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FCC ALJ: Cost Savings Alone Not Enough to Justify Discriminatory Treatment of Non-Affiliated Networks

Posted in MVPD Regulation

GSNCablevision_Company_Logo.svgThe FCC’s administrative law judge (“ALJ”) has once again sided with a programmer in resolving a complaint under the Commission’s program carriage rules.  More than five years after GSN filed a program carriage complaint against Cablevision, ALJ Richard Sippel issued an initial decision finding that Cablevision improperly discriminated against GSN on the basis of its non-affiliation when moving GSN from Cablevision’s expanded basic tier to its “Sports Pak”—this despite the fact that the ALJ determined that Cablevision had demonstrated that it saved programming fees as a result of the retiering.

Section 616 of the Communications Act and the FCC’s implementing regulations prohibit multichannel video programming distributors (MVPDs) from “unreasonably restraining the ability of an unaffiliated programming vendor to compete fairly by discriminating in video programming distribution on the basis of affiliation or non-affiliation of vendors in the selection, terms, or conditions” for carriage.

GSN alleged that Cablevision discriminated against it on the basis of non-affiliation by moving GSN to the “Sports Pak” while leaving affiliated networks, including similarly situated WeTV and Wedding Channel along with expensive affiliated sports networks, in the expanded basic tier.  Cablevision originally considered and rejected proposals to move GSN to its Silver tier and to move GSN and three other unaffiliated networks to the Sports Pak to reduce programming expenses.  Ultimately, GSN was the only non-sports or outdoors network included in the “Sports Pak,” which Cablevision renamed the “Sports and Entertainment Pak.”  Continue Reading

Negotiating Seller Reps and Warranties in a Purchase Agreement

Posted in Corporate/Business

The Deal RoomOne of the most heavily negotiated parts of a purchase agreement is often the seller’s representations and warranties – and for good reason.  The seller’s reps and warranties serve three very important purposes in a purchase agreement: (1) they constitute what the seller is willing to tell the buyer as being true about the assets at the time of signing the agreement, (2) they are tested at closing when the seller needs to re-certify to the buyer that those same things are still true about the assets and (3) they can form the basis of an indemnification claim if the buyer discovers a problem after closing.

Let’s take each of those items one by one. Continue Reading

FCC Seeks Comment on Updated Catalog of Post-Auction Reimbursement Expenses

Posted in Broadcast Regulation, Spectrum

MP900438810On October 13, 2016, the Federal Communications Commission (FCC)’s Media Bureau released an update to the Catalog of Eligible Expenses (the “Catalog”) that it will use as a guide when processing requests for reimbursement from the TV Broadcaster Relocation Fund.  Comments on the proposed updates are due by November 14, 2016 and reply comments are due by November 29, 2016.

The Media Bureau first sought comment in September 2013 regarding the types of costs that should be included in the Catalog and how to determine whether such costs are reasonable.  Based on that record and a report that the agency commissioned from Widelity, Inc., the Bureau adopted its initial Catalog in October 2015.

The proposed changes to the Catalog include increases in baseline costs previously proposed; the addition of new categories of expenses; and the removal of other categories of expenses which have been discontinued or the Bureau has determined will likely not be required due to technological advancements.

In addition to seeking comment on the specific proposed changes in the updated Catalog, the Bureau also is seeking comment on how to adjust baseline costs during the three year reimbursement period.  The Bureau proposes to adjust prices annually based on the Producer Price Index annual average.

Are Letters of Intent Worth Signing?

Posted in Corporate/Business

Parties can sometimes overemphasize the value of a Letter of Intent (“LoI”).  Quite often, parties spend legal fees to send drafts of letters of intent back and forth multiple times, when that time and money would likely have been The Deal Roombetter spent on negotiating the actual definitive agreement.  Since letters of intent should always be nonbinding (except in limited, unique circumstances), we often recommend that parties, particularly sellers, skip the LoI and move right to working on binding, definitive documents.

If an LoI is being utilized, buyers and sellers should approach them differently, and experienced transactional counsel likely have different starting points for LoIs depending on whether their client is the buyer or seller. Continue Reading

FCC Invites Broadcasters to Test Repack Reimbursement System

Posted in Broadcast Regulation

blogThe FCC is providing broadcasters with an opportunity to test and provide feedback on the Incentive Auction Broadcaster Relocation Reimbursement System, which is the online form that the Commission will use to collect requests for reimbursement of repacking expenses (technically known as FCC Form 2100, Schedule 399).

Beginning on October 4, 2016, broadcasters can access a test environment at https://apps2demo.fcc.gov/dataentry/login.html using their FRN and password.  A quick start guide is available at: http://www.fcc.gov/incentiveauctions/reimbursement.

The Commission is inviting broadcasters to provide feedback on the form and the test environment by November 4, 2016 to form399beta@fcc.gov.

