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 Federal  Communications  Commission  FCC  06-  172 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 In  the  Matter  of 
 Farm  Journal,  Inc.  Petition  For  Declaratory  Ruling 
 )  ) 
 )  ) 
 ) 
 MB  Docket  No.  06-  92 


 ORDER  AND  DECLARATORY  RULING 
 Adopted:  November  28,  2006  Released:  December  4,  2006 


 By  the  Commission: 
 I.  INTRODUCTION 
 1.  In  this  Order,  we  grant  the  Petition  for  Declaratory  Ruling  filed  by  Farm  Journal,  Inc.  (  Farm  Journal)  seeking  a  finding  that  RFD-  TV,  a  programming  service  owned  and  operated  by  RFD 


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


 II.  BACKGROUND 
 2.  In  the  Cable  Television  Consumer  Protection  and  Competition  Act  of  1992  (  1992  Cable  Act),  Congress  directed  the  Commission  to  impose  certain  public  interest  obligations  on  DBS  providers, 


 including  a  set-  aside  of  channel  capacity  for  noncommercial  educational  or  informational  programming.  2  Section  25.701(  f)(  1)  of  the  Commissions  rules,  which  implements  this  statutory  provision,  requires  DBS 
 providers  to  reserve  four  percent  of  their  channel  capacity  exclusively  for  use  by  qualified  programmers  for  noncommercial  programming  of  an  educational  or  informational  nature.  3  Section  25.701(  f)(  2)  of  the 


 1  Petition  for  Declaratory  Ruling  of  Farm  Journal  Inc.  (Nov.  28,  2005)  (  Farm  Journal  Petition). 
 2  47  U.  S.  C.    335(  a).  See  Implementation  of  Section  25  of  the  Cable  Television  Consumer  Protection  and 
 Competition  Act  of  1992,  Direct  Broadcast  Satellite  Public  Interest  Obligations,  Report  and  Order,  13  FCC  Rcd  23254  (1998)  (  First  Report  and  Order),  on  recon.,  19  FCC  Rcd  5854  (2004),  vacated  in  limited  part,  19  FCC  Rcd 


 5647  (2004).  As  part  of  the  set  aside  requirement,  Congress  mandated  that  DBS  providers  offer  access  to  educational  programmers  at  reasonable  prices,  terms,  and  conditions.  47  U.  S.  C.    335(  b)(  3). 
 3  47  C.  F.  R.    25.701(  f)(  1).  In  making  the  required  reserved  capacity  available,  DBS  providers  may  not  charge  rates 
 that  exceed  costs  that  are  directly  related  to  making  the  capacity  available  to  qualified  programmers.  47  C.  F.  R.    25.  701(  f)(  5)(  i). 
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 rules  sets  forth  the  definition  of  what  constitutes  a  qualified  programmer  for  the  purposes  of  this  carriage  obligation.  4  Pursuant  to  this  rule,  a  qualified  programmer  is  either:  (a)  a  noncommercial 
 educational  broadcast  station  as  defined  in  section  397(  6)  of  the  Communications  Act  of  1934,  as  amended;  (b)  a  public  telecommunications  entity  as  defined  in  section  397(  12)  of  the  Communications 
 Act  of  1934,  as  amended;  (c)  an  accredited  nonprofit  educational  institution  or  a  governmental  organization  engaged  in  the  formal  education  of  enrolled  students;  (d)  a  nonprofit  organization  whose 
 purposes  are  educational  and  include  providing  educational  and  instructional  television  material  to  such  accredited  institutions  and  governmental  organizations;  or  (e)  an  other  noncommercial  entity  with  an 
 educational  mission.  5  An  entity  being  carried  on  a  DBS  providers  set-  aside  capacity  must  air  only  noncommercial  programming  of  an  educational  or  informational  nature.  6 


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


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


 4  47  C.  F.  R.    25.701(  f)(  2). 
 5  Id. 
 6  47  C.  F.  R.    25.  701(  f)(  1). 
 7  See  Farm  Journal  Petition  at  4-  13.  While  Farm  Journal  also  asks  the  Commission  to  find  that  RFD-  TV  is  not  a 
 qualified  programmer  under  47  C.  F.  R.    25.  701,  there  is  not  an  adequate  record  for  the  Commission  to  reach  such  a  decision  at  this  time. 


