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HCC/SCT Marks Up STELA Reauthorization Bill

March 25, 2014. The House Commerce Committee's (HCC) Subcommittee on Communications and Technology (SCT) marked up a yet to be introduced bill to extend expiring provisions of the Communications Act related to the retransmission of signals of television broadcast stations.

This main provision of this draft bill is reauthorization of the Satellite Television Extension and Localism Act (STELA). It provides for a five year extension. However, this bill also addresses the FCC's media ownership rules, retransmission consent, sweeps week, the integration ban, and other issues.

See, discussion draft of the bill, the HCC's draft summary, and TLJ bill summary in story titled "HCC/SCT to Mark Up STELA Reauthorization Bill" in TLJ Daily E-Mail Alert No. 2,635, March 24, 2014.

The full HCC has not yet scheduled a date for it mark up of this bill. The Senate Commerce Committee (SCC) has not yet marked up a bill. Key provisions of the STELA (enacted as S 3333 [LOC | WW] in the 111th Congress) are set to expire at the end of 2014.

Rep. Greg Walden (R-OR), the Chairman of the SCT, said that this bill will "reauthorize the law that ensures that 1.5 million subscribers in hard-to-reach areas continue to receive broadcast content via their chosen satellite provider."

He said in his March 25 statement that this draft bill also "proposes reasonable reforms -- that can become law -- to the current state of the video market -- sensible, modern-day, deregulatory changes -- that are supported by the major competitors in the marketplace: broadcasters, major cable operators, and satellite operators. Getting all three of these entities on the same page was no easy task -- something that I know my colleagues understand. Any major changes put at risk our ability to move forward in a positive way to reauthorize this important service."

The SCT approved by voice vote an amendment offered by Rep. Walden and Rep. Anna Eshoo (D-CA), the ranking Democrat on the SCT, that revises the provisions of the bill regarding attribution for the purpose of the FCC's obsolete media ownership rules, and repeal of the FCC's integration ban.

This amendment contains the same language on media ownership attribution as the original. However, it puts this text in brackets. Rep. Fred Upton (R-MI), Chairman of the HCC, wrote in his statement that "an agreement to make the symbolic gesture of placing brackets around the text of section four shows our commitment to working toward a bipartisan agreement on that provision".

Rep. Walden said that the "major cable operators" are among those who are "on the same page" for this bill. And, Michael Powell, head of the National Cable & Telecommunications Association (NCTA), stated in a release that "We are especially pleased that committee members have worked collaboratively to eliminate the FCC’s Integration Ban, an unnecessary rule that has increased significantly both the cost and energy consumption of cable leased set-top boxes while offering no consumer benefit.".

Other cable operators are represented by the American Cable Association (ACA). Matthew Polka, head of the ACA, stated in a release that both the FCC and the Department of Justice's (DOJ) Antitrust Division have "recognized that consumers and competition are harmed when separately owned, same-market broadcasters collude in the sale of retransmission consent to multichannel video programming distributors (MVPDs), including independent cable operators who are ACA members."

He continued that "Available evidence shows that such collusion raises retransmission rates by at least 18% and that these unjustly gained higher rates are passed along to consumers in the form of higher bills. Not surprisingly, ACA members and the millions of customers they serve are quite distressed with Section 3 of the discussion draft passed today in that it provides broadcasters with a statutory right to engage in this highly dubious practice."

Section 3 of this draft bill, which the SCT did not amend at this mark up, would amend 47 U.S.C. § 325 to prohibit multiple broadcast stations from negotiating retransmission consent jointly unless the cable or satellite operator agrees to joint negotiations or the stations are directly or indirectly under common de jure control approved by the Federal Communications Commission (FCC).

It would add a new subsection iv to 325(b)(3)(C) that would require the FCC to write regulations that "shall" "prohibit a television broadcast station from negotiating on a joint basis with another television broadcast station in the same local market ... to grant retransmission consent under this section to a" MVPD "unless -- (I) such stations are considered to be directly or indirectly owned, operated, or controlled by the same entity for purposes of section 73.3555(b) of title 47, Code of Federal Regulations, or any successor regulation; or (II) such" MVPD "agrees to negotiate on such joint basis."

On the other hand, the National Association of Broadcasters (NAB) opposes proposals by groups that represent MVPDs to alter the retransmission consent regime. The NAB's Dennis Wharton stated in a release that "From the outset, NAB has supported passage of a STELA bill that remains free of amendments that are designed to benefit behemoth pay TV companies at the expense of local broadcasters and our tens of millions of viewers. We believe the bill passed today strikes that balance."

Withdrawn Amendments. Rep. Marsha Blackburn (R-TN) offered and later withdrew an amendment that would have amended the retransmission consent statutory regime, which is codified at Section 325.

Currently, Section 325(b)(1) provides that "No cable system or other multichannel video programming distributor shall retransmit the signal of a broadcasting station, or any part thereof, except ... with the express authority of the originating station". That is, broadcasters can charge cable companies and other MVPDs for retransmission of their programming. Section 325(b)(2) provides exceptions.

Rep. Blackburn's amendment would have provided that Section 325(b)(1) "shall not apply ... to retransmission of the signal of a television broadcast station if the licensee of such station is also the licensee of an AM or FM radio broadcast station and, during the term of the license for such television broadcast station in which such retransmission occurs, such licensee has transmitted a sound recording over such radio station without compensating the owners and creators of the content contained in the transmission."

Rep. Steve Scalise (R-LA) offered and later withdrew an amendment that would have amended 47 U.S.C. § 543(b)(7)(A) regarding basic tier service.

Currently, Section 543(b)(7(A) provides as follows:

Rep. Scalise's amendment would have replaced the word "provide" with "offer", deleted the clause "to which subscription is required for access to any other tier of service", and deleted clause (iii).

Rep. Eshoo offered and later withdrew an amendment that would have required the FCC to conduct a rulemaking proceeding "to determine whether, during retransmission consent negotiations or after the parties to such negotiations reach an impasse resulting in the expiration of an existing retransmission consent agreement, the blocking of online content owned by or affiliated with a television broadcast station (or a person who owns or controls, is owned or controlled by, or is under common ownership or control with such station) constitutes a failure to negotiate in good faith under section 325(b)(3)(C)(ii) ..." (Parentheses in original.)

Rep. Ben Ray Lujan (D-NM), who represents a district that includes huge swaths of sparsely populated northern New Mexico, offered and later withdrew an amendment regarding retransmission consent that would have provided relief for MVPDs in an "underserved county".

Rep. Lujan offered and later withdrew another amendment that would have added a new section to the bill that would have required the FCC to write a report that contains an "analysis of ... the extent to which consumers in each local market ... have access to broadcast programming from television broadcast stations ... located outside their local market".

(Published in TLJ Daily E-Mail Alert No. 2,636, March 25, 2014.)