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ACA to FCC: Update Program Access Rules To Cover Buying Groups, Like NCTC

The American Cable Association called on the Federal Communications Commission to ensure the rights of buying groups under the program access rules to access, on non-discriminatory terms and conditions, video programming controlled by vertically integrated cable operators and affiliated programmers.

"The FCC should adopt ACA's proposed reforms to the program access rules concerning buying groups as these changes will ensure that buying groups as they operate have rights under the program access rules as Congress intended," ACA President and CEO Matthew M. Polka said.  "Moreover, it is very important that FCC rules treat buying groups like the National Cable Television Cooperative (NCTC) comparably to multichannel video programming distributors (MVPDs) with regard to volume discounts and prevent cable-affiliated programmers from excluding regularly participating buying group members from opting-in to master agreements."

ACA's views were detailed in reply comments filed with the FCC on Jan. 14 in connection with the agency's review of its program access regulations in the wake of its October decision to let the exclusivity ban sunset after it had promoted competition in the pay-TV distribution market for two decades.  With limited exception, the rules had categorically banned exclusive contracts between cable operators and cable programmers they owned, and other exclusive arrangements involving cable-affiliated programmers.  In their stead, the FCC adopted a case-by-case approach to evaluating such exclusive contracts.

In its comments, ACA supported the FCC's tentative conclusion in favor of expanding its definition of a buying group to include a group operating like NCTC, the industry's largest buying group.  ACA also supported clarifying other aspects of the rules to allow NCTC to utilize the program access rules in a meaningful way.  NCTC is currently unable to take advantage of program access protections due to FCC requirements that a buying group assume the full payment liabilities of its members, or that each member agree to assume the liabilities of all other members, a far higher level of liability than commonly agreed upon and used by programmers and NCTC in negotiations for many years. 

ACA said the FCC's proposed alternative liability rule accords with marketplace realities and will allow NCTC to continue with its business model without subjecting programmers to any greater financial risk.  ACA noted that defaults among NCTC members are rare, and NCTC regularly takes steps to assist its programming partners in dealing with such situations when they may occur as part of its regular course of business.

ACA also recommended that the FCC clarify that cable-affiliated programmers are required to provide buying groups the same volume discounts or other advantageous terms and conditions based on the number of subscribers that they would ordinarily extend to individual MVPDs serving the same number of subscribers.

ACA additionally argued that buying group members with up to 3 million subscribers should have a presumptive right to participate in any programming master agreement with a vertically integrated cable programmer.  ACA maintained that the 3 million "safe harbor" will prevent cable-affiliated programmers from circumventing key program access protections Congress intended to be available to buying groups.

ACA explained that a 3 million subscriber safe harbor will simply preserve the status quo and not, as programmers have suggested, create new participation rights.  Moreover, ACA noted the safe harbor will not prevent cable-affiliated programmers from negotiating individual deals with an MVPD when they each determine this would be efficient.

Notwithstanding elimination of the exclusivity ban, MVPDs still have a legal right to file complaints at the FCC challenging exclusive contracts on a case-by-case basis, based on evidence that a particular exclusive contract for cable affiliated, satellite-delivered programming is an unfair act and a significant hindrance to competition.

In response to the FCC's call for presumptions, ACA supported adoption of several rebuttable evidentiary presumptions, including the presumption that the unfair act standard is met for the case of exclusive contracts with respect to cable-affiliated regional sports networks (RSNs), both satellite and terrestrially delivered, and that both the significant hindrance standard and the unfair act standard are satisfied for the case of exclusive contracts over satellite delivered, cable-affiliated national sports network (NSN) programming. In addition, ACA said the presumption that both the significant hindrance standard and the unfair act standard are satisfied in the case of other satellite delivered, cable-affiliated programming whose exclusive arrangement was successfully challenged by an MVPD.

Lastly, ACA supported adoption of a rebuttable presumption in favor of granting standstill of an existing contract involving cable-affiliated sports programming pending resolution of the underlying complaint, in light of the fact that this programming is time-sensitive "must have" programming.

"These presumptions will not resurrect the per se ban on exclusivity as some programmers seem to think," Polka said. "The effect of the presumptions is only to shift the burden of producing evidence in support of its case, not the burden of persuasion.  They will reduce burdens on the complainant and the FCC, thereby increasing the utility and efficiency of the case-by-case process, in

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