FCC Considers Prohibiting Unconditional MFNs and Unreasonable ADMs

Posted in Broadcast Regulation, MVPD Regulation

fcc-logoAt its September 29, 2016 open meeting, the Federal Communications Commission (FCC or Commission) adopted a Notice of Proposed Rulemaking (NPRM) in which it proposes rules prohibiting “certain practices some multichannel video programming distributors (MVPDs) use in their negotiations for carriage of video programming” that the Commission believes “may impede competition, diversity, and innovation in the video marketplace.” Comments will be due 60 days after the NPRM is published in the Federal Register.

In the NPRM, the FCC proposes to prohibit the use of so-called “unconditional” most favored nation (MFN) provisions and “unreasonable” alternative distribution method (ADM) clauses in contracts between MVPDs and independent programmers. As described by the Commission, an “unconditional” MFN clause entitles a pay TV provider to receive favorable contract terms that a programmer has given to another programming distributor, without requiring the pay TV provider to assume any corresponding obligations from the other distribution agreement. The agency describes an ADM clause as generally prohibiting or limiting a programmer from putting its programming on alternative video distribution platforms, such as online platforms. The FCC focuses on these two provisions based on the record developed in response to a Notice of Inquiry issued in February 2016. The Commission characterizes the record as revealing that:

certain MVPDs have used their bargaining leverage vis-à-vis independent programmers to exact unconditional MFN clauses and/or unreasonable ADM provisions that hamper the ability of programmers to experiment with online distribution. Such contractual provisions make it challenging for programmers to achieve a profitable level of carriage, or to secure carriage without contracting away their freedom to present content to a broader audience via the Internet. Restrictions placed on programmers by unconditional MFN and unreasonable ADM obligations in turn create barriers to entry and hinder the growth of OVDs by restraining their access to content and precluding them from entering into mutually beneficial agreements with independent programmers. Continue Reading

FCC Meeting Update: Foreign Investment Rules and Independent Programming Proposal, But No Set Top Box Rules

Posted in Broadcast Regulation, MVPD Regulation

FCCAt its September 29, 2016 open meeting, the FCC adopted rules to make it easier for broadcasters to seek approval for foreign ownership, reformed the methodology for publicly traded broadcasters and common carriers to assess compliance with the statutory foreign ownership limits, and proposed rules it believes will strengthen the position of independent programmers in negotiations with multichannel video programming distributors (MVPDs).  The Commission tabled the most anticipated item on its agenda, however, delaying the adoption of rules requiring MVPDs to offer apps as a substitute for set top boxes. Continue Reading

FTC Workshop Shines Additional Light on Need for Effective Disclosures

Posted in Advertising Issues, Program Content

spotlight_____by_mo_design-d54nrtl[1]At a recent Federal Trade Commission (FTC) workshop, the focus was squarely on how advertisers and marketers should ensure the effectiveness of consumer disclosures, particularly on new digital platforms. Terming the topic one of “exceptional importance” that has been under study for more than one hundred years, FTC Chairwoman Edith Ramirez opened the workshop by emphasizing the agency’s focus on how best to evaluate the effectiveness of disclosures.  The workshop sessions highlighted a variety of issues related to and research regarding disclosures, including the following five key takeaways:

Continue Reading

The Silver Lining in the FCC’s UHF Discount Order

Posted in Broadcast Regulation

silver liningOn Wednesday, the FCC issued a long-expected Order abolishing its 30-year policy of applying a “UHF Discount” when calculating a broadcaster’s compliance with the 39% National TV Ownership Cap.  At the same time, the Commission refused to adopt a “VHF Discount” in recognition of the technical inferiority of VHF channels following the digital transition.  The Order comes as a blow to television networks and large station groups that are near the national cap and whose opportunities for growth into new markets are now limited.

But those looking for a silver lining should pay attention to the FCC’s discussion of its authority to alter the UHF Discount.  Continue Reading

FCC Bids Adieu to UHF Discount

Posted in Broadcast Regulation

calculatorThey say all good things must come to an end, and for the FCC’s UHF discount, the end has arrived (pending the outcome of near-certain litigation).  Earlier today, the FCC issued a Report and Order eliminating its 30-year old policy of applying a 50% “discount” to market populations served by UHF stations when calculating compliance with the 39% national TV ownership cap, declaring that “the UHF discount cannot be justified in the digital world.” At the same time, the FCC declined to adopt a comparable VHF discount, finding that the circumstances that justified adoption of the UHF discount 30 years ago do not extend to VHF stations today.

When calculating a station’s compliance with the national TV ownership cap, the Commission considers the population of the market rather than the population served by an individual station’s contour. Recognizing the “inherent physical limitations” of the UHF band, the agency in 1985 adopted the UHF discount, explaining that the discount compensated for the fact that the signal strength of a UHF television signal decreased more rapidly with distance, resulting in smaller coverage areas and smaller audience reach. Although the actual national ownership cap has fluctuated since that time, the UHF discount has remained in place. Continue Reading