.[^204] NCTA proposes that cable
    operators, like DBS operators, should be exempt from obtaining
    retransmission consent when they provide distant broadcast signals
    to a household that would be allowed to receive the signal if it
    were a DBS subscriber.[^205]

63. Broadcasters object to NCTA's proposal, saying it would harm local
    broadcasters' competitive position and ability to provide local
    programming.[^206] Broadcasters argue that in enacting SHVIA,
    Congress stimulated competition between cable and DBS by providing
    DBS with a temporary reprieve from retransmission consent, network
    non-duplication, and syndicated exclusivity for households that do
    not receive broadcast service so that DBS could offer distant
    broadcast programming to subscribers.[^207] Broadcasters assert,
    however, that Congress did not make the exemptions permanent; in
    SHVIA, Congress established a sunset date of December 31, 2004, for
    the exemptions, which was extended to December 31, 2009, in
    SHVERA.[^208] NAB suggests that if cable and DBS have reached
    sufficient competitive equality in the MVPD marketplace to justify
    regulatory parity, the exemptions for DBS for unserved households
    should be eliminated.[^209] The exemptions, NAB says, should not be
    extended to cable.[^210]

64. DBS operators also oppose NCTA's proposal. They state that NCTA's
    complaints and proposed regulatory changes fail to acknowledge the
    "no-distant-if-local" rule, which applies only to DBS
    providers.[^211] SHVERA provides that a DBS operator cannot offer
    the analog signal of a distant network station to a new subscriber
    when the DBS operator carries the analog signal of a local broadcast
    station affiliated with the same network.[^212] A similar
    prohibition applies to the importation of a distant digital network
    station when a digital local broadcast station affiliated with the
    same network is being carried.[^213] EchoStar states this "super
    network non-duplication rule" applies only to DBS providers, for
    both served and unserved households, in every DMA where the DBS
    operator provides local-into-local service.[^214] In contrast,
    EchoStar argues, a cable operator may carry distant analog and
    digital broadcast signals to all of its subscribers, whether or not
    they can receive an analog or digital over-the-air signal, subject
    to retransmission consent, network non-duplication, and syndicated
    exclusivity.[^215] EchoStar contends that, although it is difficult
    to compare the competitive impact of the rules on cable and DBS
    operators, SHVERA's introduction of both the analog and digital
    "no-distant-if-local" rules place greater restrictions on DBS's
    carriage of distant network stations, relative to the restrictions
    placed on cable operators.[^216]

### Discussion

65. At the outset, parity -- application of the same laws and
    regulations to cable and DBS -- is a worthy goal. Several of
    Congress' revisions to the laws governing carriage of television
    broadcast signals by DBS operators have been aimed at establishing
    greater parity between the legal frameworks for cable and DBS
    operators.[^217] Establishing statutory and regulatory parity
    between cable and DBS could mean applying the DBS provisions to
    cable, the cable provisions to DBS, or some combination of the two.
    The principal recommendation in the record is to extend to cable
    operators the exemptions from retransmission consent, network
    non-duplication, and syndicated exclusivity that apply to DBS
    operators for retransmission of distant broadcast network signals to
    "unserved households."[^218]

66. We have examined the disparities in our rules as well as proposals
    advanced by cable operators to remedy the alleged ill effects of
    these disparities. We conclude that the proposed remedies would not
    necessarily have the desired effect and, in fact, may be unworkable.
    In addition, the role of copyright compulsory license authority
    cannot be ignored in this analysis, and disparities in the
    application of the copyright scheme to cable and DBS operators must
    be taken into account in any evaluation of proposed modifications to
    the Commission's retransmission and exclusivity rules or the
    underlying statutes. Those disparities are complex and cannot
    readily be categorized as favoring either one industry or the other.

67. Under current rules, there are significant differences between cable
    and satellite regarding the need to obtain retransmission consent
    for the carriage of broadcast stations outside the local DMA. The
    cable rules are straightforward with respect to carriage of distant
    signals. A cable operator generally may offer any distant broadcast
    signal to any household by paying the required copyright royalties,
    obtaining retransmission consent, and complying with the network
    non-duplication and syndicated exclusivity rules.

68. DBS operators, on the other hand, face greater restrictions in the
    retransmission of distant signals, especially for subscribers that
    are considered to be served by broadcast stations over-the-air.
    Specifically, a DBS operator may not offer distant network signals
    except to households shown to be "unserved" by network stations. On
    a going forward basis, a DBS operator will not be permitted to offer
    distant network signals to any subscriber where local-into-local
    service is available.

69. In some respects, however, the rules applicable to DBS are seemingly
    less restrictive than the rules applicable to cable. For example, a
    DBS operator may offer the signals of distant superstations (*i.e*.,
    non-network stations) to any household without obtaining
    retransmission consent. Cable operators, on the other hand, must
    obtain retransmission consent for all distant signals except a very
    limited group of superstations. DBS operators must comply with the
    network non-duplication and syndicated exclusivity rules only for
    nationally distributed superstations, a limited subset of all
    superstations. Cable operators must comply with these rules with
    respect to all distant signals. However, in practice, this supposed
    DBS advantage is not meaningful because the households treated as
    "unserved" are most likely outside of the 35/55 mile zone within
    which local stations may assert exclusivity protection against cable
    operators. In the cable context, where the concept of "unserved
    household" does not exist, cable operators are required to provide
    local stations as part of basic service to all subscribers and,
    while they are permitted to provide distant signals to anyone, they
    must obtain retransmission consent to do so and provide exclusivity
    protection where applicable.

70. One approach to remedying disparities would be to apply the DBS
    rules to cable households that would be considered "unserved." This
    would allow cable operators in outlying areas, which are often
    rural, to carry distant signals without retransmission consent and
    without having to blackout programming under the exclusivity rules.
    Since the concept of "unserved household" does not currently exist
    under the cable rules, as envisioned, the modification advocated by
    NCTA would provide that whenever a DBS operator may retransmit a
    distant broadcast signal to an unserved household without being
    subject to the retransmission consent, network non-duplication and
    syndicated exclusivity rules, a cable operator should be entitled to
    retransmit distant broadcast signals to the same household, if it
    were a cable household, without being subject to the retransmission
    consent, network non-duplication and syndicated exclusivity rules.
    NCTA claims this option would make it easier for cable operators to
    import distant broadcast signals to unserved households and into
    areas where it is difficult for viewers to get a good quality local
    broadcast signal.

71. It is unclear from the comments how cable systems would be able to
    determine whether households are "unserved" and how they would
    differentiate in their delivery of programming between a household
    that is served and a household that is unserved. Given that all
    broadcast stations are supposed to be on a cable system's "basic"
    tier (in a rate-regulated system), it is unknown how the cable
    system would turn a distant station on or off from the basic tier
    based on whether a household is or is not "served." Satellite
    operators, on the other hand, are not required to offer local
    broadcast service in all DMAs, and there is no basic tier equivalent
    for DBS. Satellite providers also are subject to elaborate reporting
    requirements for notifying the networks as to which subscribers are
    getting particular distant network stations. Networks may (and do)
    challenge satellite carriers' designation of "unserved" status.

72. Moreover, it is unlikely that the network non-duplication and
    syndicated exclusivity rules now apply to cable service to a
    household that would be deemed "unserved," since such households
    tend to be distant from any broadcast station's community of license
    and therefore outside the applicable specified zones. Consequently,
    while cable operators generally are subject to the Commission's
    network non-duplication and syndicated exclusivity rules, it is
    unlikely that a broadcast signal delivered to an "unserved" home
    would be in an area where blacking out must occur, and parity with
    DBS in this case would not have a significant impact. Furthermore,
    out-of-market significantly viewed stations are not subject to the
    network non-duplication and syndicated exclusivity rules, and the
    rules do not apply to cable systems that serve fewer than 1,000
    subscribers.

73. With respect to retransmission consent, if Congress amended the
    statute to exempt cable carriage of distant signals from
    retransmission consent to match the DBS model, cable operators would
    be relieved of retransmission consent obligations only with respect
    to individual subscribers, which is likely to be unworkable. In
    addition, pursuant to SHVERA, if local-into-local service is
    available in a market, a DBS operator may not offer distant signals
    to subscribers, even if they are "unserved," unless they were
    getting distant signals as of December 8, 2004. The analogous
    situation for cable would mean that distant signals would never be
    permitted because cable always carries local stations and is
    required to carry such signals on the basic tier, which is provided
    to all subscribers. As DBS operators expand local-into-local
    service, any perceived advantage that DBS has is likely to disappear
    over time as DBS carriage of distant signals shrinks to fewer and
    fewer markets and sunsets in 2009 (unless extended again).[^219]

74. An alternative approach would be to apply the cable provisions to
    DBS. Under this alternative, as raised in the record, DBS operators
    would be required to obtain retransmission consent and would be
    subject to the network non-duplication and syndicated exclusivity
    rules in situations where DBS operators currently are not subject to
    those rules.[^220] This option could be limited to the provision of
    distant signals to unserved households or it could be extended to
    the provision of distant signals to all DBS subscribers, if the
    compulsory copyright license were revised. With respect to the
    offering of distant broadcast signals to unserved households, this
    option, which is raised by NAB, would make it more difficult and
    less desirable for DBS operators to retransmit distant broadcast
    signals to unserved households and would further limit the
    availability of programming to consumers who do not get local
    programming service. As currently written, the statute and rules
    allow these households to receive programming from a distant signal
    when local stations, the preferable choice for receiving
    programming, are not available. If the cable provisions were applied
    to DBS, DBS operators would be allowed to retransmit any distant
    broadcast signals to any subscriber, whether or not the subscriber
    is considered an unserved household, and whether or not
    local-into-local service is provided, subject to retransmission
    consent and network non-duplication and syndicated exclusivity
    protection, as is currently permitted under the cable rules.
    Although no one requested this option, it would permit DBS operators
    additional choice for the services they provide their subscribers,
    while still protecting the exclusivity rights of local stations.
    This alternative would require a statutory amendment to the
    copyright law.

75. Regulatory parity is generally a worthy goal where disparities are
    not warranted by special circumstances. Consistent with the
    different technologies involved, every effort should be made to
    apply the same rules to cable operators, DBS operators, and other
    MVPDs. Thus, to the extent the Commission's exclusivity and
    retransmission consent rules are different with respect to cable and
    DBS and create distortions in the competitive landscape, we
    generally recommend that Congress continue its efforts to harmonize
    applicable laws to the extent feasible in light of differences in
    technology. However, consistency of policies and rules is a matter
    not just of communications policy but copyright policy as well: a
    large part of this effort will necessarily involve the consideration
    of copyright issues, which the Copyright Office is currently
    examining in compliance with SHVERA.[^221] We believe a
    comprehensive analysis of regulatory disparities and possible
    measures to achieve greater parity should await the outcome of those
    efforts so that policy objectives relating to communications law and
    copyright law can be coordinated. Accordingly, we conclude that
    specific suggestions for change should await the results of the
    companion Copyright Office inquiry. Finally, in considering whether
    to apply the DBS rules to cable or the cable rules to DBS or
    developing some other alternatives, Congress should seek solutions
    that rely, to the extent feasible, on market mechanisms rather than
    detailed administrative rules.