 8  See  Farm  Journal  Petition  at  4-  13. 
 9  Request  For  Comment  On  Petition  For  Declaratory  Ruling  Regarding  RFD  Communications,  Inc.  and  Its 
 Eligibility  To  Be  Carried  as  a  DBS  Public  Interest  Noncommercial  Programmer,  MB  Docket  No.  06-  92,  Public  Notice,  DA  06-  906  (rel.  Apr.  20,  2006). 


 10  Farm  Journal,  Inc.,  MB  Docket  No.  06-  92,  Order,  DA  06-  1088  (rel.  May  24,  2006). 
 11  Farm  Journal  Reply  at  1-  6;  Free  Press  Comments  at  5-  9. 
 12  Farm  Journal  Reply  at  3-  6. 
 13  Free  Press  Comments  at  3. 
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 5.  RFD-  TV  responds  that  it  is  the  only  nationally-  distributed  television  network  devoted  exclusively  to  serving  the  needs  and  interests  of  the  nations  rural  community.  14  In  particular,  RFD-  TV 
 argues  that  its  programming  provides  specific  educational  or  informational  value  to  its  viewers,  and  that  it  provides  coverage  of  various  auctions  of  livestock  in  order  to  inform  viewers,  and  not  .  .  .  to  facilitate  a 
 commercial  transaction.  15  According  to  RFD-  TV,  these  auctions  provide  ranchers  and  other  individuals  with  valuable,  real-  time  information  on  factors  that  affect  the  economic  health  of  the  cattle  industry.  16 


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


 III.  DISCUSSION 
 7.  Under  the  Commissions  rules,  a  qualified  programmer  is  either:  (a)  a  noncommercial  educational  broadcast  station  as  defined  in  section  397(  6)  of  the  Communications  Act  of  1934,  as 


 amended;  (b)  a  public  telecommunications  entity  as  defined  in  section  397(  12)  of  the  Communications  Act  of  1934,  as  amended;  (c)  an  accredited  nonprofit  educational  institution  or  a  governmental 
 organization  engaged  in  the  formal  education  of  enrolled  students;  (d)  a  nonprofit  organization  whose  purposes  are  educational  and  include  providing  educational  and  instructional  television  material  to  such 
 accredited  institutions  and  governmental  organizations;  or  (e)  an  other  noncommercial  entity  with  an  educational  mission.  19  RFD-  TV  does  not  claim  to  be  a  noncommercial  educational  broadcast  station 
 (given  that  it  is  not  a  licensed  television  station  at  all,  noncommercial  or  otherwise);  an  accredited  educational  institution;  or  an  educational  organization  that  provides  educational  and  instructional 
 television  programming  to  educational  institutions.  20  RFD-  TV  does  argue  that  it  meets  the  criteria  established  in  section  25.701(  f)(  2)  of  the  Commissions  rules  because  it  is  a  public  charity  organized  for 
 the  purpose  of  delivering  educational  and  instruction  programming  to  rural  America.  21  Even  if  RFD-  TV  should  be  considered  a  noncommercial  entity  with  an  educational  mission  under  section  25.701(  f)(  2)(  e)  of 
 the  Commissions  rules,  however,  we  find  that  it  is  not  acting  like  a  noncommercial  entity  with  an  educational  mission  in  this  instance.  Because  RFD-  TV  favors  certain  programming,  maintains  a 
 significant  exclusive  relationship  with  Superior,  a  commercial  enterprise,  and  acts  as  if  it  is  a  commercial  enterprise,  we  conclude  that  RFD-  TV  cannot  avail  itself  of  the  DBS  set-  aside  provisions  contained  in 
 section  25.701  of  the  Commissions  rules  at  this  time. 
 8.  Although  airing  auctions  may  have  educational  and  informational  benefit  to  some  viewers,  we  find  that,  in  this  case,  any  such  benefits  are  secondary  to  RFD-  TVs  primary  purpose  behind 


