19564 Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Proposed Rules

1Fox now competes with ABC, CBS, and NBC.

Further, United Paramount Network and Warner

Brothers Network are beginning to develop as

competitors to these networks.

MM Docket Nos. 94–150, 92–51, and

87–154; FCC 95–139, adopted April 3,

1995, and released April 7, 1995. The

complete text of this Order is available

for inspection and copying during

normal business hours in the FCC

Reference Center (Room 239), 1919 M

Street, NW., Washington, DC, and also

may be purchased from the

Commission’s copy contractor,

International Transcription Service, at

(202) 857–3800, 2100 M Street, NW.,

Suite 140, Washington, DC 20037.

Synopsis of the Order

1. The Commission denies the Motion

to Establish an Accelerated Procedural

Schedule for the LLC Issue (‘‘Motion’’),

which the Association of Black Owned

Television Stations (‘‘ABOTS’’) filed in

this proceeding on January 25, 1995.

The Commission, in a Notice of

Proposed Rule Making (60 FR 6483,

February 2, 1995) established a

comment deadline of April 17, 1995,

and of May 17, 1995 for reply

comments. ABOTS asked that the

Commission accelerate the comment

schedule with respect to Section VII

(Limited Liability Companies and Other

New Business Forms) of the Notice of

Proposed Rule Making with comments

due by February 10, 1995, and reply

comments due by February 17, 1995.

ABOTS also asked the Commission to

expedite our disposition in the rule

making regarding the issue of LLCs and

to reach a decision by March 3, 1995, if

possible. The Commission finds the

concerns expressed by ABOTS in its

Motion to be unfounded, and believes

that an acceleration of the comment

period and decisionmaking process

would not be in the public interest.

Thus, the Commission denies ABOTS’

requests. In a separate decision adopted

April 7, 1995, and printed elsewhere in

this Federal Register, the Commission

extends the time for filing comments in

this proceeding to May 17, 1995, and

the time for filing replay comments to

June 19, 1995.

2. Accordingly, pursuant to Section

4(j) of the Communications Act, 47

U.S.C. 154(j) It Is Hereby Ordered that

the Motion to Establish an Accelerated

Procedural Schedule for the LLC Issue

filed by the Association of Black Owned

Television Stations is denied.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 95–9570 Filed 4–18–95; 8:45 am]

BILLING CODE 6712–01–M

47 CFR Part 73

[MM Docket No. 95–40; FCC 95–145]

Broadcast Services; Network/Affiliate

rule

AGENCY: Federal Communications

Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: This Notice of Proposed Rule

Making proposes to eliminate or modify

the Commission’s requirement that

broadcast television stations file their

network affiliation agreements with the

Commission and that these filings be

publicly available. This action is needed

to determine if the costs of this rule

exceed its benefits.

DATES: Comments are due by June 12,

1995, and reply comments are due by

July 12, 1995.

ADDRESSES: Federal Communications

Commission, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT:

Robert Kieschnick (202–739–0770) or

Paul Gordon (202–776–1653), Mass

Media Bureau.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s Notice of

Proposed Rule Making in MM Docket

No. 95–40, FCC 95–145, adopted April

5, 1995 and released April 5, 1995. The

complete text of this NPRM is available

for inspection and copying during

normal business hours in the FCC

Reference Center (Room 239), 1919 M

Street, N.W., Washington, D.C., and also

may be purchased from the

Commission’s copy contractor,

International Transcription Service,

(202) 857–3800, 2100 M Street, NW.,

Suite 140, Washington, DC 20037.

Synopsis of Notice of Proposed Rule

Making

1. With this Notice of Proposed Rule

Making (NPRM), the Commission

continues its examination of rules

regulating broadcast television network/

affiliate relations in light of changes in

the video marketplace. This NPRM

proposes repeal or modification of 47

C.F.R. § 73.3613(a) (the ‘‘filing of

affiliation contracts’’ rule). This rule

requires television broadcast licensees

to file copies of network affiliation

contracts, agreements, and

understandings with the Commission.

The contract must be reduced to one

written document, including the

substance of any oral agreements,

without reference to any other

document. However, the rule does allow

subsequent renewals, changes, or

amendments to the contract to be set

forth in separate filings that refer to the

original contract. Notification of

cancellation or termination of the filed

contracts is also required. This rule

applies only to agreements with

broadcast television networks that offer

15 or more hours of programming per

week to 25 or more affiliates in 10 or

more states. Thus, while ABC, CBS,

NBC, and Fox are subject to the rule, the

United Paramount Network and the

Warner Brothers Network are not.