## Rural Cable and Digital Broadcast Signals

76. Section 208 requires that we examine the effects of the
    retransmission consent, network non-duplication, syndicated
    exclusivity, and sports blackout rules on the ability of rural cable
    operators to compete with DBS in offering digital broadcast signals.
    Below we describe commenter positions and proposals on this subject.
    Having reviewed the record in this proceeding, we find that
    commenters have not demonstrated that the rules are affecting the
    ability of rural cable operators to compete with DBS in the
    provision of digital broadcast signals. Accordingly, we do not
    recommend any changes to relevant statutory or rule provisions at
    this time. We note, however, that our most recent *Notice of
    Inquiry* on the state of video competition seeks additional
    information on competition in rural markets.[^222] To the extent
    that relevant evidence is forthcoming in that proceeding, we will
    report our findings to Congress in our next annual video competition
    report.

### Comments

77. DBS operators assert that cable operators have market power, while
    rural cable operators assert that DBS operators have market power.
    DirecTV contends that cable operators are often the dominant MVPDs
    in their franchise areas and may be described as local monopolies in
    many of the largest DMAs.[^223] DirecTV claims that a cable
    operator's share of the local MVPD market often gives it sufficient
    market power to refuse to pay cash for retransmission consent, while
    DirecTV's small share of the local MVPD market requires it to pay
    cash.[^224] Cable commenters allege that regulatory disparities not
    only hinder competition generally, but will increasingly hinder
    rural cable operators' ability to carry digital broadcast signals.
    NCTA argues that DBS has a number of advantages in households that
    do not receive analog broadcast service and will soon have
    additional advantages in households that do not receive digital
    broadcast service.[^225] ACA states that there is a growing
    disparity in market power between DBS and rural cable operators
    stemming from the inability of some rural cable operators to receive
    and retransmit good quality local broadcast signals to their
    subscribers.[^226] According to ACA, DBS's local-into-local service
    is increasingly able to provide good quality local broadcast signals
    to DBS subscribers.[^227] NCTA further points out that many
    broadcasters are not reaching their entire analog population with a
    digital signal.[^228] NCTA states that this is usually not a problem
    with respect to the delivery of analog signals because cable
    operators can receive signals from translators, but that translators
    do not currently have second channels for the purpose of digital
    signal transmission and will likely not be available as a source of
    digital signal delivery until the end of the digital
    transition.[^229]

78. ACA claims that these problems can be solved by granting rural cable
    operators access to satellite-delivered local broadcast signals on
    nondiscriminatory prices and terms.[^230] DBS operators disagree,
    stating there is no reason to force DBS operators to provide
    broadcast signals to competitors.[^231] EchoStar states that DBS
    operators do not control a bottleneck or essential facility to which
    competitors need nondiscriminatory access.[^232] EchoStar and
    DirecTV argue that they have established facilities for receiving
    local broadcast signals in markets where they offer local-into-local
    service, and there are no barriers preventing rural cable operators
    from making arrangements for the delivery of good quality local
    broadcast signals to their cable headends.[^233]

79. NCTA and ACA also make other comments and proposals concerning the
    effects of our retransmission consent, non-duplication and
    syndicated exclusivity rules on competition in rural areas, which we
    discuss above in Sections III.A. and III.B.[^234] Although the
    comments and proposals would apply to a broader group of NCTA and
    ACA members than just rural cable operators, NCTA and ACA assert
    that their comments are particularly important to rural cable
    operators' ability to provide digital signals to subscribers.[^235]
    For example, ACA contends that the practice of linking carriage of
    broadcast signals to carriage of other affiliated programming
    diverts resources from rural cable operators that could be used to
    deliver digital signals.[^236] NCTA contends that its proposals will
    allow rural cable operators to compete more effectively with DBS,
    although they do not assert that their proposals will spur
    competition with respect to provision of digital signals in
    particular.

80. Network Affiliates state that the retransmission consent, network
    non-duplication, syndicated exclusivity, and sports blackout rules
    do not treat digital signals differently than analog signals, so the
    current regulations do not disadvantage rural cable operators
    relative to satellite carriers.[^237] With respect to the sports
    blackout rule, the Professional Sports Leagues explain that most
    sports events are held in large, urban areas, so the sports blackout
    rule is rarely applicable to rural cable operators.[^238] Thus, they
    argue, the sports blackout rule does not hinder the ability of rural
    cable operators to compete with DBS.[^239]

81. Pioneer maintains that some broadcast satellite stations in rural
    areas fail to provide a strong signal to the entire geographic area
    where they assert network non-duplication and syndicated exclusivity
    protection.[^240] Pioneer states that the poor quality broadcast
    signal is attributable to the broadcaster's failure to invest in
    adequate transmission facilities.[^241] Pioneer asks the Commission
    to modify the network non-duplication rule so that where a local
    affiliate station's signal is weak or absent, the cable operator
    would be permitted to carry the signal of a neighboring or distant
    station affiliated with the same broadcast network, either
    exclusively, or in addition to the local affiliate.[^242] Pioneer
    requests that it be permitted to import distant broadcast network
    signals without being subject to the network non-duplication
    rule.[^243]

### Discussion

82. As we discuss in greater detail in Sections III.A. (retransmission
    consent) and III.B. (network non-duplication and syndicated
    exclusivity rules), these rules are integral to achieving core
    policy objectives, including the promotion of localism. These policy
    objectives are no less important in rural areas than in other
    geographic areas. Moreover, the record does not show that the rules
    are harming competition between DBS and rural cable. We also find
    that there is not sufficient evidence in the record to show that
    broadcasters are using the network non-duplication and syndicated
    exclusivity rules to raise prices for rural MVPDs. Accordingly, we
    will not modify the rules on such grounds.[^244]

83. We also decline to adopt or recommend to Congress the proposals by
    ACA and Pioneer relating to signal access. Under the Commission's
    signal carriage rules, there are no restrictions on the manner in
    which the broadcaster's signal is delivered to the cable operator's
    headend.[^245] We recognize that sharing facilities with DBS
    operators is one option that could be employed to deliver broadcast
    signals to rural cable operators' headends, but other alternatives,
    including fiber, microwave or fixed satellite service, could be
    used. We do not believe that there is a need to require that DBS
    operators share their facilities with their competitors -- incumbent
    cable operators -- although we would support any mutually agreed
    upon arrangements among the parties. Thus, we do not find it
    appropriate to recommend this option to Congress. Similarly, we
    decline to modify the network non-duplication rule in the manner
    proposed by Pioneer.[^246] Stations that elect must-carry are
    required by the Commission's rules to deliver a good-quality signal
    to the headend. With respect to stations that elect retransmission
    consent, we would expect that the delivery of a good-quality signal
    to the cable headend would be one of the terms discussed and
    resolved by the parties in their negotiation for a carriage
    agreement. Broadcasters and cable operators are free to negotiate
    compensation terms that include the cost of delivering a
    good-quality signal to the cable headend. However, stations that
    elect retransmission consent may invoke the network non-duplication
    rules even if they are not carried. For the reasons set forth above,
    we are reluctant to dilute those rights.

## Other Issues 

84. In addition to the proposals discussed above, commenters provide
    other suggestions on narrower issues for the Commission to recommend
    to Congress. EchoStar provides several recommendations related to
    the must-carry/retransmission consent process. It requests that the
    Commission streamline the must-carry/retransmission consent election
    rules by setting up a clearinghouse, as part of an electronic
    system, by which television stations can make carriage requests and
    by which satellite carriers can send responses.[^247] We do not have
    any evidence in the record showing that the
    must-carry/retransmission consent election rules are in any way
    burdensome or inefficient and in need of streamlining. SHVERA
    directed the Commission to revise its rule governing notification of
    commencement of new local-into-local service by requiring satellite
    carriers to notify broadcasters via certified mail at the address
    provided in the Commission's consolidated database system.[^248]
    Also, Commission rules require that must-carry/retransmission
    consent elections be made by certified mail, a process that ensures
    that there is no dispute over a station's election choice.[^249]
    These procedures are clear and are intended to eliminate errors and
    make sure that notices are made in compliance with the rules.
    Accordingly, we decline to implement EchoStar's request at this
    time.

85. Finally, EchoStar and NCTA recommend certain changes to the
    copyright law. EchoStar requests that satellite carriers' legal
    ability to carry distant signals (analog or digital) be made
    permanent, rather than expire on December 31, 2009.[^250] EchoStar
    also points out that there is now a sunset date of December 31,
    2008, on the significantly viewed station waiver provision that
    local broadcasters may grant, allowing certain otherwise ineligible
    subscribers to receive such signals, and recommends that the waiver
    process be made permanent or be made to coincide with the distant
    signal provision sunset date of December 31, 2009.[^251] Other
    commenters oppose EchoStar's requested changes to copyright
    law,[^252] and contend that issues concerning the sunset date are
    beyond the scope of this proceeding.[^253] NCTA argues that DBS pays
    lower copyright royalty fees than all but the smallest cable
    operators.[^254] NCTA recommends that both cable and DBS pay the
    lower royalty fee for the same distant broadcast network
    signals.[^255] MPAA contends that NCTA's proposals are outside the
    scope of this proceeding and should be disregarded.[^256] We agree.
    As Congress has asked that we evaluate communications policy, and
    not copyright law, in this proceeding, we decline to consider the
    recommendations of EchoStar and NCTA and defer to the Copyright
    Office's expertise in these areas. We expect that these issues will
    be considered when the Copyright Office evaluates the operation of
    copyright licenses under sections 109 and 110 of SHVERA.

# Conclusion

86. In fulfillment of the requirements of section 208 of SHVERA, we have
    considered the effect of the retransmission consent, network
    non-duplication, syndicated exclusivity, and sports blackout rules
    on competition among MVPDs and on rural MVPDs' ability to compete
    with DBS operators in the delivery of digital broadcast signals. We
    have evaluated commenters' positions and proposals with respect to
    these rules. For the reasons set forth above, we do not recommend
    any changes at this time to the statutory provisions relating to
    Commission rules under consideration in this Report.

