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[Federal Register Volume 73, Number 191 (Wednesday, October 1, 2008)]
[Rules and Regulations]
[Pages 56999-57001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23152]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[FCC 08-192]

Network Affiliated Stations Alliance (NASA) Petition for Inquiry 
Into Network Practices and Motion for Declaratory Ruling

AGENCY: Federal Communications Commission.

ACTION: Notice of petition for inquiry.

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SUMMARY: NASA and the Networks request that the Commission affirm a 
number of basic principles relating to the Commission rules governing 
network/affiliate relationships to avoid future disputes. Since that 
time, each of the Networks engaged in constructive discussions with its 
respective affiliates and revised its current standard affiliation 
agreement to address the central issues raised by NASA. Accordingly, 
NASA and the Networks agree that a Commission ruling with respect to 
those particular contract provisions is no longer necessary. Pursuant 
to the Commission's rules, we grant NASA's request for declaratory 
ruling in part and grant the Joint Request in full.

DATES: October 1, 2008.

ADDRESSES: You may submit comments, identified by FCC 08-192, by any of 
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.

For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, please contact Holly Saurer, [email protected], of the 
Policy Division, Media Bureau, (202) 418-2120.

[[Page 57000]]

SUPPLEMENTARY INFORMATION: This is a summary of the Federal 
Communications Commission's Declaratory Ruling in FCC 08-192, adopted 
August 20, 2008, and released September 3, 2008. The full text of this 
document is available for public inspection and copying during regular 
business hours in the FCC Reference Center, Federal Communications 
Commission, 445 12th Street, SW., CY-A257, Washington, DC 20554. These 
documents will also be available via ECFS (http://www.fcc.gov/cgb/ecfs/
). (Documents will be available electronically in ASCII, Word 97, and/
or Adobe Acrobat.) The complete text may be purchased from the 
Commission's copy contractor, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554. To request this document in accessible formats 
(computer diskettes, large print, audio recording, and Braille), send 
an e-mail to [email protected] or call the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).

Summary of the Final Rule

I. Introduction

    1. The Commission has before it a Petition for Inquiry into Network 
Practices (Petition), a Motion for Declaratory Ruling (Motion), and a 
Joint Request of Network Affiliated Stations Alliance (NASA) and the 
ABC, CBS, NBC and Fox Television Networks (Networks) to Resolve NASA 
Petition. NASA and the Networks request that the Commission affirm a 
number of basic principles relating to the Commission rules governing 
network/affiliate relationships to avoid future disputes. Pursuant to 
Sec.  1.2 of the Commission's rules, we grant NASA's request for 
declaratory ruling in part and grant the Joint Request in full.

II. Background

    2. In its Petition, NASA asked the Commission to institute an 
inquiry as to whether certain alleged practices of the Networks 
regarding their affiliates were consistent with the Commission's 
network rules, the Communications Act, and the public interest. NASA 
subsequently filed the Motion, in which it sought a declaratory ruling 
that certain specified practices engaged in by the Networks are 
inconsistent with the Communications Act and the Commission's rules and 
policies. In response, the Networks contended that it would be improper 
for the Commission to involve itself in the private contractual 
relationships between networks and affiliates.
    3. On January 19, 2005, NASA filed a Third Update of Record and 
Continued Request that Commission Issue Declaratory Ruling on Basic 
Principles in which it stated that each of the Networks has reformed 
its contracts to address the central issues raised by NASA. At the same 
time, NASA asked the Commission to clarify the meaning of the existing 
network/affiliate rules, consistent with the reformed affiliation 
agreements. In response, the Networks asked the Commission to reject 
NASA's request and to close this proceeding, arguing that there is no 
longer any basis for Commission action.
    4. On June 9, 2008, NASA and the Networks filed the Joint Request, 
stating that they had revised their standard affiliation agreements to 
address the issues raised by NASA with respect to particular 
contractual provisions, and that a Commission ruling regarding the 
resolved contractual issues is unnecessary. Nevertheless, they state 
that ``NASA and the Networks have a mutual interest in avoiding future 
controversies regarding the meaning of the Commission's network/
affiliate rules and in assuring that the rules of the road for the 
network/affiliate relationship are clear.'' The parties thus request 
that the Commission issue an order ratifying a number of principles 
``with which both NASA and the Networks agree, consistent with the 
revisions to the standard affiliation agreements by the Networks and 
the amendments negotiated by the Networks and their affiliates to their 
current affiliation agreements.''

