Definition of Indie a Gray Area in Programming NPRM
As the FCC considers rules on how multichannel video programming distributors (MVPD) deal with independent programmers, one issue remains how to define an independent programmer. Multiple cable lawyers told us the proceeding, which some expect to get more active once the FCC finishes more high-profile agenda items affecting the cable industry, potentially could see some major programmers trying to argue they fall into that indie category. Meanwhile, AT&T's proposed $108.7 billion buy of Time Warner could help spur the FCC into adopting the rules in the indie programming NPRM adopted in September (see 1609290036), given worries that AT&T -- owning its own programming content -- would have incentives to discriminate against other programmers, multiple cable lawyers said. Some speculated the FCC, if not part of any regulatory review of the deal, might look at rulemakings on issues like program access or program carriage to try to ensure a competitive marketplace (see 1610260022).
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The FCC's notice of inquiry (NOI) defined an independent programmer as one not vertically integrated with an MVPD. But the NPRM said -- given the calls by some commenters for a tighter definition -- it wants comment on whether it should go with a narrower definition that would reflect that large programmers not vertically integrated with an MVPD "do not confront the same obstacles in securing carriage for their content as smaller or niche programmers."
Big programmers that aren't affiliated with MVPDs almost surely don't have the same challenges getting placement on MVPD systems that small programmers do, said ITTA President Genny Morelli. It would be surprising if the FCC deliberately wanted those large programmers to have the types of protections it's considering for indies, she said. ITTA in the NOI proceeding backed a narrower definition of indie programmer. The FCC also needs to ensure rules protecting indie programmers also separate small, new-entrant MVPDs from the majors, Morelli said.
Whether large programmers unaffiliated with MVPDs try to lobby the FCC to keep a definition that could include them remains to be seen, said multiple experts. A lawyer with cable clients said the FCC is aware of concerns some see the proposed definition as too narrow and would be unlikely to ultimately adopt it.
But the NPRM's having no proposed definition and seeking comment without making any specific proposal seems to point to the FCC having not been swayed by arguments the definition needs to be narrower, said cable lawyer Barbara Esbin of Cinnamon Mueller. The NPRM indicates the agency is open to suggestion but it obviously wasn't completely swayed by the argument its NOI-proposed definition could help large companies that don't need regulatory help, or it would have narrowed the proposed definition, she said.
The FCC in the NPRM also asks questions about where it should draw that indie programmer line -- for example, whether it would mean a video programming vendor not affiliated with a broadcast network, movie studio or MVPD, or whether the definition also should include some unspecified gross revenue threshold. The FCC also asks what should the threshold be -- just programming license fees and/or advertising revenue, or if it should include other sources. And it asks whether a programmer's total assets or asset/revenue mix should be the definitional standard. The agency said it wants input on how excluding large programmers from the rules' protections could adversely affect consumers or the video marketplace.
Regulators in recent media transactions attached programming stipulations such as FCC-imposed conditions on Comcast's buy of NBCUniversal that prohibit Comcast from discriminating on the basis of affiliation and the DOJ addressing alternative distribution methods in its consent decree on Charter Communications' buy of Time Warner Cable and Bright House Networks, said one lawyer with cable clients. The lawyer also said the AT&T/TW deal could prompt the FCC to look at carriage rules under the logic that if such restrictions are valid for merger conditions then they also should be valid for the rest of the industry.
Docket 16-41 has been quiet since the NPRM was issued, probably because the cable industry is largely preoccupied with the more-pressing set-top box, broadband privacy and business data services proceedings before the FCC, said several cable lawyers. There's also some question in the cable industry about what jurisdiction the agency has for making such rules on program carriage, one of the lawyers said.