**APPENDIX**

**LIST OF COMMENTERS**

[Initial Comments]{.underline}

1.  ABC Television Affiliates Association, the CBS Television Network
    Affiliates Association, the FBC Television Affiliates Association,
    and the NBC Television Affiliates Association (Network Affiliates)

2.  American Cable Association (ACA)

3.  BellSouth Corporation and BellSouth Entertainment, L.L.C.
    (BellSouth)

4.  Duhamel Broadcasting Enterprises (Duhamel)

5.  EchoStar Satellite L.L.C. (EchoStar)

6.  Joint Cable Commenters (Advance Newhouse Communications, Cox
    Communications, Inc., and Insight Communications) (Joint Cable
    Commenters)

7.  National Association of Broadcasters (NAB)

8.  National Cable Television Association (NCTA)

9.  NBC Universal, Inc. (NBC)

10. The Professional Sports Leagues (Office of the Commissioner of
    Baseball, the National Football League, the National Basketball
    Association, the National Hockey League, and the Women's National
    Basketball Association) (Professional Sports Leagues)

11. Satellite Broadcasting and Communications Association (SBCA)

12. The Walt Disney Company (Disney)

[Reply Comments]{.underline}

1.  ABC Television Affiliates Association, the CBS Television Network
    Affiliates Association, the FBC Television Affiliates Association,
    and the NBC Television Affiliates Association (Network Affiliates)

2.  DIRECTV, Inc. (DirecTV)

3.  Discovery Communications, Inc. (Discovery)

4.  Duhamel Broadcasting Enterprises (Duhamel)

5.  EchoStar Satellite L.L.C. (EchoStar)

6.  Fox Entertainment Group, Inc. and Fox Television Holdings, Inc.
    (Fox)

7.  Microcom (late-filed) (Microcom)\*

8.  Motion Picture Association of America, Inc. (MPAA)

9.  Named State Broadcasters Associations (NSBA)

10. National Association of Broadcasters (NAB)

11. NBC Universal, Inc. and NBC Telemundo License Co. (NBC)

12. Pioneer Telephone Association, Inc. d/b/a/ Pioneer Communications
    (late-filed) (Pioneer)

13. The Professional Sports Leagues (Office of the Commissioner of
    Baseball, the National Football League, the National Basketball
    Association, the National Hockey League, and the Women's National
    Basketball Association) (Professional Sports Leagues)

14. Time Warner Cable Inc. (Time Warner)

15. Viacom (Viacom)

16. The Walt Disney Company (Disney)

\* - Originally, Microcom misfiled in MB Docket No. 05-25.

[Other Filings]{.underline}

1.  Joint Cable Commenters (Advance Newhouse Communications, Cox
    Communications, Inc., and Insight Communications) (May 23, 2005)

2.  NBC Telemundo License Co. (June 10, 2005)

3.  National Association of Broadcasters (June 10, 2005)

4.  Discovery Communications, Inc. (August 10, 2005)

5.  The Walt Disney Company (August 10, 2005)

6.  National Association of Broadcasters (August 11, 2005)

7.  The Walt Disney Company (August 25, 2005)

[^1]: Pub. L. No. 108-447, 118 Stat. 2809 (2004). SHVERA was enacted on
    December 8, 2004.

[^2]: *Id*. at § 208.

[^3]: *Id*.

[^4]: *Media Bureau Seeks Comment for Inquiry Required by the Satellite
    Home Viewer Extension and Reauthorization Act on Rules Affecting
    Competition in the Television Marketplace*, 20 FCC Rcd 1572 (2005)
    (Public Notice).

[^5]: The Appendix lists the commenters in this proceeding and the
    acronyms used to refer to them.

[^6]: *See* Communications Act of 1934, as amended ("Communications
    Act"), 47 U.S.C. §§ 325, 338-40, 534-35, 543, 548; 47 C.F.R §
    76.55-62 (cable must carry); 47 C.F.R. § 76.64 (cable retransmission
    consent); 47 C.F.R. § 76.66 (DBS signal carriage).

[^7]: Copyright Act of 1976 ("Copyright Act"), 17 U.S.C. §§ 111, 119,
    122.

[^8]: 47 C.F.R. § 76.92-76.95 (cable network non-duplication); 47 C.F.R.
    § 76.101-110 (cable syndicated exclusivity); 47 C.F.R. § 76.111
    (cable sports blackout); 47 C.F.R. § 76.120 (satellite definitions
    related to exclusivity); 47 C.F.R. § 76.122 (satellite network
    non-duplication); 47 C.F.R. § 76.123-76.125 (satellite syndicated
    exclusivity); 47 C.F.R. § 76.127 (satellite sports blackout); 47
    C.F.R. § 76.128 (application of cable and satellite sports blackout
    rules); 47 C.F.R. § 76.130 (satellite substitution for blacked out
    programming).

[^9]: *See* *Implementation of the Satellite Home Viewer Improvement Act
    1999: Broadcast Signal Carriage Issues, Retransmission Consent
    Issues*, 16 FCC Rcd 1918 (2000) ("*SHVIA Signal Carriage Order*");
    *Technical Standards for Determining Eligibility For
    Satellite-Delivered Network Signals Pursuant To the Satellite Home
    Viewer* *Improvement Act*, 15 FCC Rcd 24321 (2000); *Implementation
    of the Satellite Home Viewer Improvement Act of 1999: Application of
    Network Non-Duplication, Syndicated Exclusivity, and Sports Blackout
    Rules To Satellite Retransmissions of Broadcast Signals*, 15 FCC Rcd
    21688 (2000) ("*Satellite Exclusivity Order*"); *Implementation of
    the Satellite Home Viewer Improvement Act of 1999, Retransmission
    Consent Issues: Good Faith Negotiation and Exclusivity*, 15 FCC Rcd
    5445 (2000) ("*SHVIA Good Faith Order*"); *Implementation of the
    Satellite Home Viewer Improvement Act of 1999, Enforcement
    Procedures for Retransmission Consent Violations*, 15 FCC Rcd 2522
    (2000).

[^10]: Melville B. Nimmer and David Nimmer[, Nimmer on
    Copyright]{.smallcaps} § 8.18 (2005).

[^11]: *Id*.

[^12]: *Id*. *See, e.g., Teleprompter Corp. v. Columbia Broadcasting
    System, Inc.,* 415 U.S. 394 (1974) (development and implementation
    of new functions, such as program origination, sale of commercials
    and interconnection, does not convert an entire cable system,
    regardless of distance from the broadcasting station, into a
    "broadcast function" subjecting the cable operator to copyright
    infringement liability; importation of "distant" signals from one
    community into another does not constitute a "performance" under the
    Copyright Act); *Fortnightly v. United Artists*, 392 U.S. 390 (1968)
    (cable operator retransmitting signals of television
    stations---including plaintiff's copyrighted programming---did not
    "perform" within purview of Copyright Act and therefore did not
    infringe plaintiff's copyrights).

[^13]: *See* Pub. L. No. 94-553, 90 Stat. 2541 (1976); *see also* [17
    U.S.C. §
    101](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000546&DocName=17USCAS101&FindType=L)
    *et seq*.

[^14]: *See* [17 U.S.C. §
    111(b)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000546&DocName=17USCAS111&FindType=L).

[^15]: *See* [17 U.S.C. §
    111(c)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000546&DocName=17USCAS111&FindType=L).
    Under the compulsory license, cable systems are not required to
    obtain the consent of the copyright owners of copyrighted material
    contained in the broadcast signal being retransmitted or negotiate
    license fees for the use of such copyrighted material, but, instead,
    must pay government-established fees for the right to retransmit
    copyrighted material contained in broadcast programming. [17 U.S.C.
    §
    111(d)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000546&DocName=17USCAS111&FindType=L).
    The 1976 amendments established that fees payable to copyright
    owners for compulsory licenses would be based on a percentage of
    each cable system's gross revenues and would be adjusted
    periodically by the newly formed Copyright Royalty Tribunal. *Id.
    see* *also* [17 U.S.C. §
    801(b)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000546&DocName=17USCAS801&FindType=L).

[^16]: [47 C.F.R. §§
    76.59(b)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000547&DocName=47CFRS76.59&FindType=L),
    [76.61(b)-(c)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000547&DocName=47CFRS76.61&FindType=L)
    (repealed 1980); 17 U.S.C § 111.

[^17]: 47 C.F.R. §§ 76.92, 76.101; 17 U.S.C. § 111(d).

[^18]: *See First Report and Order in Dockets 14895 and 15233,* 38 FCC
    683 (1965) ("*1965 Network Exclusivity Order*"); *Second Report and
    Order in Dockets 14895, 15233 and 15971,* 2 FCC 2d 725 (1966)
    ("*1966 Network Exclusivity Order*").

[^19]: *See Quincy Cable TV, Inc. v. FCC*, 768 F.2d 1434 (D.C. Cir.
    1985) (striking down the Commission\'s 1972 must carry rules set
    forth in 36 FCC 2d 143 (1972)); *Century Communications Corp. v.
    FCC*, 835 F.2d 292 (D.C. Cir. 1987) (striking down the Commission\'s
    1986 must carry rules set forth in 1 FCC Rcd 864 (1986)).

[^20]: Cable Television Consumer Protection and Competition Act of 1992,
    Pub. L. No. 102‑385, 106 Stat. 1460 (1992); H. Rep. No. 628, 102d
    Cong., 2d Sess. 1 (1992) ("*House Report*"); S. Rep. No. 92, 102d
    Cong., 1st Sess. 1 (1991) ("*Senate Report*").

[^21]: House Committee on Energy and Commerce, H.R. Conf. Rep. No.
    102-862 ("*Conference Report*"), 102d Cong., 2d Sess. (1992),
    reprinted at 138 Cong. Rec. H8308 (Sept. 14, 1992) at 2.

[^22]: *Conference Report* at 3.

[^23]: *Conference Report* at 3.

[^24]: *Senate Report* at 35.

[^25]: *Senate Report* at 36.

[^26]: *See, e.g.*, Disney Reply Comments at 7-9; NAB Comments at 19;
    Network Affiliates Comments at 7-8; Fox Reply Comments at ii, 4-5;
    NAB Reply Comments at 9-11. *See also* Ted Sherman, *Consumers Loom
    as Losers in Battle Between Cable, Broadcast Firms*[, The Newark
    Star-Ledger]{.smallcaps}, Sept. 13, 1993 (noting that after 1992 Act
    established retransmission consent requirements, "\[a\]lmost every
    broadcaster initially demanded the cash \[and\] at the same time,
    nearly all cable operators said no, threatening to dump the on-air
    broadcast stations come Oct. 6, when the \[retransmission consent\]
    provision takes hold"); Mark Robichaux, *Tele-Communications Says It
    Will Fail to Meet Deadline on TV Stations' Fees*, [The Wall Street
    Journal,]{.smallcaps} Aug. 18, 1993, at B8 ("Delays in meeting the
    October deadline have been caused in part by the face-off between TV
    stations demanding new cash fees and cable systems steadfastly
    refusing to pay.").

