BROADCAST 

EXCLUSIVITY 

RULES

Effects of Elimination 

Would Depend on 

Other Federal Actions 

and Industry 

Response

Report to Congressional Requesters

April 2015

GAO-15-441

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-441, a report to 

congressional requesters

April 2015

BROADCAST EXCLUSIVITY RULES

Effects of Elimination Would Depend on Other 

Federal Actions and Industry Response

Why GAO Did This Study

Local television stations negotiate with 

content providers—including national 

broadcast networks, such as ABC—for 

the right to be the exclusive provider of 

content in their markets. FCC’s

network non-duplication and 

syndicated exclusivity rules 

(“exclusivity rules”) help protect these 

contractual rights. In 2014, FCC issued 

a further notice of proposed rulemaking 

(FNPRM) to consider eliminating or 

modifying the rules in part to determine 

if the rules are still needed given 

changes in recent years to the video 

marketplace. 

GAO was asked to review the 

exclusivity rules and the potential 

effects of eliminating them. This report 

examines (1) industry stakeholder 

views on the need for and effects of 

the exclusivity rules and (2) the 

potential effects that removing the 

exclusivity rules may have on the 

production and distribution of content, 

including local news and communityoriented content.

GAO reviewed all 31 comments filed 

by industry stakeholders with FCC in 

response to its FNPRM. GAO also 

interviewed 27 of those industry 

stakeholders and FCC officials. GAO 

also analyzed—in light of general 

economic principles—stakeholder 

views on the potential effects of 

eliminating the rules.

FCC reviewed a draft of this report and 

provided technical comments that GAO

incorporated as appropriate.

What GAO Found

Broadcast industry stakeholders that GAO interviewed (including national 

broadcast networks, such as ABC, and local television stations) report that the 

exclusivity rules are needed to protect local television stations’ contractual rights 

to be the exclusive providers of network content, such as primetime dramas, and 

syndicated content, such as game shows, in their markets. These stakeholders 

report that by protecting exclusivity, the rules support station revenues, including 

fees from cable operators paid in return for retransmitting (or providing) the 

stations to their subscribers (known as retransmission consent fees). Conversely, 

cable industry stakeholders report that the rules limit options for providing highdemand content, such as professional sports, to their subscribers by requiring 

them to do so by retransmitting the local stations in the markets they serve. As a 

result, these stakeholders report that the rules may lead to higher retransmission 

consent fees, which may increase the fees households pay for cable service.

Based on GAO’s analysis of industry stakeholder views, expressed in comments

to the Federal Communications Commission (FCC) and interviews, eliminating 

the exclusivity rules may have varying effects. 

• If the rules were eliminated and cable operators can provide television 

stations from other markets to their subscribers (or “import” a “distant 

station”), local stations may no longer be the exclusive providers of network 

and syndicated content in their markets. This situation could reduce 

stations’ bargaining position when negotiating with cable operators for 

retransmission consent. As a result, stations may agree to lower 

retransmission consent fees. This potential reduction in revenues could 

reduce stations’ investments in content, including local news and 

community-oriented content; the fees households pay for cable television 

service may also be affected. Because multiple factors may influence 

investment in content and fees, GAO cannot quantify these effects.

• If the rules were eliminated, other federal and industry actions could limit 

cable operators’ ability to import distant stations. For example, if copyright 

law was amended in certain ways, cable operators could face challenges 

importing distant stations. A cable operator could be required to secure 

approval from all copyright holders (such as the National Football League) 

whose content appears on a distant station the cable operator wants to 

import; with possibly hundreds of copyright holders in a day’s 

programming, the transaction costs would make it unlikely that a cable 

operator would import a distant station. Also, broadcast networks may be 

able to provide oversight of retransmission consent agreements if FCC 

rules were to allow it. Cable operators may only import distant stations if 

retransmission consent agreements with those stations permit it, and 

stations’ agreements with broadcast networks generally prohibit stations 

from granting such retransmission. If FCC rules allowed it, broadcast 

networks could provide oversight to help ensure such agreements do not 

grant retransmission outside the stations’ local markets. Under these two

scenarios, local stations may remain the exclusive providers of content in 

their markets, their bargaining position may remain unchanged, and there 

may be limited effects on content and fees for cable service.

View GAO-15-441. For more information, 

contact Mark Goldstein at (202) 512-2834 or 

goldsteinm@gao.gov.
Page i GAO-15-441 Broadcast Exclusivity Rules

Letter 1

Background 4

Industry Stakeholders Have Differing Views of the Need for and 

Effects of Exclusivity Rules 12

The Effects of Eliminating the Exclusivity Rules on Content 

Depend on Related Federal Actions and the Response of 

Industry Participants 17

Concluding Observations 25

Agency Comments 25

Appendix I Objectives, Scope, and Methodology 26

Appendix II GAO Contact and Staff Acknowledgments 28

Figures

Figure 1: Broadcasting Industry Participants and Flow of 

Television Content 5

Figure 2: Examples of the Network Non-Duplication Rule Area of 

Exclusivity for Small and Large Markets 7

Figure 3: Flow of Money in the Broadcasting Industry 11

Figure 4: Potential Scenarios Under Which Elimination of 

Exclusivity Rules May Have Varying Effects 17

Figure 5: Potential Effects of Eliminating the Federal 

Communication Commission’s Exclusivity Rules 19

Contents
Page ii GAO-15-441 Broadcast Exclusivity Rules

Abbreviations

DMA designated market areas 

FCC Federal Communications Commission

FNPRM further notice of proposed rulemaking

MVPD multichannel video-programming distributor

NFL National Football League

TWC Time Warner Cable

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-15-441 Broadcast Exclusivity Rules

441 G St. N.W.

Washington, DC 20548

April 14, 2015

The Honorable Fred Upton

Chairman

The Honorable Frank Pallone, Jr.

Ranking Member

Committee on Energy and Commerce

House of Representatives

The Honorable Greg Walden

Chairman

The Honorable Anna G. Eshoo

Ranking Member

Subcommittee on Communications and Technology

Committee on Energy and Commerce

House of Representatives

Local television stations often provide national content, such as national 

news and primetime dramas, and local content, such as local news and 

emergency alerts, over the air to the public. Many of these stations are 

affiliated with national broadcast networks, such as the “top four” 

networks—ABC, CBS, Fox, and NBC. Despite the availability of free overthe-air content, about 85 to 90 percent of U.S. households pay for and 

receive television service from a multichannel video programming 

distributor (MVPD), such as a cable or satellite operator, which provides a 

secondary transmission (or retransmission) of local television stations’ 

content, as well as transmission of cable networks unavailable over the 

air. Local television stations generally obtain the exclusive right to air 

content in their local markets through negotiations and contracts with 

national broadcast networks that supply national news and sports and 

primetime shows, and syndicators that provide content such as game 

shows and reruns. The Federal Communications Commission’s (FCC) 

network non-duplication and syndicated exclusivity rules (exclusivity 

rules) help local television stations enforce these exclusive rights, in part 

by requiring cable operators1 to block duplicative network and syndicated 

 1

FCC’s exclusivity rules apply equally to cable operators and open video system 

operators. For the purposes of this report, we refer to both as “cable operators.” However, 

FCC’s rules generally do not apply to satellite operators such as Dish Network; satellite 

operators are subject to similar restrictions under copyright law. 

