July 24, 2014

In the Matter of Amendment of the Commission’s Rules Related to Retransmission Consent, Report and Order and Further Notice of Proposed Rulemaking

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The FCC proposes to repeal its syndicated exclusivity and network nonduplication rules,1 which the Commission first devised in the 1960s and 1970s. The rules were intended to limit cable television growth and to protect the growth of fledgling UHF broadcast stations.2 We agree with commenters3 that these rules are vestigial and potentially anticompetitive interventions into television markets from a bygone era.4 

Television rules from the past are increasingly socially costly as technologies and business models change—particularly as content moves online—and it is time to start repealing old regulations. Experts view television regulations as “a Rube Goldberg regulatory structure,” a complex system that performs simple tasks in indirect, convoluted ways.5 The Copyright Office characterizes the FCC’s network nonduplication and syndicated exclusivity rules as “highly complex” and “a paradox” because FCC rules both encourage and discourage importation of distant broadcast transmissions.6 The Congressional Research Service similarly has said that “the negotiations between programmers and distributors, although private, are strongly affected by statutory and regulatory requirements and cannot be properly characterized as free-market.”

Every television industry segment has received some regulatory favors though the decades. However, the Copyright Office notes that there is “a thicket of communications law requirements aimed at protecting and supporting the broadcast industry.” 7 This thicket arises largely because the FCC has aspirations for broadcast—namely localism, free television, competition, and diverse voices—that are often in tension with each other.8These conflicting goals also tend to disadvantage pay-TV providers, particularly smaller operators.

The existing rules have prevented a freer media market for forty years and should be repealed. As the Commission has said, “If the [exclusivity] rules should ultimately prove unnecessary or need modification in light of the passage of time, congressional action or other factors, they can be modified or rescinded.” 10 Repealing the rules would not be a panacea for what ails television markets, but as one operator noted, eliminating these rules at issue “would be an important step in the right direction . . . .” 11 

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