[^27]: *See* Disney Reply Comments at 7-9; NAB Comments at 19; NAB Reply
    Comments at 9-11; Network Affiliates Comments at 7-8; Fox Reply
    Comments at 5. *See also* Robichaux, n. Error: Reference source not
    found, *supra* ("Nearly all of the nation's largest cable operators
    have vowed to forgo paying cash to local TV stations."); Michael
    Burgi, *TV Ratings Companies Brace For Retransmission Fallout*,
    [Media Week,]{.smallcaps} Jun. 28, 1993 ("'. . . we can foresee no
    circumstances where we would pay cash,' said Richard Aurelio,
    president of Time Warner Cable in New York, referring to the FCC
    retransmission consent decree . . ."); Mark Robichaux, [Cable
    Cowboy: John Malone And The Rise Of The Modern Cable
    Business]{.smallcaps} (John Wiley & Sons, Inc. 2002) ("TCI, for one,
    refused to pay cash to any of the big networks but it indicated it
    might be willing make room on its systems for a new cable channel a
    broadcaster might like to start.").

[^28]: *See* Wayne Friedman, *Tribune Time*, [Inside Media]{.smallcaps},
    Oct. 6, 1993 (Tribune\'s partnership with the fledgling TV Food
    Network "was put together mainly to negotiate retransmission consent
    with cable systems").

[^29]: *See* Disney Reply Comments at 8; NAB Reply Comments at 9. The
    new broadcast-affiliated MVPD networks included Fox's FX, ABC's
    ESPN2, and NBC's America's Talking, which later became MSNBC. Disney
    Reply Comments at 8; *see also* Sherman, n. Error: Reference source
    not found, *supra*.

[^30]: CBS, which maintained a cash compensation strategy longer than
    other broadcasters, authorized retransmission consent to cable
    operators without compensation for one year while negotiations
    continued. *See* Barry Layne, *No Fade to Black Under Retrans,*
    [Hollywood Reporter,]{.smallcaps} Oct. 7, 1993*.* Major network
    affiliates were removed from TCI cable systems in Corpus Christi,
    Texas for over one month as negotiations continued. *Battle Over
    Carriage Ends in Corpus Christi,* [Cable World]{.smallcaps}, Nov.
    22, 1993. Other stations were removed from cable systems in Grand
    Rapids, and Michigan, Portland, Maine. *At Deadline*, [Media
    Week,]{.smallcaps} Oct. 11, 1993. *See also*, Jeannine Aversa,
    Rachel W. Thompson & Rod Granger, *Storm Still Brews in Conn. as FCC
    Readies Final Must-Carry Rules*, [Multichannel News,]{.smallcaps}
    Mar. 8, 1993 (noting Cablevision's threat to drop several broadcast
    stations, including those in Boston and Hartford/New Haven "if they
    don't forgo payment for carriage").

[^31]: *See* *General Motors Corporation and Hughes Electronics
    Corporation, Transferors and The News Corporation Limited,
    Transferee, For Authority to Transfer Control*, 19 FCC Rcd 473 at
    503 ¶ 56 (2004) ("*News-Hughes Order*") (study shows most
    broadcasters have opted for, or settled for, in-kind compensation
    from cable operators in exchange for retransmission consent (citing
    FCC, OPP Working Paper #37, *Broadcast Television: Survivor in a Sea
    of Competition* at 29)); *id.* at 555 ¶ 180 (the "price" an MVPD is
    willing to pay for carriage of a local broadcast station is more
    likely to be structured in the form of an "in kind" payment whereby
    the MVPD provides channel capacity for a broadcast network's
    affiliated cable programming network and/or other carriage-related
    concessions (citing *SHVIA Good Faith Order*, 15 FCC Rcd at 5462 ¶
    38).

[^32]: The Commission is required to define local markets by using
    commercial publications which delineate television markets based on
    viewing patterns. *See* 47 U.S.C. § 534(h)(1)(C). The Commission
    first used Arbitron's areas of dominant influence (ADIs) and
    subsequently adopted Nielsen Media Research's designated market
    areas (DMAs) to define local markets. *See Implementation of the
    Cable Television Consumer Protection and Competition Act of 1992*, 8
    FCC Rcd 2965, 2975-76 ¶¶ 37-41 (1993) ("*Signal Carriage Order"*)
    (defining markets using ADIs); *Definition of Markets for Purposes
    of the Cable Television Mandatory Television Broadcast Signal
    Carriage Rules, Implementation of Section 301(d) of the
    Telecommunications Act of 1996, Market Determinations,* 11 FCC Rcd
    6201 (1996) (defining local markets using Nielsen DMAs after
    Arbitron ceased publication of television data). Local markets for
    purposes of cable carriage tend to be larger, on average, than the
    areas served by a station's over-the-air signal.

[^33]: Cable operators that are subject to rate regulation are required
    to provide subscribers with a basic service tier and to carry local
    broadcast stations on that tier. 47 U.S.C. § 543(b)(7), 47 C.F.R.
    § 76.901. In order to receive mandatory carriage on a cable system,
    a station must provide the cable system with a good quality signal,
    and its programming must not be substantially duplicative of the
    programming of another station carried by the cable system. 47
    C.F.R. § 76.55(c)(3); 47 C.F.R. § 76.56 (b)(5).

[^34]: 47 U.S.C. § 325. Noncommercial television stations have a right
    to mandatory carriage under the 1992 Act, but do not have statutory
    retransmission consent rights. Sections 614 and 615 of the
    Communications Act contain the cable television "must carry"
    requirements for commercial and noncommercial television stations,
    respectively.

[^35]: *See* *Carter Mountain Transmission Corp*., 32 FCC Rcd 459
    (1962), *aff'd sub. nom., Carter Mountain Transmission Corp. v.
    FCC*, 321 F.2d 359 (D.C. Cir. 1963), *cert. denied,* 375 U.S. 951
    (1963), in which the Commission concluded that providing a cable
    system with a distant signal that duplicated the programming of the
    only local television station would have an adverse economic impact
    on that station. After *Carter*, the Commission initiated a
    rulemaking proceeding that eventually resulted in the adoption of
    the Commission's first cable television rules. *See 1965 Network
    Exclusivity Order*, 38 FCC 683. A year later, the Commission
    asserted jurisdiction over all cable systems and further expanded
    the rules. *See 1966 Network Exclusivity Order*, 2 FCC 2d 725.

[^36]: The Satellite Home Viewer Act of 1988, Pub. L. No. 100-667, 102
    Stat. 3935, Title II (1988) ("SHVA"); 17 U.S.C. § 119.

[^37]: The DTH industry was originally comprised mainly of Home
    Satellite Dish (HSD) providers, who offered consumers home reception
    of signals transmitted by satellites operating generally in the
    C-band frequency. Unlike DBS service, which uses small dishes
    operating on other frequencies, HSD antennas are between four and
    eight feet in diameter and can receive a wide range of unscrambled
    (free) programming and scrambled programming purchased from licensed
    program packagers. DBS is now the most widely-used means for
    individuals to receive satellite programming. DirecTV and the DISH
    Network (owned and operated by EchoStar) are DBS carriers currently
    providing nationwide service.

[^38]: "Network stations" are generally television broadcast stations
    owned or operated by, or affiliated with, one or more of the
    television networks. *See* 47 U.S.C. § 339(d)(3) (stating that
    "network station" for purposes of this section is defined by the
    Copyright Act); 17 U.S.C. § 119(d)(2) ("The term 'network station'
    means -- (A) a television broadcast station, including any
    translator station or terrestrial satellite stations that
    rebroadcasts all or substantially all of the programming broadcast
    by a network station, that is owned or operated by, or affiliated
    with, one or more of the television networks in the United States
    which offer an interconnected program service on a regular basis for
    15 or more hours per week to at least 25 of its affiliated
    television licensees in 10 or more States; or (B) a noncommercial
    educational broadcast station . . .").

[^39]: 17 U.S.C. §119(a)(1), (2). Section 119(d)(10)(A) of the Copyright
    Act defines an unserved household as a "household that cannot
    receive, through use of a conventional stationary, outdoor rooftop
    receiving antenna, an over-the-air signal of a primary network
    television station affiliated with that network of Grade B intensity
    as defined by the Federal Communications Commission under [section
    73.683(a) of title 47 of the Code of Federal
    Regulations](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1000547&DocName=47CFRS73.683&FindType=L),
    as in effect on January 1, 1999." An unserved household can also be
    one that is subject to one of four statutory waivers or exemptions.
    *See* 17 U.S.C. § 119(d)(10)(B)-(E). *See also* 47 USC §
    325(b)(2)(C) (providing an exemption from retransmission consent
    requirements for satellite carriage of network stations to unserved
    households), as amended by section 201 of the SHVERA (extending
    exemption from December 31, 2004 to December 31, 2009).

[^40]: Section 119(d)(9) of the Copyright Act defines "superstation" as
    "a television station, other than a network station, licensed by the
    Federal Communications Commission, that is secondarily transmitted
    by a satellite carrier."

[^41]: 17 U.S.C. § 119.

[^42]: The Satellite Home Viewer Improvement Act of 1999, Pub. L. No
    106-113, 113 Stat. 1501, 1501A-526 to 1501A-545 ("SHVIA") (1999).
    SHVIA was enacted as Title I of the Intellectual Property and
    Communications Omnibus Reform Act of 1999 ("IPACORA") (relating to
    copyright licensing and carriage of broadcast signals by satellite
    carriers).

[^43]: 47 U.S.C. § 325.

[^44]: *See* Joint Explanatory Statement of the Committee of Conference
    on H.R. 1554, H.R. Conf. Rep. No. 106-464 ("*SHVIA Conference
    Report*"), 106th Cong., 1^st^ Sess. (1999), reprinted at 145 Cong.
    Rec. H11792 (Nov. 9, 1999).

[^45]: 47 U.S.C. §§ 534-535. Cable operators that are subject to rate
    regulation are required to set aside a portion of their channel
    capacity, generally one third, for the carriage of commercial
    broadcast signals. 47 U.S.C. § 534(b), 47 C.F.R. § 76.56(b). They
    are required to provide each subscriber with a basic service tier,
    and all broadcast stations must be carried on that tier. 47 U.S.C. §
    543(b)(7), 47 C.F.R. § 76.901.