Letter
Page 2 GAO-15-441 Broadcast Exclusivity Rules

content; specifically, cable operators must block duplicative content when 

they retransmit the signal of a television station from another market (a 

“distant market”) in a local station’s market. For example, if a cable 

operator retransmits (or “imports”) WTVR, the CBS affiliate in Richmond, 

Virginia, in Washington, D.C., the exclusivity rules allow WUSA, the CBS 

affiliate in Washington, to require the cable operator to block the duplicate 

national CBS and syndicated content as long as WUSA has received 

rights from CBS and the providers of syndicated content to be the 

exclusive provider of such content in the Washington, D.C. market and 

has appropriately invoked those rights.2

In 2014, FCC issued a further notice of proposed rulemaking (FNPRM) to 

consider eliminating or modifying the exclusivity rules,3 in part to 

determine if the rules are still needed given changes to the video 

marketplace since the rules were first promulgated in 1966 (network nonduplication rule)4 and 1972 (syndicated exclusivity rule).5 You asked us to 

review FCC’s exclusivity rules and the potential effects of removing them. 

This report examines (1) industry stakeholder views on the need for and 

effects of the exclusivity rules and (2) the potential effects that removing 

the exclusivity rules may have on the production and distribution of 

content, including local news and community-oriented content.

 2

In this example, the exclusivity rules allow other stations in the Washington, D.C. market 

to require the cable operator to block syndicated content on WTVR that duplicates 

syndicated content they broadcast. In order to invoke their exclusivity protections, local 

television stations must provide written notification, within 60 days of signing an affiliation 

agreement or contract providing exclusive content, to each cable operator in their market 

notifying them that they are exclusive providers of network and syndicated content and

informing the cable operator that it cannot show duplicative content from another 

television station in their market. 47 C.F.R. §§ 76.94, 76.105.

3

Any potential elimination of the exclusivity rules would not address the similar restrictions 

that apply to satellite operators under copyright law. See Amendment of the Commission’s 

Rules Related to Retransmission Consent, Report and Order and Further Notice of 

Proposed Rulemaking, 29 FCC Rcd. 3351 (2014).

4

See Amendment of Subpart L, Part 91, to Adopt Rules and Regulations to Govern the 

Grant of Authorizations in the Business Radio Service for Microwave Stations to Relay TV 

Signals to Community Antenna Systems and Other Amendments, Second Report & 

Order, 2 FCC 2d 725 (1966). 

5

See Amendment of Part 74, Subpart K, of the Commission’s Rules and Regulations 

Relative to Community Antenna Television Systems; and Inquiry Into the Development of 

Communications Technology and Services to Formulate Regulatory Policy and 

Rulemaking and/or Legislative Proposals and Other Amendments, Cable Television 

Report and Order, 36 FCC 2d 141 (1972).
Page 3 GAO-15-441 Broadcast Exclusivity Rules

To address these objectives, we reviewed and analyzed all public 

comments submitted by industry stakeholders in response to FCC’s 

FNPRM regarding the potential elimination or modification of the 

exclusivity rules. Our review included 31 formal comments filed by 

industry stakeholders that included cable and satellite operators, national 

broadcast networks, local television stations, industry associations, and 

content copyright holders.6 We analyzed these comments, focusing on 

stakeholder views on the need for and effects of the rules and the 

potential effects of eliminating the rules. We also conducted semistructured interviews with 27 industry stakeholders, including 

broadcasters, cable and satellite operators, industry associations, and 

content copyright holders that filed comments with FCC regarding these 

issues.7 We interviewed FCC officials regarding the rules. We also 

interviewed industry analysts that study the broadcasting and cable 

industries; we selected industry analysts by identifying analysts who study 

and make recommendations on the stocks of publicly traded companies 

that we interviewed as part of our review and whom we had interviewed 

on prior engagements. We reviewed prior GAO reports that cover related 

issues. We also conducted a literature search and did not find any studies 

directly relevant to our work. For our second objective, in addition to 

gathering information about industry stakeholders’ views, we also 

analyzed those views in light of general economic principles to 

understand more fully the potential effects of eliminating the exclusivity 

rules. For more information on our scope and methodology, see app. I.

We conducted this performance audit from October 2014 through April 

2015 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

 6

We did not review reply comments or letters filed by individuals.

7

We attempted to interview at least one industry stakeholder representing the 31 public 

comments filed; 4 stakeholders did not respond to our request for interviews. 
Page 4 GAO-15-441 Broadcast Exclusivity Rules

Many entities are involved in the production and distribution of television 

content to households, as shown in figure 1. Local television stations may 

acquire network content from the national broadcast networks that they 

are affiliated with, such as CBS; from syndicators for syndicated content, 

such as game shows and reruns; or from both.8 Stations also create their 

own content, including local news. Stations provide content to households 

directly through over the air transmission, which households can receive 

free of charge, and through retransmission by MVPDs, such as cable and 

satellite operators. Content producers, such as Sony and Disney, also 

distribute content through cable networks, such as ESPN, that are carried 

by MVPDs. “Over-the-top” providers, such as Netflix, provide content to 

consumers through Internet connections often provided by MVPDs.

 8

In this report, we only consider commercial local television stations; some stations are 

noncommercial, such as those affiliated with the Public Broadcasting System. Commercial 

stations can be affiliated with a national broadcast network, such as ABC, or independent, 

that is, not affiliated with a network. Those stations affiliated with a national broadcast 

network enter affiliation agreements with the network. Broadcast networks own and 

operate some local television stations. For example, CBS owns and operates 16 local 

television stations, including those in Atlanta, New York, and Pittsburgh. Under federal 

law, a single entity can own any number of television stations nationwide as long as the 

stations collectively reach no more than 39 percent of national television households. See 

Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, § 629,118 Stat. 3, 99 (2004).

Background

Flow of Television Content
Page 5 GAO-15-441 Broadcast Exclusivity Rules

Figure 1: Broadcasting Industry Participants and Flow of Television Content

According to FCC, local television stations’ affiliation agreements with 

networks and contracts with syndicators9 generally grant a station the 

right to be the exclusive provider of that network’s or syndicator’s content 

in the station’s local market.10 Broadcasting industry stakeholders and 

economic theory note that exclusive territories can provide economic 

benefits to local television stations, broadcast networks, and viewers. 

Local television stations benefit from being the exclusive providers in their 

markets of high-demand network content, such as professional sports 

and primetime dramas. Being the exclusive provider supports stations’ 

viewership levels, which strengthens their revenues, allowing them to 

invest in the production of local content, among other things. For 

broadcast networks, exclusivity can help increase the value of each local 

 9

In this report, we consider both affiliation agreements with national broadcast networks 

and contracts with syndicators to be contracts.