III. Discussion

    5. Under Sec.  1.2 of the rules, the Commission ``may * * * issue a 
declaratory ruling terminating a controversy or removing uncertainty.'' 
The Commission has broad discretion whether to issue such a ruling. We 
agree with NASA and the Networks that additional guidance concerning 
licensee control, the right-to-reject rule, and the option-time rule 
would be helpful to avoid future disputes, and that the principles 
identified below are consistent with the Act and our rules.
A. Licensee Control
    6. Section 310(d) of the Communications Act prohibits the direct or 
indirect transfer of control of any station license to another entity 
without a Commission finding that ``the public interest, convenience, 
and necessity will be served thereby.'' We affirm that the following 
principle identified in the Joint Request is consistent with the Act 
and the Commission's rules:
     Affiliates, as the licensees of local television stations, 
must retain ultimate control over station programming, operations and 
other critical decisions with respect to their stations, and network 
affiliations must not undercut this basic control. Retention of this 
control by Commission licensees is required by section 310(d) of the 
Communications Act and the Commission's rules.
B. Right-to-Reject Rule
    7. To ensure that licensees retain sufficient control over 
programming to fulfill their obligation to operate in the public 
interest, the Commission's right-to-reject rule prohibits a television 
broadcast station from entering into ``any contract, arrangement, or 
understanding, express or implied, with a network organization'' that 
prevents or hinders the station from ``[r]ejecting or refusing network 
programs which the station reasonably believes to be unsatisfactory or 
unsuitable or contrary to the public interest'' or from 
``[s]ubstituting a program which, in the station's opinion, is of 
greater local or national importance.''
    8. We affirm that the following principles relating to the right-
to-reject rule identified in the Joint Request are consistent with the 
Act and the Commission's rules:
     Pursuant to Sec.  73.658(e) of the Commission's rules, 
networks and their affiliates are prohibited from ``having any contract 
* * * which, with respect to programs offered or already contracted for 
pursuant to an affiliation contract, prevents or hinders the station 
from: (1) Rejecting or refusing network programs which the station 
reasonably believes to be unsatisfactory or unsuitable or contrary to 
the public interest, or (2) Substituting a program which, in the 
station's opinion, is of greater local or national importance.'' This 
language does not give an affiliate the unfettered right to preempt 
network programs, but where a preemption is made pursuant to one of the 
two prongs of the right-to-reject rule, the economic consequence to the 
affiliate is irrelevant.
     Consistent with the Commission's right-to-reject rule, 
affiliation agreements should not include provisions that limit right-
to-reject preemptions for ``greater local or national importance'' to 
breaking news events or any other specific type of programming. 
Affiliation agreements should not include provisions that prevent 
affiliates from rejecting a program as ``unsatisfactory or unsuitable 
or contrary to the public interest''

[[Page 57001]]

because they have carried a similar network program in the past. 
Affiliation agreements should not include provisions that impose 
monetary or non-monetary penalties on affiliates based on preemptions 
protected by the right-to-reject rule. Affiliation agreements should 
not include provisions that subject right-to-reject preemptions to, or 
count them against, contractual preemption limits (or ``baskets'') 
(though baskets are perfectly appropriate for preemptions not protected 
by the right-to-reject rule).
C. Option-Time Rule
    9. The Commission's option-time rule proscribes any clause in an 
affiliation agreement that ``prevents or hinders the station from 
scheduling programs before the network agrees to utilize the time 
during which such programs are scheduled, or which requires the station 
to clear time already scheduled when the network organization seeks to 
utilize the time.'' In its Petition, NASA argued that certain contract 
provisions, with respect to both analog and digital broadcasting, 
violated the option-time rule by allowing networks to reserve an option 
to use an affiliate's broadcast time without committing to supply 
programming for the optioned time. To clarify the reciprocal 
obligations of networks and affiliates under the Commission's option-
time rule, we affirm that the following principles set forth in the 
Joint Request are consistent with the Act and our rules:
     Consistent with the option-time rule, affiliation 
agreements should not include provisions that result in the optioning 
of the station's time to the network organization or that have the same 
restraining effect as time optioning. Network affiliation agreements 
may not, under the Commission's option-time rule, obligate stations to 
carry a network's programming or other content during certain time 
periods without reciprocally obligating the network to provide the 
content for those time periods. Similarly, network affiliation 
agreements may not require affiliates to carry, at some unspecified 
future date, unspecified digital content that the network may (or may 
not) choose to offer.

IV. Ordering Clauses

    10. Accordingly, it is ordered that the Network Affiliated Stations 
Alliance's Motion for Declaratory Ruling filed June 22, 2001 is granted 
in part as discussed above.
    11. It is further ordered that the Joint Request is granted and 
that this proceeding is terminated.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. E8-23152 Filed 9-30-08; 8:45 am]
BILLING CODE 6712-01-P
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