[^46]: 47 U.S.C. § 338. *But see* § 210 of SHVERA, creating § 338(d)(4)
    (mandatory carriage in Alaska and Hawaii). *See also*
    *Implementation of the Satellite Home Viewer Extension and
    Reauthorization Act of 2004 to Amend Section 338 of the
    Communications Act*, MB Docket No. 05-181, FCC 05-159 (rel. Aug. 23,
    2005).

[^47]: 47 U.S.C. § 338. Satellite carriers are not required to carry a
    station if its programming is duplicative of the programming of
    another station carried by the DBS provider in the DMA or if the
    station fails to provide a good quality signal to the DBS provider's
    local receive facility. *Id.*

[^48]: SHVERA, §§ 101(a), 201.

[^49]: Regarding the term "significantly viewed," section 102 of SHVERA
    extends the statutory copyright license contained in 17 U.S.C. §
    119(a) to "apply to the secondary transmission of the primary
    transmission of a network station or a superstation to a subscriber
    who resides outside the station's local market ... but within a
    community in which the signal has been determined by the Federal
    Communications Commission, to be significantly viewed in such
    community, pursuant to the rules, regulations, and authorizations of
    the Federal Communications Commission in effect on April 15, 1976,
    applicable to determining with respect to a cable system whether
    signals are significantly viewed in a community." 17 U.S.C. §
    119(a)(3)(A). *See also* *Implementation of the Satellite Home
    Viewer Extension and Reauthorization Act of 2004, Implementation of
    Section 340 of the Communications Act*, 20 FCC Rcd 2983 (2005)
    (*"SHVERA Significantly Viewed NPRM"*).

[^50]: SHVERA permits a satellite carrier to privately negotiate with a
    local network station to obtain a waiver of the requirement that the
    local station be offered. 47 U.S.C. § 340(b)(4). In addition, the
    statutory copyright provisions contained in 17 U.S.C. § 119, as
    amended by SHVERA, permit subscribers to seek a waiver from the
    relevant local station through their satellite carrier. The
    statutory copyright waiver provision sunsets on December 31, 2008,
    on which date no further waivers will be granted and those then in
    effect will terminate. 17 U.S.C. § 119(a)(3)(C)(ii).

[^51]: SHVERA, § 102; 17 U.S.C. § 119(a). Significantly viewed stations
    are treated as local stations for purposes of copyright royalty fee
    payments.

[^52]: NBC states that contracts between broadcasters and
    networks/syndicators often contain provisions limiting the station's
    out-of-market redistribution of the network and syndicated
    programming. NBC Comments at 6-8.

[^53]: *Amendment of Parts 73 and 76 of the Commission's Rules Related
    to Program Exclusivity in the Cable and Broadcast Industries*, 3 FCC
    Rcd 5299, 5316, 5319 ¶¶ 104, 118 (1988) ("*1988 Program Exclusivity
    Order*"), *recon. denied in pertinent part*, *Memorandum Opinion and
    Order,* 4 FCC Rcd 2711 (1989) ("*1989 Program Exclusivity Order*").

[^54]: 47 C.F.R. §§ 76.93, 76.103, 76.122(b), 76.123(b)-(c), 76.124.
    Sections 73.658(b) and (m) of the Commission's rules, 47 C.F.R. §§
    73.658(b), (m), limit the geographic area of the exclusive territory
    that licensed commercial television stations can obtain from a
    network or non-network program supplier.

[^55]: The extent to which must carry stations rely on the network
    non-duplication and syndicated exclusivity rules may be limited
    because of rules permitting cable and satellite carriers to decline
    to carry duplicating stations. Under the must carry rules, if a
    cable operator elects to carry just one of two local affiliates of a
    network, it must carry the affiliate whose community of license is
    closest to the cable system's headend. Also, a cable operator is not
    required to carry the signal of any local station that substantially
    duplicates the signal of another local station or to carry the
    signals of more than one local commercial station affiliated with a
    particular broadcast network. *See* 47 C.F.R. § 76.56. A satellite
    carrier is not required to carry any local station that
    substantially duplicates another local station, or more than one
    local commercial station affiliated with a network unless such
    stations are licensed to communities in different states. A
    satellite carrier is permitted to select which duplicating signal in
    a market to carry, and which network affiliate in a market to carry.
    *See* 47 C.F.R. § 76.66(h) (2)-(3).

[^56]: *See* 47 C.F.R. §§ 76.92 and 76.122. In addition to full power
    television stations, 100-watt translator stations are allowed to
    demand network non-duplication protection under certain
    circumstances. *See* 47 C.F.R. § 76.92(d).

[^57]: *See* 47 C.F.R. §§ 76.92 and 76.120. Section 76.51 of the rules
    lists the top 100 markets applicable to this rule. A station
    licensed to a hyphenated television market, as defined in section
    76.51, is entitled to assert exclusivity, under the network
    non-duplication rule, within 35 miles surrounding each named city.
    The 35 mile specified zone, as well as all other mileage zones, used
    in applying the exclusivity rules, is measured from the relevant
    station's "reference point" in its community of license. The rules
    provide a list of the reference points to identify television market
    boundaries used for this purpose. *See* 47 C.F.R. § 76.53. For a
    full explanation of the relevant zone of protection for the
    application of the sports blackout rule, *see* 47 C.F.R. § 76.5(e).
    The same reference point applies to all stations licensed to the
    same community regardless of where their transmitters or studios are
    located.

[^58]: *See 1965 Network Exclusivity Order*, 38 FCC 683 (implementing
    the first non-duplication rules for cable television).

[^59]: *See id*. *See also 1966 Network Exclusivity Order*, 2 FCC 2d 725
    (modifying the non-duplication rule, shortening the time period of
    non-duplication to one day); *First Report and Order in Docket
    19995,* 52 FCC 2d 519 (1975) (exempting cable providers with less
    than 1,000 subscribers from network non-duplication requirements);
    *Memorandum Opinion and Order in Docket No. 19995,* 67 FCC 2d 1303
    (1978) ("*1978 Network Exclusivity Order*") (exempting significantly
    viewed channels from being blacked out under network non-duplication
    rules); *1989 Program Exclusivity Order,* 4 FCC Rcd 2711 (1989)
    (modifying the notice requirement for network non-duplication and
    reinstating the syndicated exclusivity rules.)

[^60]: *See 1988 Program Exclusivity Order*, 3 FCC Rcd at 5308 ¶ 49,
    *recon. denied in pertinent part*, *1989 Program Exclusivity Order,*
    4 FCC Rcd 2711 (1989). For a complete history of the Commission's
    network non-duplication and syndicated program exclusivity rules,
    *see 1989 Program Exclusivity Order*, 4 FCC Rcd at 2711-2716 ¶¶
    5-29.

[^61]: *Amendment of Parts 73 and 76 of the Commission's Rules Related
    to Program Exclusivity in the Cable and Broadcast Industries*, 3 FCC
    Rcd 6171 (1988) ("*Program Exclusivity FNPRM*").

[^62]: *1988 Program Exclusivity Order*, 3 FCC Rcd at 5314 ¶ 92; 47
    C.F.R. §§ 76.92 and 76.93.

[^63]: The cable rules governing exclusivity are applied on a community
    unit basis within a station's zone of protection. *See* 47 C.F.R. §
    76.5(dd). Community units are political jurisdictions (*i.e*., a
    city, town, or county) or portions of political jurisdictions for
    which a local government body has granted a franchise to operate a
    cable system. Since satellite carriers, unlike cable systems, do not
    have identifiers assigned to the communities they serve, the rules
    incorporate a comparable method for determining the areas to which
    the zone of protection applies, based on zip codes. 47 C.F.R. §§
    76.122(c)(7), 76.123(d)(4).

[^64]: 47 C.F.R. §§ 76.92 note (the area within which a station may
    enforce network non-duplication may not exceed the area within which
    the station may acquire territorial exclusivity rights under section
    73.658(m). *See also* 47 C.F.R. § 76.93 (stations shall be entitled
    to exercise non-duplication rights in accordance with contractual
    provisions of the network-affiliate agreement.) The territorial
    exclusivity rules limit the area in which a broadcast station may
    obtain the rights to be the exclusive distributor of specific
    programming. Under network territorial exclusivity (47 C.F.R. §
    73.658(b)), no broadcast station licensee may have an agreement that
    prevents another station located in a different community from
    broadcasting any network program. Under non-network territorial
    exclusivity (47 C.F.R. § 73.658(m)), a station may not have an
    arrangement with a non-network program supplier which prevents
    another station located in a community more than 35 miles away from
    broadcasting the same programming. Network affiliation agreements
    often have provisions restricting affiliates from granting
    retransmission consent beyond a specified area.

[^65]: *See* 47 C.F.R. §§ 76.95(a); *see also 1988 Program Exclusivity
    Order*, 3 FCC Rcd at 5314 ¶ 94.

[^66]: *See* 47 C.F.R. § 76.92(f).

[^67]: *See, e.g., 1965 Network Exclusivity Order,* 38 FCC at 720 ¶ 97;
    *1978 Network Exclusivity Order,* 67 FCC 2d 1303, 1304 ¶ 6 (1978).

[^68]: 47 U.S.C. § 339(b). A "nationally distributed superstation" is
    defined as a television broadcast station, licensed by the
    Commission, that: (1) is not owned or operated by or affiliated with
    a television network that, as of January 1, 1995, offered
    interconnected program service on a regular basis for 15 or more
    hours per week to at least 25 affiliated television licensees in 10
    or more states; (2) on May 1, 1991, was retransmitted by a satellite
    carrier and was not a network station at that time; and (3) was, as
    of July 1, 1998, retransmitted by a satellite carrier under the
    statutory license of section 119 of title 17, United States Code. 47
    U.S.C. § 339(d)(2). The television broadcast stations that meet the
    foregoing three criteria are limited to KTLA-TV (Los Angeles),
    WPIX-TV (New York), KWGN-TV (Denver), WSBK-TV (Boston), WWOR-TV (New
    York) and WGN**-**TV (Chicago). *See Satellite Exclusivity Order,*
    15 FCC Rcd at 21692-93 ¶¶ 9-10. "Nationally distributed
    superstations" are a subset of "superstations." *See* 47 C.F.R. §§
    76.122 and 76.123.

[^69]: 47 C.F.R. § 76.122 sets out the network non-duplication rules as
    they apply to DBS providers.

[^70]: For a definition of "zone of protection," see 47 C.F.R. §
    76.120(e).

[^71]: 47 C.F.R. § 76.122(a).

[^72]: *Id*.; *see also Satellite Exclusivity Order*, 15 FCC Rcd at
    21703 ¶ 28. While there is no readily applicable measure that will
    precisely match specified zones in either the cable or satellite
    context, it would be more difficult to determine which satellite
    subscribers are located within a cable community unit, which is tied
    to the cable franchise process, than to use zip codes. *Id*.