10Television markets are typically defined by designated market areas (DMA). To measure 

television viewing, Nielsen Media Research has divided the country into 210 local 

television markets, also referred to as DMAs. Each DMA consists of all the counties 

whose largest viewing share is given to stations of the same market area.
Page 6 GAO-15-441 Broadcast Exclusivity Rules

station and create efficiencies in the distribution of network content. Thus, 

while exclusive territories reduce competition between some stations 

(e.g., local NBC stations in different geographic markets do not compete), 

the exclusive territories could provide incentives for stations to invest 

more heavily in the development of content and thus promote greater 

competition between stations in the same geographic market (e.g., local 

ABC and NBC stations in the same market compete), which can benefit 

viewers.

FCC’s exclusivity rules are an administrative mechanism for local 

television stations to enforce their exclusive rights obtained through 

contracts with broadcast networks and syndicators.

• Network non-duplication. This rule protects a local television station’s 

right to be the exclusive provider of network content in its market. 

FCC promulgated the rule in 1966 to protect local television stations 

from competition from cable operators that might retransmit the 

signals of stations from distant markets. FCC was concerned that the 

ability of cable operators to import the signals of stations in distant 

markets into a local market was unfair to local television stations with 

exclusive contractual rights to air network content in their local market. 

The rule allows exclusivity within the area of geographic protection 

agreed to by the network and the station, so long as that region is 

within a radius of 35 miles—for large markets—or 55 miles—for small 

markets—from the station (see fig. 2).11

 11There are some limited exceptions. For example, the network non-duplication rule does 

not apply to distant signals that are “significantly viewed,” within a given market. FCC 

publishes a list of stations that are deemed to be significantly viewed outside their DMA.

Exclusivity Rules and 

Related Rules and Laws
Page 7 GAO-15-441 Broadcast Exclusivity Rules

Figure 2: Examples of the Network Non-Duplication Rule Area of Exclusivity for Small and Large Markets

Note: Stations in large markets have a 35-mile area of exclusivity; stations in small markets have a 

55-mile area of exclusivity.

• Syndicated exclusivity. This rule protects a local television station’s 

right to be the exclusive provider of syndicated content in its market. 

FCC first promulgated the rule in 1972 to protect local television 
Page 8 GAO-15-441 Broadcast Exclusivity Rules

stations and ensure the continued supply of content.12 This rule 

applies within an area of geographic protection agreed to by the 

syndicator and the station, so long as that region is within a 35-mile 

radius from the station.

The exclusivity rules—when invoked by local television stations—require 

cable operators to block duplicative content carried on a distant signal 

imported into the station’s protected area by cable operators. For 

example, these rules allow WJZ, the CBS-affiliated local television station 

in Baltimore, to prohibit a cable operator from showing duplicative 

network content on another market’s CBS station that the cable operator 

imports into Baltimore. Similarly, the rules allow WJZ to prohibit a cable 

operator from showing any duplicated syndicated content on any other 

market’s station the cable operator imports into Baltimore. Local television 

stations are able to invoke the exclusivity rules regardless of whether their 

signals are retransmitted by a cable operator or not. For example, even if 

WJZ is not retransmitted by a particular cable operator in Baltimore, WJZ 

can invoke its exclusivity rights against that cable operator, requiring it to 

block duplicative content.13 FCC has statutory authority to administratively 

review complaints of violation of these rules (e.g., if a local television 

station believes a cable operator imported a distant signal into its market 

even though the station invoked its exclusivity protections) when such 

complaints are formally brought before the Commission. FCC officials 

said that the Commission addresses such complaints on a case-by-case 

basis.

 12FCC repealed the syndicated exclusivity rule in 1980, stating that doing so would have 

negligible impact on local television stations. See Cable Television Syndicated Program

Exclusivity Rules; Inquiry Into the Economic Relationship Between Television 

Broadcasting and Cable Television, Report and Order, 79 FCC 2d 663, 734 (1980). 

However, FCC reinstated the rule in 1988 stating that the analysis underlying the repeal of 

the rule was flawed. Amendment of Parts 73 & 76 of the Commission’s Rules Relating to 

Program Exclusivity in the Cable & Broadcast Industry, Report & Order, 3 FCC Rcd. 5299, 

5303 (1988).

13Under the rules, a cable operator could import a signal from a distant market and show 

non-duplicative content from the distant market station, such as local news. For example, 

an official with one national network we interviewed said that it allows cable operators in 

Harrisburg, Pennsylvania to import its affiliate from Philadelphia, which the network owns, 

and show the Philadelphia local news; all national network content provided in Harrisburg, 

however, is provided by the local affiliate.
Page 9 GAO-15-441 Broadcast Exclusivity Rules

The broadcast industry is governed by a number of other rules and 

statutes that interplay with the exclusivity rules. These rules and laws 

include the following:

• Must carry. Must carry refers to the right of a local television station to 

require that cable operators that serve households in the station’s 

market retransmit its signal in that local market.14 The choice to invoke 

must carry is made every 3 years by stations. Cable operators 

carrying stations under the must-carry rule may not accept or request 

any fee in exchange for coverage.

• Retransmission consent. Retransmission consent refers to permission 

given by television stations who do not choose must carry to allow a 

cable or satellite operator to retransmit their signals. Stations invoke 

either retransmission consent or must carry. Retransmission consent 

was enacted in 1992; at the time, Congress determined that cable

operators obtained great benefit from the broadcast signals that they 

were able to carry without broadcaster consent, which resulted in an 

effective subsidy to cable operators.15 Retransmission rights are 

negotiated directly between a local television station and cable and 

satellite operators. By opting for retransmission consent, stations give 

up the guarantee that cable and satellite operators will carry their 

signal under must carry in exchange for the right to negotiate 

compensation for their retransmission. Cable and satellite operators 

are unable to retransmit the signal of a local television station that has 

chosen retransmission consent without its permission. If, despite 

negotiations, a local television station and a cable or satellite operator 

do not reach agreement, the local television station may prohibit the 

cable or satellite operator from retransmitting its signal, commonly 

referred to as a “blackout.” FCC rules require local television stations 

and cable or satellite operators to negotiate for retransmission 

 14Cable Television Consumer Protection and Competition Act of 1992, Pub. L. No. 102-

385, § 4, 106 Stat. 1460, 1471 (1992). The must-carry rule applies to cable operators. A 

similar rule, carry-one-carry-all, applies to satellite operators.

15Pub. L. No. 102-385, § 2(a)(19), 106 Stat. 1460, 1462. 
Page 10 GAO-15-441 Broadcast Exclusivity Rules

consent in “good faith.”16 FCC’s rules set a number of good faith 

standards, including a requirement that parties designate an individual 

with decision-making power to lead negotiations.

