Replies Attack Initial Arguments in Program Access Rulemaking

The lack of exclusive deals between unaffiliated regional sports networks and multichannel video programming distributors undercuts cable industry arguments that exclusive deals among affiliated RSNs and cable MVPDs create diversity of programming choices, said Verizon and Verizon Wireless in reply comments filed with the FCC Monday. Verizon’s reply and others (http://xrl.us/boax3q) responded to the commission’s rulemaking notice on program access rules, which contained a proposal that would make it harder for MVPDs to withhold RSNs they own from competitors by setting up a rebuttable presumption that such withholding is unfair under the Communications Act. The rulemaking was initiated as the commission allowed a ban on exclusive contracts between affiliated networks and distributors to expire (CD Oct 9 p1).

"The record shows that there are no examples of an unaffiliated RSN seeking an exclusive deal,” Verizon and Verizon Wireless said (http://xrl.us/boaxvh). “This profit-driven behavior of independent programmers that eschew exclusive dealing is powerful evidence against the alleged procompetitive benefits of withholding by cable-affiliated RSNs."

As in initial comments (CD Dec 18 p5), competitive MVPDs such as DBS operators and LECs largely supported the proposed rebuttable presumption as well as another presumption in favor of setting up a standstill agreement, while larger cable operators and networks with corporate ties to them opposed it. The American Public Power Association also supported the presumptions (http://xrl.us/boaxx8).

NCTA said support from such quarters for the rebuttable presumption proposals is predictable. Supporters “argue that exclusive contracts ... never benefit consumers or promote competition,” NCTA said (http://xrl.us/boaxy9). “But their arguments fail to address the extent to which exclusivity can be and often is a legitimate and procompetitive means of product differentiation.” The FCC should reject calls to involve cable-owned national sports networks in these rules, NCTA said. “There is no ... evidence to support the blanket conclusion that most exclusive contracts involving” national sports networks hinder competition, NCTA said, leaving the FCC with no basis for a presumption that they do, “much less that they are unfair."

Some cable operators, such as Mediacom and Cox, focused their comments and replies on other aspects of the rulemaking notice, including expanding the program access rights of buying groups. Large content companies including Disney, Viacom, Time Warner, CBS and News Corp. asked the commission not to take up requests by Cox and Mediacom to “expand the scope of this FNPRM ... to non-vertically integrated programmers,” they said in a joint letter (http://xrl.us/boaxxj).

Time Warner Cable urged the commission to reject two American Cable Association proposals raised in initial comments, contending they're outside the scope of the rulemaking. The ACA’s calls for setting up a 14-day standstill in programming disputes and for a determination that any discrimination involving cable-affiliated, terrestrially delivered programming is an “unfair act” are “well outside the scope of the FNPRM and are without merit in any event,” it said. ACA wants the commission to strengthen the rights of buying groups, adopt the rebuttable presumptions, create a standstill provision and include national sports programming in these rules, its reply said. “Although cable-affiliated programmers and vertically integrated cable operators have advanced a raft of reasons why these reforms should not be adopted ... the public interest mandates their adoption.”