2. The primary purpose of requiring

broadcast television stations to file their

affiliation agreements with the

Commission has been to give the

Commission the ability to monitor these

contractual relationships and ensure

that the Commission’s restrictions on

these relationships are not violated in

affiliation agreements. Also, by

requiring affiliates to file their affiliation

agreements with the Commission, the

rule may chill any desire to engage in

misbehavior, thereby reducing the

likelihood that these agreements will

contain provisions that violate the

Commission’s underlying network/

affiliate rules.

3. Since 1985, when we last examined

this rule, the video marketplace has

changed dramatically. As pointed out in

our recent Further Notice of Proposed

Rule Making in MM Docket No. 91–221

(60 FR 6490, February 2, 1995)

addressing broadcast television

ownership, there has been an increase

in the number of broadcast stations

available for affiliation with a broadcast

network in nearly every market.

Moreover, new, aspiring networks have

emerged.1 As a result of these changes,

the bargaining positions of broadcast

television networks and commercial

broadcast television stations have

changed and differ market by market.

The recent affiliate switches

demonstrate the increased competition

between broadcast networks for

affiliation with broadcast television

stations in different markets, and thus

suggest that broadcast networks’ market

power over their affiliates has

diminished to some extent.

4. Given the recent increased

competition between broadcast

networks for affiliates in different

markets, we solicit comment on whether

or not there is a continuing need for the

Commission to monitor network/

affiliate relationships through

mandatory filings of their affiliation

agreements. We also seek comment on

the extent to which filing these

contracts with the Commission is

necessary to deter violations of the
Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Proposed Rules 19565

2See B. M. Owen and S. S. Wildman, Video

Economics, Harvard University Press, (1992) at

166–172 for a discussion of influences on the

bargaining position of broadcast television networks

and commercial broadcast television stations in

negotiating affiliation agreements.

3For a general overview of the manner in which

data dissemination among competitors may

facilitate cartel-like behavior, see N.R. Prance, Price

Data Dissemination as a Per Se Violation of the

Sherman Act, 45 U. Pitt. L. Rev. (1983) at 68–78;

see also Donald S. Clark, Price-Fixing without

Collusion: An Antitrust Analysis of Facilitating

Practices after Ethyl Corp., 1983 Wis. L. Rev. 887,

900–901; see also MCI Telecom. Corp. v. AT&T, 114

S. Ct. 2223, 2233 (1994) for an example of the

Commission’s concern over this issue.

network/affiliate rules. If we conclude

that routine filing of agreements is not

necessary to deter violations of the

rules, we could relieve licensees of the

duty to file affiliation agreements

routinely, and instead simply require

the production of such agreements upon

Commission request.

5. Separate and apart from the issue

of whether contracts should be filed

with the Commission is the issue of

whether licensees should be required to

make these contracts available to the

public. Making these agreements

publicly available allows the general

public to inspect them and to file

complaints where abuses of the public

interest are discovered. It also allows

third parties (e.g., advertisers), whose

commercial interests are affected by

these agreements, to determine if their

interests are harmed by these

agreements. We solicit comment on the

importance of these purposes and

examples of the general public’s use of

these filings that illustrate the extent of

the benefits from making these filings

publicly available.

6. Turning to the possible costs of the

rule, we note that there are direct and

indirect costs to be considered. The

direct costs of filing these agreements

are the additional expenses incurred to

prepare and submit the filings to the

Commission over the expenses incurred

to prepare affiliation agreements for

their original purpose. We solicit

evidence on the size of these costs

incurred by filing affiliates.

7. The indirect costs of filing these

agreements are more difficult to

quantify, potentially more serious, and

a result of our requirement that the

filings be publicly available. First,

networks must bargain with broadcast

stations serving different markets to gain

access to their potential audiences

through affiliation agreements. As

mentioned earlier, the number of

potential parties to such contracts

differs market by market, but generally

represents a few potential parties on

either side. By making compensation or

other data in these filings publicly

available, the Commission may facilitate

the ability of parties either seeking or

offering affiliation to avoid competition.

For example, in markets where there are

more commercial stations than

broadcast networks interested in seeking

affiliation agreements, networks might

seek, through parallel action, to lower

the compensation they pay potential

affiliates and could use the public

filings to ensure each party is

performing as agreed.2 Alternatively, in

markets where there are more broadcast

networks seeking affiliation agreements

than commercial broadcast stations

available, commercial stations could

seek to ensure that the compensation

that each of them receives is higher than

the compensation any one of them alone

was willing to accept. In either example,

the public availability of the affiliation

compensation data facilitates joint

monitoring to ensure similar behavior.3

The Commission solicits comment on

the potential for such behavior in light

of current market conditions, estimates

of the size of these indirect costs, and

their consequences, if any, for viewers.