• Compulsory copyright. Must carry and retransmission consent pertain 

to the retransmission of a local television station’s signal. The content 

within that signal is protected by copyright. For example, the National 

Football League (NFL) holds the copyright for its games that are 

broadcast on CBS, Fox, and NBC. Generally, any potential user 

(other than the copyright holder) intending to transmit copyright 

protected content must obtain permission from the copyright holder 

beforehand. The compulsory copyright licenses, enacted in 1976, 

allow cable operators to retransmit all content on a local television 

station without negotiating with the copyright holders.17 To make use 

of the compulsory copyright, the cable operator must follow relevant 

FCC rules and pay royalties to the Copyright Office within the Library 

of Congress.18 The Copyright Act establishes the royalties that a cable 

operator must pay to carry television stations’ signals. A cable 

operator pays a minimum royalty fee regardless of the number of local 

or distant television station signals it carries, and the royalties for local 

signals are less than those for distant signals.

 16The Communications Act requires that FCC promulgate rules requiring MVPDs and 

local television stations to negotiate retransmission consent agreements in good faith. 47 

U.S.C. 325(b)(3)(C)(ii). The rules subsequently promulgated by FCC define good faith 

standards and prohibit, among other things, refusal by one entity to negotiate and refusal 

by one entity to respond to a proposal made by another entity. See 47 C.F.R. § 

76.65(b)(1).

17The compulsory copyright also applies to satellite operators. The compulsory copyright 

ensures that copyright holders are compensated for the retransmission of their content 

and that cable and satellite operators do not have to negotiate individually with each 

copyright holder. See 17 U.S.C. §§ 111, 119. According to FCC officials, however, it is not 

clear if the compulsory copyright applies to open video systems. Although the Copyright 

Office recommended to Congress in 1997 that copyright law be amended to include open 

video systems, Congress has not acted on that recommendation. See U.S. Copyright 

Office, A Review of the Copyright Licensing Regimes Covering Retransmission of 

Broadcast Signals (Washington, D.C.: Aug. 1, 1997). 

18The Copyright Office disburses these royalties to copyright holders. See 17 U.S.C. § 

111(d)(3).
Page 11 GAO-15-441 Broadcast Exclusivity Rules

Compensation for television content flows through industry participants in 

a number of ways that are relevant to the exclusivity rules, as seen in 

figure 3.

Figure 3: Flow of Money in the Broadcasting Industry

Households that subscribe to television service with an MVPD pay 

subscription fees; FCC reported that the average monthly fee for 

expanded-basic service was $64.41 on January 1, 2013.19 Those MVPDs, 

including cable and satellite operators, pay retransmission consent fees

to local television stations that opt for retransmission consent; as 

discussed above, the fees are determined in negotiations between 

stations and MVPDs. Advertisers purchase time from local television 

stations, broadcast networks, and MVPDs. Local television stations 

provide compensation to their affiliated national broadcast networks and 

to the providers of syndicated content in exchange for the rights to be the 

 19FCC defined expanded-basic service as the combination of basic service and the most 

subscribed to cable programming service tier. This excludes service from satellite 

operators. Implementation of Section 3 of the Cable Television Consumer Protection and 

Competition Act of 1992; Statistical Report on Average Rates for Basic Service, Cable 

Programming Service, and Equipment, Report on Cable Industry Prices, 29 FCC Rcd. 

5280, 5282 (2014).

Flow of Fees, Revenues, 

and Compensation in the 

Broadcasting Industry
Page 12 GAO-15-441 Broadcast Exclusivity Rules

exclusive provider of that content in their market. Local television stations 

also use their advertising and retransmission consent revenues to 

develop their own content, including local news.20

In 2014, FCC issued a FNPRM to consider eliminating or modifying the 

exclusivity rules, in part to determine if the rules are still needed given 

changes to the video marketplace since the rules were first promulgated. 

FCC asked for comments on, among other things, the potential effects of 

eliminating the rules. In response to the FNPRM, FCC received 72 

records during the open comment period, including letters from 

individuals, and comments and reply comments from industry 

stakeholders. FCC officials said that the Media Bureau is working on a 

recommendation for the FCC Chairman’s consideration on whether to 

repeal or modify the exclusivity rules; there is no firm timeframe for when 

the bureau may make a recommendation.

 20According to Nielsen data from February 2013, almost three out of four U.S. adults (71 

percent) watch local television news over the course of a month. Kenneth Olmstead et al., 

“How Americans Get TV News at Home,” Pew Research Center Journalism Project (Oct. 

11, 2013), accessed March 5, 2014, http://www.journalism.org/2013/10/11/howamericans-get-tv-news-at-home/.

FCC Rulemaking on 

Exclusivity Rules

Industry Stakeholders 

Have Differing Views 

of the Need for and 

Effects of Exclusivity 

Rules
Page 13 GAO-15-441 Broadcast Exclusivity Rules

All 13 broadcast industry stakeholders (local television stations, national 

broadcast networks, and relevant industry associations) we interviewed 

and whose comments to FCC we reviewed report that the exclusivity 

rules are needed to help protect stations’ exclusive contractual rights to 

air network and syndicated content in their markets. Those stakeholders 

reported that the rules provide an efficient enforcement mechanism to 

protect the exclusivity that local television stations negotiate for and 

obtain in agreements with networks and syndicators; in the absence of 

the rules, enforcement of exclusivity would have to take place in the 

courts, which would be difficult and inefficient for several reasons.

• These stakeholders report that if a local television station believes that 

a cable operator improperly imported duplicative content on a distant 

signal into its market, the station will be unable to bring legal action to 

stop the airing of this duplicative content. Specifically, the cable 

operator may have an agreement with a station in a distant market 

that allows it to retransmit that station’s signal in other markets. Since 

the affected local station might not have a contract with either the 

cable operator that is importing the distant station or the distant 

station, these stakeholders report that the local station cannot bring 

legal action. In 2012, for example, cable operator Time Warner Cable 

(TWC) did not reach a retransmission consent agreement with Hearst 

broadcast stations in five markets. TWC’s contract with another 

broadcaster, Nexstar, did not explicitly prohibit retransmission of 

Nexstar’s signals into distant markets,21 and TWC imported Nexstar 

stations into Hearst’s markets.22 However, according to one broadcast 

industry stakeholder, because of a lack of contractual relationship 

between Hearst and TWC regarding the retransmission of Nexstar’s 

signals, it would have been very difficult for Hearst to take a breach of 

contract action.

 21According to FCC, affiliation agreements generally prohibit local stations from granting 

retransmission of their signals outside their local market.

22Nexstar filed a breach of contract and a copyright infringement claim against TWC in 

federal court, arguing, among other things, that its retransmission consent agreement with 

TWC did not permit the out-of-market retransmission of its stations’ signals. Nexstar 

moved for a preliminary injunction, to prohibit TWC from retransmitting its signals into 

distant markets. Nexstar’s motion was denied, as the United States Court of Appeals for 

the Fifth Circuit affirmed that Nexstar was unlikely to succeed on the merits because its 

retransmission consent agreement with TWC allowed out-of-market retransmission of 

Nexstar’s signals. See Nexstar Broadcasting, Inc. v. Time Warner Cable, Inc,. 524 Fed. 