 airing  these  livestock  auctions,  which,  as  noted,  is  to  increase  revenue  for  Superior.  In  reaching  this  conclusion,  we  have  taken  particular  notice  of  the  fact  that:  (1)  RFD-  TV  maintains  a  direct,  exclusive 
 relationship  with  Superior;  (2)  Superior  is  a  commercial  enterprise;  (3)  RFD-  TV  promotes  Superior 
 14  Opposition  of  RFD  Communications,  Inc.  to  Farm  Journal,  Inc.  Petition  for  Declaratory  Ruling  (  RFD 
 Opposition)  at  1.  15 
 Id.  at  4.  16 
 Id.  17 
 See  http://  www.  superiorlivestock.  com/  Superior.  sla?  sp=  spa.  18 
 Id.  19 
 47  C.  F.  R.    25.701(  f)(  2).  20 
 See  Farm  Journal  Petition  at  4-  5;  RFD  Opposition.  21 
 RFD-  TV  Opposition  at  2-  3. 
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 livestock  auctions  to  the  exclusion  of  those  of  competing  livestock  auction  companies;  and  (4)  Superior  provides  the  largest  source  of  funding  for  RFD-  TVs  sponsorship  revenue.  The  fact  that  auctions 
 performed  by  other  livestock  auctioneers  are  not  featured  on  RFD-  TV  further  leads  us  to  conclude  that  the  primary  purpose  of  such  Superior  auctions  programming  is  commercial,  and  not  educational  or 
 informational  in  nature.  In  short,  RFD-  TV  and  Superior  act  as  if  they  are  partners  working  in  unison  and  engaged  in  a  single  commercial  enterprise.  Some  commenters  point  to  the  existence  of  a  special 
 relationship  between  RFD-  TV  and  Superior,  and  the  record  and  public  sources  of  information  indicate  that  there  is  a  significant  and  ongoing  relationship  between  RFD-  TV  and  Superior.  22  Indeed,  RFD-  TV 
 acknowledges  that  Superior  provides  a  regular  source  of  funding  to  RFD-  TV  in  the  form  of  sponsorship  payments,  and  these  payments  amount  to  a  significant  portion  of  RFD-  TVs  total  revenue  derived  from 
 sponsorship  payments.  23 
 9.  RFD-  TVs  web  site  indicates  that  RFD-  TV  airs  only  those  livestock  auctions  conducted  by  Superior,  to  the  exclusion  of  livestock  auctions  performed  by  other  auctioneers.  24  This  undercuts 


 RFD-  TVs  claim  that  its  airing  of  these  auctions  is  for  educational  or  informational  purposes.  Moreover,  such  transmissions  are  not  intermittent;  an  analysis  of  RFD-  TVs  web  site  indicates  that  RFD-  TV  appears 
 to  broadcast  Superior  auctions  from  around  the  country  on  a  regularly-  scheduled  basis.  By  airing  the  programming  of  Superior  to  the  exclusion  of  others,  RFD-  TV  provides  the  livestock  auctions  of  one 
 company  a  leg  up  on  the  livestock  auctions  conducted  by  other  companies.  Moreover,  RFD-  TVs  provision  of  such  an  improper  advantage  to  Superior  indicates  that  RFD-  TV  maintains  an  interest  in,  and 
 is  likely  invested  in  the  success  of,  this  commercial  enterprise.  Publicly-  available  sources  of  information  confirm  the  special  relationship  between  RFD-  TV  and  Superior  and  tout  it  as  a  competitive  advantage  for 
 Superior.  25  Third,  the  relationship  between  RFD-  TV  and  Superior  is  significant  and  appears  to  extend  beyond  the  mere  airing  of  livestock  auctions.  26  For  example,  RFD-  TVs  senior  management  includes  the 
 former  Sales  Director  of  Superior.  27  RFD-  TV  provides  substantial  information  on  its  web  site  about  Superiors  business  (including  direct  contact  information),  how  a  Superior  livestock  auction  works 
 (including  definitions  of  commonly-  used  terms),  and  how  to  participate  in  a  Superior  livestock  auction.  Indeed,  RFD-  TVs  web  site  acknowledges  that  it  maintains  a  special  relationship  with  Superior,  noting 
 that  the  commercial  enterprise  teamed  up  with  RFD-  TV  and  touting  that,  through  programming  distributed  by  RFD-  TV,  Superior  sells  over  1.3  million  head  of  cattle  a  year  over  the  television.  28 