8. Second, making these filings

publicly available alters the dynamic of

the contracting process. For example,

the requirement reduces a network’s

ability and willingness to craft

contractual arrangements with one

affiliate to recognize special market

conditions of that affiliate. By way of

illustration, a network may discern that

a new affiliate requires improved local

news coverage in order to compete

against other television stations in its

market and may wish to help fund such

improvement because of the financial

constraints that the new affiliate faces.

However, the network may be reluctant

to do so if its other affiliates can

discover such improved or different

terms and are likely to demand similar

terms. Thus, by requiring contracts to be

publicly available, our rules make it less

likely that the terms are tailored to best

suit the needs of the parties to the

contract. Confidentiality of the financial

terms of affiliates’ contracts would break

the linkage between concessions offered

to one affiliate and negotiations with

other affiliates. Networks would be able

to tailor affiliation contracts solely to

local conditions with less concern for

repercussions in other markets. On the

other hand, as the Commission

previously concluded, public filing of

these contracts enables weaker affiliates

to attempt to ensure that they receive

comparable or competitive

compensation to other affiliates of a

network, thereby strengthening their

overall financial condition and ability to

serve the public. Consequently, we

solicit comments on the advantages and

disadvantages of a network’s being able

to tailor its contracts versus affiliates’

desire to ensure comparable contracts,

particularly in terms of the

Commission’s competition and diversity

concerns.

9. We propose to eliminate the filing

requirement and require broadcast

television stations to make their

affiliation agreements available to the

Commission upon request. We will

adopt this proposal if we conclude that

the benefits of continuous monitoring of

broadcast television station’s affiliation

agreements with broadcast television

networks no longer exceed their costs.

We tentatively conclude that we can

continue to enforce our network/affiliate

rules through a system of complaint

initiated requests for affiliation contract

information. Such a system would

relieve licensees of the paperwork

burden of filing contracts with the

Commission, and would reduce the

potential anticompetitive effects of

general public disclosure. We solicit

comment on this tentative conclusion

and on whether we can rely on

affiliates, or members of the public, to

file such complaints.

10. Alternatively, we could continue

to require contracts to be filed with the

Commission, but maintain the

confidentiality of the contracts by

limiting access to authorized FCC

employees. This modification of our

rule would allow us to continue to

monitor network/affiliate relations to

protect the public interest, while at the

same time reducing the indirect costs of

the current filing requirement which

arise from the public availability of

these agreements. However, the

Freedom of Information Act requires

agencies to disclose documents in

certain circumstances. Given that we

did not exempt these filings from the

Freedom of Information Act in our 1969

Report and Order in Docket No. 14710

(34 FR 5947, May 1, 1969), we also

solicit comment on whether or not this

proposal is a viable option.

11. Another alternative would be to

continue the filing requirement but

modify it to require that only redacted

copies of contracts be made available to

the public. These copies would omit

any references to the values which

determine the affiliate compensation

and, possibly, other business sensitive

terms. In this way, the public could

continue to monitor the issues affecting

program diversity in their community

and we could continue to monitor the

network-affiliate relationship. This

option would preserve the benefit of

general public scrutiny of these
19566 Federal Register / Vol. 60, No. 75 / Wednesday, April 19, 1995 / Proposed Rules

agreements, but reduce their potential

negative effects on the competition for

affiliations.

12. We could, of course, also maintain

the rule as it currently stands. We

would adopt this option only if we

determine that the direct and indirect

costs associated with these filings

continue to be less than their benefits.

We request that comments on the above

proposals weigh the benefits and costs

in a manner which justifies the

particular recommendation a

commenter makes.

Administrative Matters

13. Pursuant to applicable procedures

set forth in Sections 1.415 and 1.419 of

the Commission’s Rules, 47 C.F.R.

Sections 1.415 and 1.419, interested

parties may file comments on or before

June 12, 1995, and reply comments on

or before July 12, 1995. To file formally

in this proceeding, you must file an

original plus five copies of all

comments, reply comments, and

supporting comments. If you want each

Commissioner to receive a personal

copy of your comments, you must file

an original plus nine copies. You should

send comments and reply comments to

Office of the Secretary, Federal

Communications Commission,

Washington, DC 20554. Comments and

reply comments will be available for

public inspection during regular

business hours in the FCC Reference

Center (Room 239), 1919 M Street, NW.,

Washington, DC 20554.

14. This is a non-restricted notice and

comment rulemaking proceeding. Ex

parte presentations are permitted,

except during the Sunshine Agenda

period, provided they are disclosed as

provided in the Commission Rules. See

generally 47 C.F.R. Sections 1.1202,

1.1203, and 1.1206(a).

Initial Regulatory Flexibility Act

Statement

15. Reason for the Action: This

proceeding was initiated to review and

update the Commission’s rule

concerning the filing of broadcast

television network affiliation contracts.