[^73]: 47 C.F.R. § 76.122(b). *See also* 47 C.F.R. § 76.124, which
    details the requirements for invoking network non-duplication
    rights.

[^74]: 47 C.F.R. § 76.122(k)(l).

[^75]: 47 C.F.R. §§ 76.101-110, 76.120 and 76.123-125. Translator
    stations are not entitled to syndicated exclusivity protection.

[^76]: *See* 47 C.F.R. §§ 76.101, 76.103, 76.123(b). The Commission's
    rules provide such protection within a station's 35-mile geographic
    zone, which extends from the reference point of the community of
    license of the television station. *See* 47 C.F.R. §§ 73.658(m),
    76.53, and 76.101 Note.

[^77]: *See* 47 C.F.R. § 76.101 Note.

[^78]: *See* 47 C.F.R. §§ 76.101 and 76.123. For the notification
    requirements see 47 C.F.R. §§ 76.105 and 76.123(d). For cable, the
    syndicated exclusivity rules provide exceptions for any station
    whose signal is in the Grade B contour of the station asserting
    exclusivity, when the signal is significantly viewed, or if the
    cable system has fewer than 1,000 subscribers. 47 C.F.R. § 76.106.
    For satellite, the rules also provide exceptions regarding the
    carriage of programming of any nationally distributed superstation.
    47 C.F.R. § 76.123 (k)-(m).

[^79]: *See Cable Television Report and Order,* 36 FCC 2d 143 ¶ 65
    (1972).

[^80]: *Cable Television Syndicated Program Exclusivity Rules*, 61 FCC
    2d 746 (1976).

[^81]: *Cable Television Syndicated Program Exclusivity Rules*, [71 FCC
    2d 951
    (1979)](http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=1017&FindType=Y&SerialNum=1979026305).

[^82]: *Id*. at 966 ¶ 44.

[^83]: *See Cable Television Syndicated Program Exclusivity Rules,
    Inquiry into the Economic Relationship Between Television
    Broadcasting and Cable Television*, 79 FCC 2d 663 (1980) ("*1980
    Program Exclusivity Order*"); *see also id*.

[^84]: *1988 Program Exclusivity Order*, 3 FCC Rcd 5299, 5308-09 ¶¶
    49-55, *recon. denied in pertinent part*, *1989 Program Exclusivity
    Order,* 4 FCC Rcd 2711 (1989).

[^85]: *Id*. at ¶¶ 23, 49-51.

[^86]: *Id*. ¶¶ 23, 52-55. This analysis in 1988 pre-dates the
    requirements for retransmission consent.

[^87]: 47 C.F.R. § 76.101. A syndicated program is defined as "any
    program sold, licensed, distributed or offered to television station
    licensees in more than one market within the United States other
    than as network programming .** **. ." 47 C.F.R. § 76.5(ii).

[^88]: *See* 47 C.F.R. § 76.103.

[^89]: *See* 47 C.F.R. § 76.106(b). *See also 1988 Program Exclusivity
    Order*, 3 FCC Rcd at 5314 ¶ 15.

[^90]: 47 C.F.R. § 76.106(a).

[^91]: *Id*.

[^92]: *See* SHVIA § 1008, creating 17 U.S.C. § 339(b).

[^93]: *See Satellite Exclusivity Order,* 15 FCC Rcd at 21703 ¶ 28. *See
    also* explanation of community units at n. Error: Reference source
    not found, *supra*.

[^94]: *See* 47 U.S.C. § 340(e); 47 C.F.R. § 76.123(m).

[^95]: 47 C.F.R. § 76.111.

[^96]: 47 C.F.R. § 76.128.

[^97]: The Commission was concerned that sporting events would be
    available to fewer viewers as a result. *See Amendment of Part 76 of
    the Commission's Rules and Regulations Relative to Cable Television
    Systems and the Carriage of Sports Programs*, 54 FCC 2d 265, 281 ¶
    57 (1975).

[^98]: *Id.*

[^99]: 47 C.F.R. § 76.111.

[^100]: When sports facilities are located in suburban areas, the
    downtown reference points specified in section 76.53 may be
    inappropriate for purposes of calculating the protected zone
    (*e.g*., the New England Patriots play midway between Boston and
    Providence). Therefore, the Commission has expressed its willingness
    to consider waivers "to substitute a zone of protection extending
    out 35 miles from the site of a sports event for the television
    station specified zone designated by the rule." *Amendment of Part
    76 of the Commission\'s Rules and Regulations Relative to Cable
    Television Systems and the Carriage of Sports Programs on Cable
    Television Systems, Reconsideration of Report and Order in Docket.
    No. 19417* ("*1975 Sports Blackout Reconsideration Order*"), 56 FCC
    2d 561, 567 ¶ 19 (1975).

[^101]: 47 C.F.R. § 76.111(f).

[^102]: *See* 47 U.S.C. § 339(b); *Satellite Exclusivity Order*, 15 FCC
    Rcd at 21719-23 ¶¶ 60-69.

[^103]: 47 U.S.C. § 339(b)(1).

[^104]: 47 C.F.R. § 76.128.

[^105]: 47 C.F.R. § 76.128(a)-(b).

[^106]: 47 C.F.R. § 76.127(b)(4).

[^107]: 47 C.F.R. § 76.127(d).

[^108]: 47 C.F.R. § 76.127(e). *See Satellite Exclusivity Order*, 15 FCC
    Rcd at 21724-25 ¶¶ 70-72.

[^109]: 47 C.F.R. §§ 73.658 (b) and (m), 76.92, and 76.101.

[^110]: Satellite carriers are not required to pay any royalty fees for
    local-into-local carriage. 17 U.S.C. § 122.

[^111]: *See Turner Broadcasting System, Inc. v. FCC,* 520 U.S. 180
    (1997) (*Turner II*).

[^112]: 47 U.S.C. § 325 (b). Lorna Veraldi, *Newscasts as Property: Will
    Retransmission Consent Stimulate Production of More Local Television
    News?,* 49 Fed. Comm. L. J. 469, 484-85 (1994). Prior to the 1992
    enactment of retransmission consent, broadcasters were not entitled
    to direct compensation for MVPD carriage of their signals, although
    under the 1976 copyright statute, cable operators were required to
    pay copyright fees for carriage of broadcast stations.

[^113]: NAB Comments at 18 (citing the *Senate Report* at 36).

[^114]: *See, e.g.,* Joint Cable Commenters Comments at 6; ACA Comments
    at 7; EchoStar Comments at 3-6; Time Warner Reply Comments at 4.
    According to EchoStar, broadcasters condition retransmission consent
    on carriage of affiliated non-broadcast networks, carriage of
    affiliated broadcast stations in the same market, and carriage of
    affiliated broadcast stations in other markets. EchoStar Comments at
    3-8.

[^115]: Time Warner asserts that Congress expected that most broadcast
    stations would elect must carry, rather than retransmission consent,
    whereas the opposite has happened. According to Time Warner, in the
    latest round of retransmission consent negotiations, virtually all
    broadcast stations owned by or affiliated with the top six broadcast
    networks elected retransmission consent, rather than must-carry.
    *See* Time Warner Reply Comments at 3. The six networks are ABC,
    CBS, FOX, NBC, UPN and WB.

[^116]: Joint Cable Commenters Comments at 3-4; ACA Comments at 7;
    Discovery Reply Comments at 2-3.

[^117]: Joint Cable Commenters Comments at 40-41; 46-50; *see also*
    William P. Rogerson, *The Social Cost of Retransmission Consent
    Regulations* (Feb. 28, 2005) at 17-19 (the Rogerson study is
    attached to Joint Cable Commenters Comments).

[^118]: Joint Cable Commenters Comments at 18-26. Joint Cable Commenters
    note that the parent companies of the Big Four broadcast networks
    now own ten of the fifteen top-rated non-broadcast networks. *Id.*
    at 19. They further state that before broadcasters gained
    retransmission consent rights, only Fox was vertically integrated
    with a studio. Today, all of the Big Four broadcast networks are
    vertically integrated with studios. *Id.* at 24.

[^119]: Joint Cable Commenters at 11-13 (because they control "must
    have" programming, the Big Four broadcast networks (*i.e*., ABC,
    CBS, Fox, and NBC) are able to obtain carriage of affiliated
    networks at higher rates and on more favorable terms than would be
    the case if those affiliated networks had to compete solely on their
    own merits); Discovery Reply Comments at 2-3 (broadcasters use of
    market power to fill up MVPD channel capacity with
    broadcast-affiliated programming makes it more difficult for
    programmers unaffiliated with broadcasters to obtain carriage of
    their programming in some markets (*e.g.*, Manhattan, where 60% of
    expanded basic tier is filled with broadcast affiliated
    programming)).

[^120]: Joint Cable Commenters Comments at 13; EchoStar Comments at 3
    (citing *News-Hughes Order*, 19 FCC Rcd at 564 ¶ 202).

[^121]: Joint Cable Commenters Comments at 18-19.

[^122]: *Id*. at 14.

[^123]: EchoStar Comments at 3-6.

[^124]: Time Warner Reply Comments at 7.

[^125]: ACA Comments at 7.

[^126]: Joint Cable Commenters Comments at 28-33; Time Warner Reply
    Comments at 4.

[^127]: EchoStar Comments at 6-7. The purpose of its proposal is to
    prevent broadcast networks from negotiating on behalf of their
    affiliates. *Id*.

[^128]: ACA proposes a similar prohibition in a separately-filed
    Petition for Rulemaking. *See* ACA, *Petition for Rulemaking to
    Amend 47 C.F.R. §§ 76.64, 76.93, and 76.103, Retransmission Consent,
    Cable Network Non-Duplication, and Syndicated Exclusivity* (Mar. 2,
    2005) ("*ACA Petition for Rulemaking*").

[^129]: This would permit the linkage of carriage of a broadcast
    station's analog signal to carriage of the broadcaster's digital or
    multicast signals, thereby making the considerations locally-based
    and broadcast-related, consistent with the goals of the 1992 Act to
    foster localism and local broadcasting. Joint Cable Commenters
    meeting with Media Bureau staff (Jul. 25, 2005).

[^130]: *See, e.g.,* BellSouth Comments at 8; EchoStar Comments at
    10-11; ACA Comments at 11. *See also News-Hughes Order*, 19 FCC Rcd
    at 572-76 ¶¶ 218-26. Under the current rules, when a retransmission
    consent agreement expires, a broadcaster may withhold its signal
    from an MVPD while negotiating a new retransmission consent
    agreement (except during ratings "sweeps" periods). 47 C.F.R.
    § 76.1601, Note 1. Although this does not occur often, broadcasters
    have withheld their signals during retransmission consent disputes
    in a few instances (e.g., Nexstar withheld signals from several
    cable systems in Missouri and Texas in 2005).