 22  See,  e.  g.,  Free  Press  Comments  at  9,  Ex.  A. 
 23  See  RFD-  TV  Opposition  at  17,  n.  23.  We  understand  their  sponsorship  payments  constitute  approximately  20 
 percent  of  RFD-  TVs  total  revenue  derived  from  sponsorship  payments  and  has  been  as  high  as  60  percent.  24 
 See  Farm  Journal  Comments  at  Ex.  D  (describing  Superior  livestock  auctions);  Farm  Journal  Reply  at  3-  6;  Western  Video  Comments  at  1  (arguing  that  Superior  uses  carriage  on  RFD-  TV  to  create  a  non-  level  playing 


 field);  Intermountain  Comments  at  2  (arguing  that  RFD-  TV  has  abused  its  non-  profit  status  by  providing  Superior  with  the  ability  to  artificially  lower  their  prices  creating  an  unfair  competitive  advantage);  Turner  Media  Group 
 Comments  at  4  (arguing  that  RFD-  TV  has  abused  its  non-  profit  status  by  carrying  for-  profit  auctions  provided  exclusively  by  Superior). 
 25  See  Chris  Clayton,  Council  Bluffs,  Iowa,  Cattle  Auction  Cashes  In  on  Technology,  Casino,  OMAHA  WORLD-HERALD, 
 June  26,  2003.  In  this  article,  Superior  senior  management  is  quoted  as  saying  that  RFD-  TV  expands  the  buyers  and  gives  the  ability  for  people  to  see  what  the  market  trends  are.  Id.  at  1.  In  fact,  in  at  least  one 


 newspaper  article,  the  senior  management  of  RFD-  TV  noted  that  [  p]  robably  98  percent  of  the  cattle  will  be  sold  today  to  people  watching  at  home  or  in  their  offices.  Id. 
 26  See  http://  www.  rfdtv.  com/  shows/  superior.  asp. 
 27  See  http://  www.  fcc.  gov/  cgb/  rural/  bios/  patrickgottsch.  html.  The  publicly  available  biography  notes  both  the 
 commercial  focus  of  Superior  livestock  auctions  and  the  use  of  satellite  television  as  the  means  for  delivering  such  programming  in  the  marketplace. 


 28  See  http://  www.  rfdtv.  com/  shows/  superior.  asp. 
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 Likewise,  the  record  and  publicly-  available  information  also  indicate  that  Superior  informs  the  viewing  public  of  its  special  relationship  with  RFD-  TV.  29  For  example,  Superior  describes  itself  in  an  agricultural 
 publication  as  engaged  in  [  c]  ommercial  cattle  marketing  through  the  use  of  bi-  weekly  satellite  video  auctions  broadcast  on  RFD-  TV,  daily  Internet  auctions,  private  treaty  listing  services.  30  This  apparent 
 affiliation  serves  as  just  one  more  signal  that  RFD-  TV  is  acting  like  a  commercial  enterprise. 
 10.  For  these  reasons,  we  find  that  RFD-  TV  is  acting  like  a  commercial  enterprise  instead  of  a  noncommercial  entity  with  an  educational  mission.  This  is  the  type  of  conduct  that  noncommercial 


 educational  broadcast  stations,  public  telecommunications  entities,  accredited  nonprofit  educational  institutions  or  governmental  organizations  engaged  in  the  formal  education  of  enrolled  students  -- 
 nonprofit  organizations  whose  purposes  are  educational  and  include  providing  educational  and  instructional  television  material  to  accredited  institutions  and  governmental  organizations  --  do  not 
 undertake.  Nor  do  we  expect  noncommercial  entities  with  an  educational  mission  to  engage  in  this  type  of  inherently  commercial  activity. 


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


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


 29  Farm  Journal  Reply  at  5  (quoting  Superior  employees  during  on-  air  auctions  as  they  make  references  about  the 
 arrangement  with  RFD-  TV).  30 
 43  Agri  Marketing,  E-  commerce/  E-  Business  10,    6,  available  at  2006  Westlaw  3639491  (Jan.  1,  2006).  31 
 Farm  Journal  Petition  at  8-  12.  32 
 Id. 
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 IV.  ORDERING  CLAUSES 
 13.  Accordingly,  IT  IS  ORDERED  that,  pursuant  to  Sections  1,  4(  i)  and  (j),  and  335  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151,  154(  i)  and  (j),  and  335,  and  section  25.701 


 of  the  Commissions  rules,  47  C.  F.  R.    25.701,  Farm  Journal,  Inc.  s  Petition  for  Declaratory  Ruling  is  HEREBY  GRANTED  to  the  extent  discussed  herein. 


 FEDERAL  COMMUNICATIONS  COMMISSION 


 Marlene  H.  Dortch  Secretary 
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