Appx. 977 (2013).

Broadcast Industry 

Stakeholders Report That 

Exclusivity Rules Are 

Needed to Protect 

Exclusive Rights and 

Support Production of 

Local Content
Page 14 GAO-15-441 Broadcast Exclusivity Rules

• Even if a local station could bring legal action, these broadcast 

industry stakeholders added that enforcing exclusivity through courts 

would be more time consuming and resource intensive than using 

FCC administrative review to determine or uphold exclusive rights that 

parties negotiated in contracts.

Furthermore, all 13 broadcast industry stakeholders we interviewed and 

whose comments to FCC we reviewed report that exclusivity rules are 

needed to help protect stations’ revenues. These stakeholders report that 

because the rules protect the contractual exclusivity rights of local 

television stations, stations can maintain their bargaining position in 

retransmission consent negotiations with cable operators, allowing them 

to obtain what they consider to be fair retransmission consent fees based 

on the value of the content in their signal. If a local station does not grant 

a cable operator retransmission consent, the cable operator cannot 

provide any network or syndicated content that the station provides, 

including high-demand content. By contrast, if cable operators could 

import duplicative content on a distant signal, even on a temporary basis 

to avoid not showing national network content during a retransmission 

consent impasse, these stakeholders report that the bargaining position 

of local television stations will decline, with a commensurate decline in 

retransmission consent fees and the value of the local television station, 

as the station will no longer be the exclusive content provider. In addition, 

because the rules ensure that local television stations’ audiences are not 

reduced by the availability of duplicative content on signals from distant 

markets (for example, all households in a given market who watch 

popular NBC prime-time dramas will do so on their local NBC affiliate, as 

households are unable to do so on a NBC station from another market), 

they report that the rules help protect their audience share. This in turn, 

allows local television stations to obtain higher advertising revenues than 

they would if they were not the exclusive provider of network and 

syndicated content in their market. These broadcasting industry 

stakeholders also reported that by strengthening local stations’ revenues, 

the rules help them invest in developing and providing local news, 
Page 15 GAO-15-441 Broadcast Exclusivity Rules

emergency alerts, and community-oriented content, in support of FCC’s 

localism goals.23

However, the majority of cable industry stakeholders we interviewed and 

whose comments to FCC we reviewed reported that many local television 

stations have reduced their investments in local news in recent years 

despite the existence of the rules. In addition, we previously found that 

local television stations are increasingly sharing services, such as 

equipment and staff, for local news production.24 For example, stations 

can have arrangements wherein one station produces another station’s 

news content and also provides operational, administrative, and 

programming support. In addition, viewership for local news has declined 

in recent years—according to the Pew Research Center’s analysis of 

2013 Nielsen data, the viewership for early evening newscasts had 

declined 12 percent since 2007.25 During this time, Americans have 

increasingly turned to other devices—such as computers and mobile 

devices—to access news on the Internet. For example, the Pew 

Research Center also reported in 2013 that 54 percent of Americans said 

they access news on mobile devices and 82 percent said they do on a 

desktop or laptop computer.26

 23Localism is a policy that encourages local over-the-air broadcasting and ensures that 

some programming is produced at the local level with the local audience in mind. The 

concept of localism derives from title III of the Communications Act, which instructs FCC 

to regulate broadcasting in the public interest by, among other things, licensing broadcast 

stations among communities as to provide a fair, efficient, and equitable distribution 

around the country. Congress has viewed localism as a primary legislative objective with 

television broadcast stations serving as important sources of local news and public affairs 

programming. Pub. L. No. 102-385, § 2(a)(9), 104 Stat. 1460, 1461.

24GAO, Media Ownership: FCC Should Review the Effects of Broadcaster Agreements on 

its Media Policy Goals, GAO-14-558 (Washington, D.C.: June 27, 2014). FCC recently 

took action related to its ownership attribution rules and joint sales agreements, which 

may limit the extent to which local television stations enter such agreements. See Rules 

and Policies Concerning Attribution of Joint Sales Agreements In Local Television 

Markets, Further Notice of Proposed Rulemaking and Report and Order, 29 FCC Rcd. 

4371, 4527 (2014).

25Katerina Eva Matsa, “Local TV Audiences Bounce Back,” Pew Research Center (Jan. 

28, 2014), accessed March 4, 2015, http://www.pewresearch.org/facttank/2014/01/28/local-tv-audiences-bounce-back/.

26Pew Research Center, “Key Indicators in Media & News, State of the News Media 2014”

(Mar. 26, 2014), accessed March 5, 2015, http://www.journalism.org/2014/03/26/state-ofthe-news-media-2014-key-indicators-in-media-and-news/.
Page 16 GAO-15-441 Broadcast Exclusivity Rules

Eight of 12 cable industry stakeholders we interviewed and whose 

comments to FCC we reviewed reported that because the rules help local 

television stations be the exclusive provider of network content in their 

market, the rules allow local television stations to demand increasingly 

higher retransmission consent fees from cable operators, which some 

said can lead to higher fees that households pay for cable television 

service. Because local television stations are the exclusive providers of 

network content in their markets (e.g., the NBC affiliate in San Diego is 

the only provider of popular NBC prime-time dramas in that market), 

cable operators report that they are forced to pay increasingly higher 

retransmission consent fees. They report that this occurs because if a 

local television station cannot reach agreement with the cable operator 

regarding retransmission consent and does not grant retransmission 

rights to the cable operator, the cable operator cannot import a signal 

from a distant market to provide network content and the cable operator’s 

subscribers lose access to network content. This puts the cable operator 

at risk for losing subscribers to competitors, such as other cable and 

satellite operators, who continue to carry the local television station and 

its network content. While 5 of 12 cable industry stakeholders we 

interviewed and whose comments to FCC we reviewed said that they 

prefer to retransmit the local station instead of a distant market station, 

they feel that the exclusivity rules limit their ability to seek alternatives if 

they are unable to agree to retransmission consent fees with a local 

station. Eight cable industry stakeholders reported that as a result, the 

rules have led to sharp and rapidly increasing retransmission consent 

fees in recent years—a trend that they expect to continue—which can 

lead to higher cable fees for households. SNL Kagan, a media research 

firm, has projected that retransmission consent fees will increase from 

$4.9 billion in 2014 to more than $9.3 billion in 2020.27 However, 4 of 13 

broadcast industry stakeholders we interviewed and whose comments to 

FCC we reviewed stated that cable networks—such as ESPN, TBS, and 

AMC—also have exclusive distribution. For example, a cable operator 

wishing to carry ESPN can only obtain rights to do so from ESPN.

 27SNL Kagan Press Release, SNL Kagan Releases Updated Industry Retransmission Fee 

Projections: U.S. TV station owners’ retrans fees expected to reach $9.3 billion by 2020, 

versus the projected level of $4.9 billion this year according to SNL Kagan analysis 

(Monterrey, CA: Oct. 27, 2014).

