STELAR Aftermath: Ban on Joint Retrans Negotiations, Other Rules Revised

At Congress's direction, FCC narrows, considerably, the ability of same-market stations to negotiate retransmission consent deals jointly.

Back in November (as we reported), Congress passed the STELA Reauthorization Act of 2014 (a/k/a STELAR). Among other things STELAR required the Commission to modify certain rules to implement a number of Congressionally-dictated changes. STELAR also required that those modifications take effect pronto - some within 90 days, others within nine months of STELAR's enactment. Obviously mindful of both the chores Congress assigned it and the limited time frame provided by Congress to get those chores done, the Commission has taken the first step in that direction, releasing an Order amending its rules to incorporate four STELAR-mandated provisions. The four provisions address sunset dates, the ban on joint retransmission consent negotiations, expanded protections for significantly viewed stations and elimination of the "sweeps prohibition."

Don't be fooled by its meager five-page length and ostensibly limited scope: the Order will undoubtedly have far-reaching impact.

First, and most straightforwardly, the sunset dates for certain retransmission consent rules have been extended five years. The rules - previously set to expire December 31, 2014 or January 1, 2015 - will now expire December 31, 2019 or January 1, 2020, respectively. The rules involve: the retransmission consent exemption for carriage of distant network signals by satellite carriers; the prohibition on exclusive retransmission consent contracts; and the expiration of the reciprocal good faith negotiation requirements.

Second, and perhaps most importantly, the Order implements the STELAR-dictated ban on joint negotiation by broadcasters in retransmission consent. As readers will recall, earlier in 2014 the Commission had adopted its own joint negotiation prohibition. But, as called for by the Commission, that prohibition applied only to Top-Four-ranked stations, in the same market, that did not share some common attributable ownership (as measured by the Commission's ownership rules). Under STELAR, that joint prohibition has been expanded to bar joint negotiations between any two same-market TV stations not under common de jure control. Concluding that this STELAR-mandated version is in all ways broader than its existing prohibition, the Commission has now simply incorporated the STELAR language almost verbatim into the rules.

The Commission does clarify one perhaps somewhat overlooked aspect of STELAR: where the original, FCC-designed joint negotiation prohibition did not apply to any stations that shared common attributable ownership, that exemption has now been narrowed to apply only to stations that are actually under common de jure control. So where, prior to STELAR, two Top-Four-ranked same-market licensees with at least some common ownership could still engage in joint retrans negotiations, under the STELAR-imposed standard such joint negotiations involving two same-market stations (regardless of whether they are Top-Four-ranked) are permitted only if the two licensees are under common de jure control.

Third, the Commission has incorporated into its rules a prohibition barring a television station from preventing an MVPD, by contract or otherwise, from importing a distant signal if that signal qualifies as "significantly viewed" or if the MVPD is otherwise legally authorized to import the signal.

Finally, the Order removes the long-standing "sweeps prohibition" from the Commission's rules. This provision has long prohibited a cable MVPD (although not a satellite operator) from deleting a station's signal during a Nielsen "sweeps" period.

Attentive readers might question why the Commission has adopted these rule changes without first undertaking the conventional notice-and-comment rulemaking proceeding. Such proceedings are ordinarily required by the Administrative Procedure Act. But that Act exempts situations in which the FCC determines that such a proceeding is unnecessary. In this case, Congress explicitly dictated the rule changes to be made, including the narrowing of the joint retrans negotiation prohibition. Since Congress is the FCC's boss, the Commission's got to follow Congress's direction. Accordingly, the Commission had no choice but to adopt those changes, so it concluded that no public notice and comment proceeding was required.

Barring court challenge or reconsideration, these four provisions will take effect 30 days after the Order is published in the Federal Register. Check back here for updates.