[^131]: BellSouth suggests that the Commission prohibit a television
    broadcast station from imposing any non-optional linkage of its
    digital signal to carriage of its analog signal in exchange for
    retransmission consent. It argues that the Commission has determined
    that television stations are not entitled to mandatory carriage of
    their digital signals or their digital multicast channels during the
    DTV transition, and that broadcasters should not be able to
    circumvent that decision by forcing an MVPD into digital carriage as
    a *quid pro quo* for analog carriage. BellSouth Comments at 8. For
    the same reasons discussed herein regarding the linkage of broadcast
    and non-broadcast signals, we will not recommend any restrictions on
    the terms of retransmission consent agreements at this time.

[^132]: BellSouth Comments at 8. BellSouth also proposes that Congress
    amend the program access statutory provision (47 U.S.C. § 548) so
    that its prohibition on exclusive contracts remains in effect at
    least until the current sunset date for the statutory ban on
    exclusive retransmission consent agreements. BellSouth Comments at
    8. An examination of the program access provisions is beyond the
    scope of this proceeding, and we decline to consider this proposal.

[^133]: EchoStar Comments at 12-13.

[^134]: NAB Comments at 14; Network Affiliates Comments at 4.

[^135]: NAB Comments at 18-20; Network Affiliates Comments at 4-5
    (citing *Senate Report* at 35-36). Other examples of in-kind
    compensation include: an agreement by a cable operator to: (1)
    purchase advertising on the broadcast station; (2) promote the
    broadcast station on cable program service channels; and (3) allow
    the broadcast station to sell local advertising time on cable
    program service channels. Network Affiliates Comments at 8.

[^136]: NAB Comments at 18-19; Network Affiliates Comments at 7-8;
    Disney Reply Comments at 7-8; Fox Reply Comments at 5.

[^137]: Network Affiliates Reply Comments at 30.

[^138]: *Id*.

[^139]: Disney Reply Comments at 9-11; NBC Reply Comments at 6-7;
    Network Affiliates Reply Comments at 23; Viacom Reply Comments at
    9-11; Fox Reply Comments at 12-13; and NSBA Reply Comments at 5-8.

[^140]: Disney Reply Comments at 10; Viacom Reply Comments at 11.

[^141]: Network Affiliates Reply Comments at 23; Viacom Reply Comments
    at 10-11 (citing General Accounting Office, *Issues Related to
    Competition and Subscriber Rates in the Cable Television Industry*,
    Highlights of GAO-04-8, Telecommunications (Oct. 2003)); *see also*
    Government Accountability Office, *Subscriber Rates and Competition
    in the Cable Television Industry*, Highlights of GAO-04-262T,
    Telecommunications (Mar. 25, 2004).

[^142]: NAB Comments at 16-17 and Reply Comments at 12; Disney Reply
    Comments at 6; Viacom Reply Comments at 4.

[^143]: NBC Reply Comments at 5. *See also* Network Affiliates Reply
    Comments at 12 (neither communications law nor economic theory
    recognize any such thing as must-have broadcast signals).

[^144]: Network Affiliates Reply Comments at 13. In support of its
    position, Network Affiliates cites statements made by the Media
    Bureau in a past report: "All differentiated products, such as video
    programming, possess some degree of market power in the sense that
    there are no perfect substitutes. The critical question in any
    analysis involving differentiated products is whether the existing
    degree of market power is sufficient to allow the firm to profitably
    engage in the hypothesized anticompetitive activity." *Id*. (citing
    *Report on the Packaging and Sale of Video Programming Services to
    the Public* (*A La Carte Report*) (MB Nov. 18, 2004).

[^145]: Network Affiliates Reply Comments at 13-14.

[^146]: Viacom Reply Comments at 13. *See also* Disney Reply Comments at
    14-15; Jeffrey A. Eisenach and Douglas A. Trueheart, CapAnalysis,
    *Retransmission Consent and Cable Television Prices* (Mar. 31, 2005)
    at 15-27 (Exhibit A of the Disney Reply Comments); and Fox Reply
    Comments at 6.

[^147]: NAB Reply Comments at 31.

[^148]: *Id*. at 31.

[^149]: Disney Reply Comments at 13-16; NBC Reply Comments at 5-6; NAB
    Reply Comments at 20-22; Viacom Reply Comments at 14-15; Network
    Affiliates Reply Comments at 4-9. Broadcasters argue that there have
    been thousands of retransmission consent negotiations since 1992,
    but fewer than 10 complaints have been filed against broadcasters
    alleging a failure to negotiate in good faith. NAB Comments at
    20-21; Network Affiliates Reply Comments at 32. According to
    broadcasters, there has only been one case where the Commission
    reached the merits of the complaint, and in that case the Commission
    determined that the broadcaster had fulfilled its obligation. *Id*.

[^150]: NAB Reply Comments at 22-23.

[^151]: NAB Reply Comments at 23.

[^152]: Network Affiliates Reply Comments at 29.

[^153]: Viacom Reply Comments at 15.

[^154]: NAB argues that the ban was intended to be a transitional
    measure to help foster the growth of DBS as a competitor to
    incumbent cable operators. NAB Reply Comments at 26-27. NAB states
    that in the early years of DBS, Congress was concerned that cable
    operators would coerce broadcasters into entering exclusive
    contracts, and it placed a ban on such contracts as a temporary
    solution to facilitate the growth of DBS and competition between
    cable and DBS. *Id*. at 27.

[^155]: *News-Hughes Order*, 19 FCC Rcd at 556-57 ¶ 180, ns. 502-06
    (citing *Implementation of the Cable Television Consumer Protection
    and Competition Act of 1992; Broadcast Signal Carriage Issues*, 9
    FCC Rcd 6723, 6747 ¶ 115 (1994); *SHVIA Good Faith Order*, 15 FCC
    Rcd at 5448 ¶ 8; and Applicants' Reply at 44-45).

[^156]: *Id*.

[^157]: NCTA Comments at 12. In its separately-filed petition for
    rulemaking, ACA asks the Commission to revise the retransmission
    consent, network non-duplication, and syndicated exclusivity rules
    so that when a broadcaster seeks compensation for retransmission
    consent, a "small cable company" would be able to shop for lower
    cost network programming without being subject to network
    non-duplication and syndicated exclusivity. *ACA Petition for
    Rulemaking*. ACA proposes that broadcast stations and programming
    suppliers be prohibited from entering into contractual arrangements
    that would prevent the importation of duplicating distant signals
    into a local market in cases where the local station elects
    retransmission consent and seeks any terms "beyond carriage and
    channel placement." *Id*. at vii, 37. The term "small cable company"
    is defined in the Commission's rules governing rate regulation as "a
    cable television operator that serves a total of 400,000 or fewer
    subscribers over one or more cable systems." 47 C.F.R. § 76.901(e).

[^158]: NCTA Comments at 12; ACA Comments at 4.

[^159]: ACA Comments at 4. In its Petition for Rulemaking, ACA
    specifically proposes that the Commission adopt a new subsection (n)
    to 47 C.F.R. § 76.64, allowing a "small cable company" to override a
    local station's exclusivity rights when retransmission consent
    negotiations fail and the cable operator is able to obtain
    retransmission consent rights for carriage of an out-of-market
    station. ACA Petition for Rulemaking at 37.

[^160]: ACA Comments at 5. In more populous regions, by contrast,
    viewers may be served by out-of-market significantly viewed signals,
    which are treated as local for copyright purposes and which cable
    operators may retransmit without having to black out duplicative
    programming.

[^161]: Disney Reply Comments at 17-21; Duhamel Reply Comments at 2; NAB
    Reply Comments at 35-37; Network Affiliates Reply Comments at 40-45;
    NSBA Reply Comments at 9-10.

[^162]: Disney Reply Comments at 18-19. See also NBC Reply Comments at
    10 (NCTA's proposal treats distant broadcast network signals as
    equivalent to local broadcast network signals, but the Commission
    has always recognized the difference); NAB Comments at 10-11 (unlike
    local stations, distant stations do not provide viewers with local
    news, weather, emergency, and public service programming).

[^163]: NSBA Reply Comments at 9; Viacom Reply Comments at 16-17.

[^164]: NAB Reply Comments at 35-36; Disney Reply Comments at 17-18.

[^165]: NAB Reply Comments at 35-36.

[^166]: NAB meeting with Media Bureau staff (Aug. 10, 2005). *See also*
    NBC Comments at 6-7.

[^167]: *Id*.

[^168]: *Id*.

[^169]: *See* 47 C.F.R. §§ 76.92(f) and 76.106.

[^170]: ACA Comments at 4.

[^171]: The *Senate Report* states that "the Committee has relied on the
    protections which are afforded local stations by the FCC's network
    non-duplication and syndicated exclusivity rules. Amendments or
    deletions of these rules in a manner which would allow distant
    stations to be submitted on cable systems for carriage or local
    stations carrying the same programming would, in the Committee's
    view, be inconsistent with the regulatory structure created in S.
    12." *Senate Report* at 38.

[^172]: *Signal Carriage Order*, 8 FCC Rcd at 3006 ¶ 180 ("It seems
    clear that Congress intended that local stations electing
    retransmission consent should be able to invoke network
    non-duplication protection and syndicated exclusivity rights,
    whether or not these stations are actually carried by a cable
    system."); *Implementation of the Cable Television Consumer
    Protection and Competition Act of 1992,* 8 FCC Rcd 2965 (1993), *on
    recon.,* 9 FCC Rcd 6723 at 6747 ¶ 114 ("*Reconsideration Decision*")
    ("Network non-duplication and syndicated exclusivity rights protect
    the exclusivity that broadcasters have acquired from their program
    suppliers, including their network partners, while retransmission
    consent allows broadcasters to control the redistribution of their
    signals. Both policies promote the continued availability of the
    over-the-air television system, a substantial government interest in
    Congress' view.")

[^173]: Duhamel at 1. Duhamel supports maintaining the existing
    exclusivity provisions as well as an increase in the zone.

[^174]: 47 U.S.C. § 339(b)(1)(A).

[^175]: *See* n. Error: Reference source not found, *supra.*

[^176]: 17 U.S.C. § 122(j)(2).