Cable Industry 

Stakeholders Report That 

Exclusivity Rules Lead to 

Increased Retransmission 

Consent Fees
Page 17 GAO-15-441 Broadcast Exclusivity Rules

Industry stakeholders we interviewed and whose comments to FCC we 

reviewed discussed different scenarios under which eliminating the 

exclusivity rules may lead to varying effects (see fig. 4).28 In one scenario, 

eliminating the exclusivity rules may provide cable operators with 

opportunities to import distant signals into local markets. This could 

potentially reduce the bargaining position of local television stations in 

retransmission consent negotiations, which could reduce station revenues 

with varying effects on the availability of content and households; 

however, the magnitude of these effects is uncertain. In two other 

scenarios, eliminating the exclusivity rules may have little effect as local 

television stations could maintain their position as the exclusive provider 

of network and syndicated content. As a result, retransmission consent 

negotiations may be unlikely to change, likely resulting in minimal effects 

on content and households.

Figure 4: Potential Scenarios Under Which Elimination of Exclusivity Rules May 

Have Varying Effects

 28Our analysis of the potential effects of eliminating the exclusivity rules is based on these 

stakeholder views expressed in both their comments filed with FCC and interviews with 

us, in light of general economic principles.

The Effects of 

Eliminating the 

Exclusivity Rules on 

Content Depend on 

Related Federal 

Actions and the 

Response of Industry 

Participants
Page 18 GAO-15-441 Broadcast Exclusivity Rules

Eleven of 13 broadcast industry stakeholders we interviewed and whose 

comments to FCC we reviewed said that in the absence of the exclusivity 

rules, some local television station contracts with cable operators may 

allow for retransmission of their signals to distant markets. This may 

happen if contracts between local television stations and cable operators 

do not clearly prohibit retransmission outside of the stations’ local 

markets, as was the case in Nexstar’s contract with TWC discussed 

earlier. Two of these stakeholders said this could happen with small 

broadcasters that might lack the financial resources to cover legal 

counsel during their negotiations with cable operators. Broadcast 

networks could provide such assistance. However, officials from all three 

broadcast networks we interviewed told us that they currently do not 

oversee their affiliates’ retransmission consent agreements. In comments 

to FCC, one cable industry association suggested that FCC prohibit 

network involvement in the retransmission consent negotiations of their 

affiliates. Depending on how FCC interprets or amends its good-faith 

rules, broadcast networks may be unable to take a more active role in the

retransmission consent negotiations between their affiliates and cable 

operators.29 Even if just one local television station allowed a cable 

operator to retransmit its signal outside its local market, the cable 

operator could retransmit that signal in any other market that it served; 

this could potential harm the exclusivity of local television stations 

affiliated with the same broadcast network in those markets served by the 

cable operator.

The potential ability of a cable operator to import a distant signal, and the 

potential weakening of exclusivity that could result, may lead to a series 

of effects on the distribution of content—including local content—and on 

households and the fees they pay for cable television service (see fig. 5).

 29FCC sought public comment on the potential role of networks in good-faith negotiations, 

including whether to make it a per se violation of the rules for a local television station to 

give its affiliated national broadcast network the right to approve a retransmission consent 

agreement with a cable operator. See Amendment of the Commission’s Rules Related to 

Retransmission Consent, Notice of Proposed Rulemaking, 26 FCC Rcd. 2718, 2729-35 

(2011).

If Contractual Exclusivity is 

Difficult to Enforce, 

Removing the Exclusivity 

Rules May Have Uncertain 

Effects on Content and 

Fees Households Pay for 

Television Service
Page 19 GAO-15-441 Broadcast Exclusivity Rules

Figure 5: Potential Effects of Eliminating the Federal Communication Commission’s Exclusivity Rules

The majority of both cable and broadcast industry stakeholders we 

interviewed and whose comments to FCC we reviewed stated that as a 

result of the potential of a cable operator retransmitting a distant station’s 

signal into a local market, local television stations may have reduced 

bargaining position during retransmission consent negotiations with cable 

operators. As stated earlier, the fact that local television stations are the 

exclusive provider in their markets of high-demand national content 

provides them with a strong bargaining position in negotiations with cable 

operators. However, if during retransmission consent negotiations, a 

cable operator can provide certain content by retransmitting the signal of 

a station affiliated with the same broadcast network in another market, the 

local station’s bargaining position declines because it is no longer the 

exclusive provider of the national network content available to the cable 

operator in the station’s market. This reduction in bargaining position may 

lead to fewer black outs and a reduction in retransmission consent fees.

• With the exclusivity rules in place, a local television station may be 

willing to pull its signal from a cable operator (that is, have a blackout) 

knowing that the cable operator has no alternative for providing highdemand network and syndicated content.30 However, without the 

 30In the current environment, a local television station considering pulling its signal from a 

cable operator likely weighs a temporary reduction in retransmission consent and 

advertising revenues that would result when its station is not provided to cable subscribers 

against a potential longer-term increase in retransmission consent fee revenues.
Page 20 GAO-15-441 Broadcast Exclusivity Rules

rules, the local television station may be less willing to pull its signal 

from the cable operator, as the cable operator could provide the same 

high-demand content to its customers by importing a station from a 

distant market. For example, if a cable operator in Baltimore could 

import the Atlanta NBC affiliate into Baltimore when it does not reach 

a retransmission consent agreement with the Baltimore NBC affiliate, 

the Baltimore affiliate stands to gain little from pulling its signal, and 

thus not be retransmitted, since households served by the cable 

operator in Baltimore could still access NBC network content on the 

imported Atlanta station. With fewer blackouts, consumers would be 

less likely to lose access to broadcast network and syndicated content 

they demand.

• With reduced bargaining position, local television stations may agree

to retransmission consent fees that are lower than they otherwise 

would be because local television stations want to avoid their signals

being replaced by another television station’s signal from a distant 

market. This may mean that retransmission fees could decrease or 

increase at slower rate than they would if broadcasters maintained the 

same bargaining position they have now. For example, the NBC 

affiliate in Baltimore may be willing to accept lower retransmission 

consent fees from a cable operator knowing that the cable operator 

can import NBC content from another market if they did not reach 

agreement on retransmission consent.

In addition, to the extent that a cable operator does import a distant signal 

into a given market, the local station in that market may lose some 

viewers who watch duplicative content on the imported station. To the 

extent this happens, advertisers may spend less on advertising time given 

the reduction in audience and the advertising revenues of the local 

television station may decline.31

The potential reduction of local stations’ retransmission consent and 

advertising revenues could affect the content stations can produce and 

distribute to households, including local content, in multiple ways, as 

described below. However, the nature of these effects is unknown.

