Opinion ID: 532957
Heading Depth: 3
Heading Rank: 2

Heading: Lessening of the Value of Syndicated Programs to Local Broadcast Stations

Text: 14 The petitioners hotly contest the Commission's finding that program duplication lessens the value of syndicated programs purchased by local broadcast stations. However, the Commission's report cites substantial evidence from which it could reasonably draw this conclusion. The Commission discusses two related ways in which duplication lessens the value of syndicated programs: audience diversion and the loss of exclusivity as a competitive tool. 15 The Commission found that duplication of programming diverts a substantial portion of the broadcast audience to cable. The evidence was strongest regarding diversion caused by a cable station's simultaneous transmission of a program being aired by a broadcast channel, for such diversion can be gauged by ratings information. Numerous stations reported a substantial number of viewers that chose to watch a duplicated program on the cable rather than the broadcast channel. Although the Commission correctly observed that not every viewer who watched the program on cable would watch it on the broadcast channel if that were the only way to watch it, and that these numbers therefore did not provide a mathematically precise measure of audience diversion, 3 F.C.C.Rcd at 5305, the Commission was surely justified in concluding that significant diversion was occurring. 16 The Commission reasonably inferred that diversion lessened the value of the programming by lowering advertising revenues. The petitioners contest this finding, claiming it is based on a single study, which they attack as faulty. However, the report makes clear that the Commission relied on the study for only a rough approximation of the decrease in advertising revenue. More important was the hardly controversial conclusion that the amount advertisers will pay depends on the size of the audience that a program attracts. 3 F.C.C.Rcd at 5306; 4 F.C.C. Rcd at 2716. This statement needs no detailed study to support it. 17 The Commission addressed some allegedly contrary evidence, including the submission, by the National Cable Television Association (NCTA), of a study showing that local ratings for syndicated programs are higher for those programs that are duplicated than for those that are not. Although the NCTA claimed that this study shows that duplication does not lessen broadcast channels' viewership, the Commission quite reasonably concluded that the data simply show that the more popular a syndicated program is, the more likely it is that a cable station will choose to duplicate it. 3 F.C.C.Rcd at 5305-06. The study certainly does not make arbitrary the Commission's belief that the broadcast channel's ratings would be even higher in the absence of duplication. 18 The Commission's report does not specify quite so clearly how it reached the conclusion that nonsimultaneous transmission of duplicative programming (including transmission of different episodes of the same program) also causes audience diversion. The one sentence explicitly devoted to this question in the report says that the quantity of non-simultaneous duplication documented in the record in this proceeding, taken as a whole, presents compelling evidence that substantial diversion is taking place. Id. at 5306. This sentence suggests that the Commission has simply assumed diversion from the conceded fact of nonsimultaneous duplication. The Commission points to no specific empirical support for this statement in the record. 19 While it is intuitively reasonable to assume that simultaneous duplication causes diversion, the question of nonsimultaneous duplication seems more varied and complex. A cable company's transmission of a feature film, for example, might reduce the audience for a broadcast of that film for weeks afterwards. But if a broadcast channel airs an old episode of MASH at 6:00 p.m., will a substantial number of viewers be diverted because a cable channel is offering a different old episode at 11:00 p.m.? The Commission's report offers no way to tell, and it is possible that the 6:00 p.m. and 11:00 p.m. time slots attract quite diverse audiences. If the Commission had relied solely on its assumption of audience diversion as evidence that nonsimultaneous duplication lessens the value of programs to broadcast stations, we might well have felt obliged to require some supplementation or further explanation of its reasoning. 20 However, the Commission relies on more solid evidence that duplication makes programming less valuable. The evidence is that all stations, broadcast and cable, want exclusivity. Many broadcasters, in their comments supporting the syndex rules, identify exclusivity as the key to programming success. E.g., Comments of Tulsa 23, Ltd et al., Joint Appendix (J.A.) 293. Even more telling, cable companies themselves regularly take advantage of their ability to obtain exclusive rights in programming. See 3 F.C.C.Rcd at 5308, 5336 n. 122. The reason, as the FCC notes in its report, is that exclusivity gives stations the opportunity to promote themselves as the only presenter of a certain program. If a broadcaster spends money promoting a duplicated program, some of the value of the expenditure will be captured by the cable company that is importing the same program. Syndex will give the local broadcaster a competitive tool that it can use both to call attention to the particular pro gram and to alert viewers to the general attractiveness of the broadcaster's whole range of programming. 3 F.C.C.Rcd at 5309. 2 The strong desire of all stations for complete exclusivity is evidence that even nonsimultaneous duplication lessens the value of programming, whether because of audience diversion or for other reasons. 21 While the Commission's report may leave something to be desired in its detail on the dangers of nonsimultaneous duplication, we do not think its conclusion that even this type of duplication lessens the value of programming for broadcast stations can be called arbitrary or capricious. The record as a whole shows that both broadcast and cable companies want complete exclusivity; the Commission did not act without reason in concluding that exclusivity must be a valuable commodity, and conversely that lack of exclusivity diminishes the value of a program.