[^177]: Nielsen delineates television markets by assigning each U.S.
    county (except for certain counties in Alaska) to one market based
    on measured viewing patterns both off-air and by MVPD distribution.
    Each U.S. county generally is assigned to only one market based on
    the market whose stations receive the preponderance of audience in
    that county. However, in a few cases where a county is large and
    viewing patterns differ significantly between parts of the county, a
    portion of the county is assigned to one television market and
    another portion of the county is assigned to another market. Several
    counties in Alaska are not assigned to any DMA.

[^178]: Pioneer Comments at 5.

[^179]: Professional Sports Leagues Comments at 8.

[^180]: *Id*. at 2-3.

[^181]: *Id*. at 8.

[^182]: *Id*.

[^183]: *Id*. at 4.

[^184]: *Id*.

[^185]: *Id*.

[^186]: Professional Sports Leagues Comments at 8.

[^187]: *Id*. at 5.

[^188]: *Id*.

[^189]: *Id*. at 6.

[^190]: *Id*.

[^191]: *Id*.

[^192]: *Id*.

[^193]: *Id*.

[^194]: *Id*. at 6.

[^195]: *Id*. at 6-7.

[^196]: NCTA Comments at 12.

[^197]: NCTA Comments at 5-6.

[^198]: Professional Sports Leagues Reply Comments at 2 (citing NCTA
    Comments at 5-6). We note that NCTA did not refer specifically to
    the blackout requirement of the sports blackout rule, and we
    interpret NCTA's statement as a reference to the disparities in the
    network non-duplication and syndicated exclusivity rules as they
    apply to cable and DBS. *See* NCTA Comments at 5-6. In a late-filed
    comment, Microcom claims that the sports blackout rule has been used
    by sports leagues to prevent DBS operators from importing to Alaska
    and Hawaii sports events being played hundreds of miles away and
    requests that the Commission restrict the application of the sports
    blackout rules to only those geographic areas with a reasonable
    opportunity to attend the sports event. Microcom Comments at 1-2. We
    note the sports blackout rule already applies only in a limited area
    (*i.e.*, 35-mile zone), and Microcom's complaint therefore would
    seem to relate to contractual restrictions, not to the Commission's
    sports blackout rule.

[^199]: *Id*.

[^200]: Professional Sports Leagues Reply Comments at 2. *See also* 47
    C.F.R. § 76.127.

[^201]: *See* n. Error: Reference source not found, *supra* (NCTA and
    Microcom complaints related to other rules or contractual
    obligations, not the sports blackout rule).

[^202]: 17 U.S.C. §§ 111, 119.

[^203]: NCTA Comments at 5. Additionally, NCTA argues that SHVERA gives
    DBS a new right to provide distant digital network signals to
    households that are served by analog networks signals but fail to
    receive an over-the air digital signal. NCTA Comments at 8-9.

[^204]: *Id*. at 4.

[^205]: *Id*. at 12.

[^206]: NAB Reply Comments at 25-26; Network Affiliates Reply Comments
    at 37-38.

[^207]: NAB Reply Comments at 25; Network Affiliates Reply Comments at
    38.

[^208]: NAB Reply Comments at 25-26, Network Affiliates Reply Comments
    at 38.

[^209]: NAB Reply Comments at 26.

[^210]: *Id*.

[^211]: EchoStar Reply Comments at 4; DirecTV Reply Comments at 5.

[^212]: 47 U.S.C. § 339(a)(2)(C).

[^213]: 47 U.S.C. § 339(a)(2)(D)(iv).

[^214]: EchoStar Reply Comments at 4.

[^215]: *Id*. at 5.

[^216]: *Id*. at 6.

[^217]: House Commerce Committee Report at 1 (purpose of the SHVERA
    includes "increasing regulatory parity by extending to satellite
    carriers the same type of authority cable operators already have to
    carry 'significantly viewed' signals into a market"); *SHVIA
    Conference Report* at H11795 (SHVIA intended to place satellite
    carriers on more equal footing with local cable operators by
    allowing local-into-local carriage).

[^218]: NCTA Comments at 11-12. In addition to recommending that the
    retransmission consent and exclusivity rules be made parallel, NCTA
    also argues that satellite carriers receive a copyright advantage
    over cable operators in determining which stations are considered
    "network" stations subject to lower royalties. NCTA Comments at
    10-11. Section 109 of SHVERA requires the Copyright Office to report
    to Congress on the operation of section 111, 119, and 122 copyright
    licenses. As the differing definitions of a "network" signal are an
    integral part of copyright law, we defer to the Copyright Office
    with respect to this issue.

[^219]: NCTA suggests that DBS operators may have an additional
    advantage with respect to the delivery of distant digital networks
    to unserved households because some households that are served by
    analog signals may be unserved by digital signals. *See* para. 77,
    *infra*. While there may be some cases where a household that is not
    entitled to receive analog distant network signals may receive
    digital distant network signals, we expect that number will diminish
    over time as DBS operators increasingly provide local digital
    broadcast stations to their subscribers. *See* DirecTV, *DIRECTV
    Spaceway F2 Satellite Will Expand Local Digital/HD Services for
    DIRECTV Customer; Satellite Shipped to French Guiana* (press
    release) May 25, 2005, and *DIRECTV Spaceway F1 Satellite Launches
    New Era in High-Definition Programming; Next Generation Satellite
    Will Initiate Historic Expansion of DIRECTV Programming* (press
    release) Apr. 26, 2005, available at
    [http://phx.corporate-ir.net/phoenix.zhtml?c=127160&p=irol-news]{.underline}
    (visited Aug. 16, 2005).

[^220]: NAB Reply Comments at 26.

[^221]: SHVERA, §§ 109-110.

[^222]: *Annual Assessment of the Status of Competition in the Market
    for the Delivery of Video Programming,* Notice of Inquiry, MB Docket
    No. 05-255, FCC 05-155, ¶ 23 (rel. Aug. 15, 2005).

[^223]: DirecTV Reply Comments at 3.

[^224]: *Id*.

[^225]: NCTA Comments at 5-10.

[^226]: ACA Comments at 1-2.

[^227]: *Id*. at 5.

[^228]: NCTA Comments at 7. NCTA states that approximately 40 percent of
    stations operating pursuant to special temporary authority ("STA")
    are reaching less than 70 percent of their analog population with a
    digital signal. They also state that the FCC recognizes that
    households unable to receive these digital signals "are more likely
    to be in outlying or rural areas . . ." *Id.* (quoting *Second
    Periodic Review of the Commission's Rules and Policies Affecting the
    Conversion to Digital Television*, 19 FCC Rcd 18279, 18315 ¶ 79
    (2004).

[^229]: NCTA Comments at 6-7.

[^230]: ACA Comments at 6. ACA proposes the following statutory change:
    "In markets where a satellite carrier delivers local-into-local
    signals, that satellite carrier shall make those signals available
    to MVPDs on nondiscriminatory prices, terms and conditions, when:
    (i) the MVPD cannot receive a good quality signal off-air; and (ii)
    the MVPD has the consent of the broadcasters to retransmit the
    signal." *Id*. at 6-7.

[^231]: EchoStar Reply Comments at 1-3; DirecTV Reply Comments at 7-9.

[^232]: EchoStar Reply Comments at 1.

[^233]: EchoStar Reply Comments at 1-2; DirecTV Reply Comments at 7-8.

[^234]: ACA complains that some broadcast networks use network
    non-duplication and syndicated exclusivity solely to raise the price
    (monetary or in-kind) of retransmission consent. ACA Comments at 4.
    According to ACA, broadcasters are targeting rural cable operators
    in the hopes of obtaining at least \$860 million from rural MVPD
    subscribers in the next round of retransmission consent
    negotiations. *Id*. ACA advances proposed remedies to this alleged
    problem in its separately-filed Petition for Rulemaking. *Id*. *See
    also* n. Error: Reference source not found, *supra,* Section
    III.B.1., *supra.* NCTA proposes that broadcast stations not be
    permitted to exercise network non-duplication or syndicated
    exclusivity rights if they choose retransmission consent. NCTA
    Comments at 12. *See also* Section III.B.1., *supra*. ACA proposes
    mandatory arbitration for retransmission consent disputes. ACA
    Comments at 3. *See also* Section III.A., *supra*.

[^235]: ACA Comments at 1, 4. NCTA Comments at 8.

[^236]: ACA Comments at 7.

[^237]: Network Affiliates Comments at 17-18.

[^238]: Professional Sports Leagues Comments at 7.

[^239]: *Id*.

[^240]: Pioneer Comments at 5. Pioneer's Comments were initially
    misfiled in another docket. They were submitted to the record in
    this proceeding on June 14, 2005.

[^241]: *Id*. at 2.

[^242]: *Id*. at 7.

[^243]: *Id*. Pioneer states that it wants to deliver distant signals
    under the same provisions and conditions that are afforded to DBS
    operators. Unlike DBS, however, Pioneer suggests that it would be
    required to obtain retransmission consent. Pioneer does not mention
    the syndicated exclusivity rule in its comments.

[^244]: The findings and conclusions in our report are not intended to
    address the merits of ACA's separately-filed petition for
    rulemaking.

[^245]: In the case of a broadcast station electing must carry, the
    broadcaster is required to deliver a good quality signal to the
    cable system or DBS local receive facility, including covering any
    costs involved. *See* 47 C.F.R. §§ 76.55 and 76.66.

[^246]: Pioneer Comments at 7.

[^247]: EchoStar Comments at 15. EchoStar suggests that this process
    would significantly reduce the burdens on broadcasters and satellite
    carriers and cut down on mailing errors and disputes over the
    timeliness of requests and responses. *Id.* at 15-16. As part of its
    streamlining proposal, EchoStar further suggests that the Commission
    establish a default response for a satellite carrier's acceptance of
    a television station's carriage request, in the absence of an
    affirmative denial by the carrier, when the television station: (1)
    previously requested must-carry for the current election cycle; (2)
    is currently being carried by the carrier; and (3) makes the same
    carriage request for the next election cycle. *Id*. at 16. For the
    reasons discussed in para. 84, *supra*, we find that this default
    response suggestion is unnecessary.

[^248]: 47 U.S.C. § 338(h)(2)(A) added by Section 205 of SHVERA. *See
    Implementation of the Satellite Home Viewer Extension and
    Reauthorization Act of 2004, Procedural Rules,* 20 FCC Rcd 7780
    (2005). *See also* 47 C.F.R. § 76.66(d)(2)(ii).

[^249]: *See* 47 C.F.R. § 76.66(d)(1)(ii).

[^250]: EchoStar Comments at 13-14.

[^251]: *Id.* at 14-15.

[^252]: Network Affiliates Reply Comments at 33-34.

[^253]: MPAA Reply Comments at 7.

[^254]: NCTA Comments at 10.

[^255]: *Id*. at 12.

[^256]: MPAA Reply Comments at 4-6.