 31Two industry analysts we interviewed said that advertising revenues provide the majority 

of local television station revenues.
Page 21 GAO-15-441 Broadcast Exclusivity Rules

• Local television stations may have fewer resources to pay in 

compensation to their affiliated broadcast networks.32 If so, the 

resulting reduction in revenues for national broadcast networks may 

reduce their ability to produce, obtain, and distribute high-cost and 

widely viewed content, such as national sports and primetime dramas. 

This potential outcome may result in the migration of some content to 

cable networks to the extent that cable networks outbid broadcast 

networks for this high-cost content (e.g., if ESPN outbids Fox for NFL 

coverage or more high-cost dramas are provided by the cable network 

AMC instead of broadcast networks).33 If this happens, consumers 

who rely on free over-the-air television and do not subscribe to cable 

television service may not be able to view certain content that has 

traditionally been available on over-the-air television unless they begin 

to subscribe to a cable operator’s service.

• Twelve of 13 broadcast industry stakeholders we interviewed and 

whose comments to FCC we reviewed said that local television 

stations may have fewer resources to invest in local content. This 

could reduce the quality or quantity of local content provided to 

viewing households. Nine of these stakeholders reported that local 

news is a major cost for local television stations.

• Local television stations may have fewer resources to pay for 

syndicated content. If so, syndicators could be less able to produce, 

obtain, and distribute syndicated content, which could affect the type 

and quantity of syndicated content that households are able to view.

In addition to these potential changes in content, eliminating the 

exclusivity rules may affect the fees consumers pay for cable television 

service. However, because multiple factors may influence fees and the 

extent to which that happens is unknown, we cannot quantify the effect. 

To the extent that eliminating the exclusivity rules causes retransmission 

consent fees paid by cable operators to be lower than they otherwise 

would be, cable operators may pass some of these savings along to 

 32Three industry analysts told us that, on average, local television stations keep about 50 

percent of their retransmission consent revenues and provide the rest to their national 

networks.

33Some high-cost content previously on free over-the-air television has already migrated 

to cable networks. For example, some collegiate football bowl games previously shown on 

broadcast networks are now shown on cable networks. In addition, some content could 

migrate to over-the-top providers such as Netflix.
Page 22 GAO-15-441 Broadcast Exclusivity Rules

consumers in the form of lower subscription fees. However, as we have 

noted, eliminating the rules could lead to a migration of some highly 

viewed and high-cost content to cable networks from free over-the-air 

local television stations. This content migration could also affect fees for 

cable service; cable networks that obtain such content may experience 

additional costs for content and thus charge cable operators more to carry 

their networks. Thus, cable operator cost savings on retransmission 

consent fees could be offset to some extent by higher cable network fees. 

Furthermore, migration of such content could cause some households 

that do not subscribe to cable services to begin doing so, or cause some 

households to upgrade their service to obtain additional cable networks. 

This increased demand for cable service could also lead to some upward 

pressure on cable subscription fees.

Eleven of 13 broadcast industry stakeholders we interviewed and whose 

comments to FCC we reviewed stated that in the absence of the 

exclusivity rules, the compulsory copyright license for distant signals may 

allow a cable operator to retransmit a local television stations’ signal into 

another market as the cable operator does not need to obtain approval 

from copyright holders.34 Nine of these 13 stakeholders stated that this 

compulsory copyright may not have been enacted if the exclusivity rules 

did not already exist. Six of these 13 stated that, as a result, if FCC 

eliminates the exclusivity rules, statutory changes would also be needed 

to eliminate the compulsory copyright license for distant signals.

Assuming that retransmission of the content in a televisions station’s 

broadcast retains copyright protection,35 if Copyright Law was amended to 

remove the compulsory copyright for distant signals, a cable operator 

wishing to retransmit a station’s signal into a distant market would need to 

clear the copyrights with the copyright holders, such as the NFL, of all 

content included on the television station’s signal. However, we have 

previously found that obtaining the copyright holders’ permission for all 

this content would be challenging. Each television program may have 

 34In this scenario, a cable operator would need to obtain the local television station’s 

consent to retransmit its signal in a distant market. Affiliation agreements generally 

prohibit local television stations from granting this permission.

35The Copyright Act of 1976 provided copyright protection to the retransmission of 

television station signals. See 17 U.S.C. § 111.

If the Distant Signal 

Compulsory Copyright Is 

Repealed, Removing the 

Exclusivity Rules May 

Have Minimal Effect
Page 23 GAO-15-441 Broadcast Exclusivity Rules

multiple copyright holders, and rebroadcasting an entire day of content 

may require obtaining permission from hundreds of copyright holders. 

The transaction costs of doing so make this impractical for cable 

operators.36 Furthermore, as broadcast networks are also copyright 

holders for some content that their affiliated local television stations air, 

such as the network’s national news,37 they may be unwilling to grant 

such copyright licenses to cable operators wishing to retransmit that 

content on an distant signal, given networks’ interests in preserving their 

system of affiliate exclusivity, as discussed earlier. In such a scenario, 

cable operators may be unable to import distant signals and local 

television stations may not face the threat of duplicative network and 

syndicated content on a distant signal. Local television stations may 

retain the same bargaining position that they currently have during 

retransmission consent negotiations. As a result, there may not be any 

change in the likelihood of a blackout, retransmission consent fees, the 

quantity and quality of content, and fees for cable television service.38

Nine of 12 cable industry stakeholders we interviewed and whose 

comments to FCC we reviewed suggested that if the exclusivity rules 

were eliminated, there may be minimal effects as exclusivity would 

continue to exist in contracts. According to FCC, the affiliation 

agreements between local television stations and broadcast networks 

generally define exclusive territories for the affiliate stations and prohibit 

stations from granting retransmission consent outside their local markets. 

However, as we discussed earlier, only one local television station 

granting retransmission consent outside its local market to a cable 

operator could undermine the exclusivity of all the affiliates of a broadcast 

network in markets served by that cable operator. Broadcast industry 

stakeholders report that broadcast networks could take legal action 

against local television stations that violate terms of the affiliation 

agreements by granting retransmission consent outside their local 

 36GAO-12-75.

37Local television stations generally hold the copyrights for any local content that they 

produce, such as local news.

38If the compulsory copyright for distant signals were eliminated, cable operators may also 

be unlikely to import a distant signal into significantly viewed markets as they are able to 

do now. To prevent this effect, additional action, such as creation of a compulsory 

copyright for such cases, would be necessary.