16. Objective of this Action: The

actions proposed in this Notice are

intended to reduce concerns over the

potential deleterious effects of making

some or all the substance of broadcast

television affiliation agreements

publicly available.

17. Legal Basis: Authority for the

actions proposed in this Notice may be

found in Sections 4 and 303 of the

Communications Act of 1934, as

amended, 47 U.S.C. §§ 154 and 303.

18. Recording, Recordkeeping, and

Other Compliance Requirements

Inherent in the Proposed Rule: The

proposals may reduce existing

requirements.

19. Federal Rules that Overlap,

Duplicate, or Conflict with the Proposed

Rules: None.

20. Description, Potential Impact, and

Number of Small Entities Involved:

Approximately 1,500 existing television

broadcasters of all sizes may be affected

by the proposals contained in this

decision.

21. Any Significant Alternatives

Minimizing the Impact on Small Entities

and Consistent with the State

Objectives: The proposals contained in

this NPRM are intended to simplify and

ease the regulatory burden currently

placed on commercial television

broadcasters.

22. As required by Section 603 of the

Regulatory Flexibility Act, the

Commission has prepared the above

Initial Regulatory Flexibility Analysis

(IRFA) of the expected impact on small

entities of the proposals suggested in

this document. Written public

comments are requested on the IRFA.

These comments must be filed in

accordance with the same filing

deadlines as comments on the rest of

this Notice of Proposed Rule Making,

but they must have a separate and

distinct heading designating them as

responses to the Initial Regulatory

Flexibility Analysis. The Secretary shall

send a copy of this Notice of Proposed

Rule Making, including the Initial

Regulatory Flexibility Analysis, to the

Chief Counsel for Advocacy of the Small

Business Administration in accordance

with paragraph 603(a) of the Regulatory

Flexibility Act. Pub. L. No. 96–354, 94

Stat. 1164, 5 U.S.C. Section 601 et seq.

(1981).

23. This Notice of Proposed Rule

Making is issued pursuant to authority

contained in Sections 4(i) and 303 of the

Communications Act of 1934, as

amended, 47 U.S.C. §§ 154(i), 303.

List of Subjects in 47 CFR Part 73

Television broadcasting.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 95–9569 Filed 4–18–95; 8:45 am]

BILLING CODE 6712–01M

47 CFR Part 73

[MM Docket Nos. 91–221 and 87–8; 94–149

and 91–140; and 94–150, 92–51 and 87–

154; DA 95–761]

Mass Media Ownership Rules

AGENCY: Federal Communications

Commission.

ACTION: Proposed rule; extension of

comment period.

SUMMARY: The Commission extends by

30 days the comment periods for three

interrelated proceedings in order to

afford commenters more time to collect

data and perform necessary statistical

analyses. The three proceedings involve

(1) the television multiple ownership

rules, (2) incentives to increase minority

and female ownership of mass media

facilities and (3) the Commission’s rules

regarding attribution of ownership

interests. In all three proceedings, the

Commission requested detailed analyses

demonstrating the relative benefits and

detriments of current and proposed

rules.

DATES: Comments due May 17, 1995;

reply comments due June 19, 1995.

ADDRESSES: Federal Communication

Commission, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Jane

Hinckley Halprin, Mass Media Bureau,

Policy and Rules Division, (202) 776–

1653.

SUPPLEMENTARY INFORMATION:

Order Granting Extension of Time for

Filing Comments and Reply Comments

Adopted: April 7, 1995;

Released: April 7, 1995.

By the Acting Chief, Mass Media

Bureau:

1. On December 15, 1994, the

Commission adopted three related

rulemaking items. First, the Commission

adopted a Further Notice of Proposed

Rule Making regarding ownership of

television stations. Further Notice of

Proposed Rule Making in MM Docket

Nos. 91–221 and 87–8, FCC 94–322, 60

Fed. Reg. 6490 (Feb. 2, 1995) (TV

Ownership Further Notice). Second, the

Commission adopted a Notice of

Proposed Rule Making seeking comment

on initiatives designed to increase

minority and female ownership of the

mass media. Notice of Proposed Rule

Making in MM Docket Nos. 94–149 and

91–140, FCC 94–323, 60 Fed. Reg. 6068

(Feb. 1, 1995) (Minority/Female

Ownership Notice). Third, the

Commission adopted a Notice of

Proposed Rule Making exploring

modification of the Commission’s rules

regarding attribution of ownership

interests. Notice of Proposed Rule

Making in MM Docket Nos. 94–150, 92–

51 and 87–154, FCC 94–324, 60 Fed.

Reg. 6483 (Feb. 2, 1995) (Attribution

Notice). Comments in all three

proceedings are currently due on April

17, 1995, and reply comments are due

on May 17, 1995.

2. The Commission has received a

separate request for extension of the