If Local Television Station 

Contracts with Broadcast 

Networks and Cable 

Operators Ensure 

Exclusivity, Removing the 

Exclusivity Rules May 

Have Minimal Effect
Page 24 GAO-15-441 Broadcast Exclusivity Rules

market. However, two broadcast networks we interviewed said that they 

are reluctant to sue their affiliates because they prefer not to take legal 

action against their business partners; one added that such a suit could 

take a long time to be resolved.39

Depending on FCC’s interpretation of or amendment to its good-faith 

rules, local television stations and broadcast networks may be able to 

take actions to protect against stations’ granting retransmission consent 

outside their local markets, thereby protecting stations’ exclusive 

territories. Assuming FCC’s good faith rules permit such actions, 

broadcast networks may choose to take a more proactive role in their 

affiliates’ retransmission consent negotiations with cable operators. As we 

discuss earlier, networks have an incentive to maintain stations’ exclusive 

territories and potentially could provide input to stations’ retransmission 

consent negotiations to help prevent stations’ granting retransmission 

consent outside their local markets if that input is allowed under FCC’s 

interpretation of the good-faith rules. For example, if FCC found it 

permissible, networks potentially could provide suggested contract 

language that clearly limits retransmission by cable operators to the 

station’s local market.40

With contracts clearly protecting the exclusivity of local television stations 

and preventing cable operators from retransmitting signals to distant 

markets, cable operators may be unlikely to import distant signals as 

doing so would be a clear contractual violation of their retransmission 

consent contract. In this scenario, local television stations may retain their 

exclusivity and may not have any change to their bargaining position 

during retransmission consent negotiations. Therefore, stations’ 

retransmission consent fees and revenue, the quantity and quality of 

content, and cable subscription fees may not change.

 39According to FCC, in addition to taking legal action, broadcast networks generally have 

the option under their affiliation agreements with local television stations to terminate the 

agreement immediately if an affiliated station grants retransmission consent to a cable 

operator outside of its local market.

40In order to help ensure all their affiliated local television stations maintain their 

exclusivity, networks would need to do this with all their affiliates.
Page 25 GAO-15-441 Broadcast Exclusivity Rules

FCC’s exclusivity rules are part of a broader broadcasting industry legal 

and regulatory framework, including must carry, retransmission consent, 

and compulsory copyrights. The exclusivity rules predate many of these 

laws and rules, and in some instances, the development of these other 

laws was premised on the existence of the exclusivity rules. The effects of 

eliminating the exclusivity rules are uncertain, because the outcome 

depends on whether related laws and rules are changed and how 

industry participants respond. For example, if the compulsory copyright 

license for distant signals were eliminated, as some broadcast industry 

stakeholders suggest, removing the exclusivity rules may have little 

effect. In contrast, if FCC were to interpret good faith in its rules to limit 

the extent to which broadcast networks can influence retransmission 

consent negotiations between their affiliated stations and cable operators, 

as one cable industry association suggests, removing the exclusivity rules 

could lead to a series of events, the outcome of which could be a 

reduction in the quality or quantity of local content and potential changes 

in the fees households pay for cable television service.

We provided a draft of this report to FCC for review and comment. FCC 

provided technical comments via email that we incorporated as 

appropriate.

We are sending copies of this report to interested congressional 

committees and the Chairman of the FCC. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made significant contributions 

to this report are listed in appendix III.

Mark Goldstein

Director, Physical Infrastructure Issues

Concluding 

Observations

Agency Comments
Appendix I: Objectives, Scope, and 

Methodology

Page 26 GAO-15-441 Broadcast Exclusivity Rules

The objectives of this report were to examine (1) industry stakeholder 

views on the need for and effects of the exclusivity rules and (2) the 

potential effects that removing the exclusivity rules may have on the 

production and distribution of content, including local news and 

community-oriented content.

To address both objectives, we reviewed all public comments filed by 

industry stakeholders with the Federal Communications Commission 

(FCC) as part of its further notice of proposed rulemaking (FNPRM)—

FCC docket 10-71—considering elimination or modification of the network 

non-duplication and syndicated exclusivity rules (exclusivity rules). We did 

not review comments filed by individuals and only reviewed those from 

industry stakeholders, such as local television stations or companies, 

multichannel video programming distributors (MVPD), including cable and 

satellite operators, national broadcast networks, industry associations 

representing such companies, and content copyright holders. In total, we 

reviewed 31 public comments. Of those 31 comments, 14 were from 

broadcasting industry stakeholders, 13 were from cable industry 

stakeholders, 1 was from a satellite industry stakeholder, 1 stakeholder 

was both a broadcaster and a cable operator, 1 was from a content 

provider, and 1 was from a related industry association. We reviewed 

these public comments for stakeholder views on the rules, the current 

effects of the rules, and the potential effects of eliminating the rules.

In addition, we reviewed relevant rules and statutes, such as FCC’s 

exclusivity rules and relevant rulemaking documents, such as FCC’s 

FNPRM. We also reviewed affiliation agreements between broadcast 

networks and local television stations relevant to recent legal action 

regarding the exclusivity rules. We did not review retransmission consent 

agreements between local television stations and cable operators, 

however, as these agreements are not publicly available.

We also conducted a literature review for studies related to FCC’s 

exclusivity rules, including any studies focused on the potential effects of 

eliminating the rules. To identify existing studies from peer-reviewed 

journals, we conducted searches of various databases, such as EconLit 

and ProQuest. We searched these and other databases using search 

terms including “exclusivity,” “network non-duplication,” and “syndicated 

exclusivity” and looked for publications in the past 5 years. We reviewed 

studies that resulted from our search and found that none of them were 

directly relevant to our work. We reviewed prior GAO reports that cover 

relevant issues, such as retransmission consent and copyrights.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 27 GAO-15-441 Broadcast Exclusivity Rules

We also conducted semi-structured interviews with the industry 

stakeholders that filed public comments with FCC as part of its FNPRM 

considering eliminating or modifying the exclusivity rules. In some cases, 

multiple stakeholders co-signed and co-filed public comments; in these 

instances, we interviewed at least one of those stakeholders. While we 

attempted to interview at least one stakeholder for each of the 31 formal 

comments filed, four stakeholders did not respond to our requests for 

interviews. We interviewed 1 content provider, 13 broadcast industry 

stakeholders, 12 cable industry stakeholders, and 1 satellite industry 

stakeholder. During these interviews, we asked stakeholders about their 

views of FCC’s exclusivity rules, the effects of the rules, and the effects of 

potentially eliminating the rules on retransmission consent fees, 

broadcaster revenues, and the distribution of content, including locallyoriented content, among other things. In addition, we interviewed selected 

industry analysts who study the broadcasting and cable industries 

regarding the rules and the potential effects of eliminating the rules. We 

selected analysts to interview by identifying ones who analyze and make 

recommendations on the stocks of publicly traded companies that we 

interviewed as part of our review and whom we had interviewed as part of 

prior engagements. We also interviewed FCC officials regarding these 

rules and FCC’s rulemaking process.

For our second objective, in addition to gathering information about 

industry stakeholder views on the potential effects of eliminating the 

exclusivity rules, we also analyzed those views in light of general 

economic principles to understand more fully the potential effects of 

eliminating the exclusivity rules.
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 28 GAO-15-441 Broadcast Exclusivity Rules

Mark L. Goldstein, (202) 512-2834 or goldsteinm@gao.gov.

In addition to the contact above, Michael Clements, Assistant Director; 

Amy Abramowitz; Mya Dinh; Gerald Leverich; Josh Ormond; Amy 

Rosewarne; Matthew Rosenberg; and Elizabeth Wood made key 

contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(543351)
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