In a report to Congress released on April 14, 2015, the United States Government Accountability Office (“GAO”) found that the effects of eliminating the FCC’s network non-duplication and syndicated exclusivity rules would “depend on other federal actions and industry response.” To arrive at this “conclusion,” the GAO reviewed comments filed by industry stakeholders (including numerous broadcasters and MVPDs) in response to the FCC’s 2014 further notice of proposed rulemaking considering elimination or modification of the exclusivity rules; conducted “semi-structured” interviews with the industry stakeholders; and reviewed relevant rules, statutes, and affiliation agreements.
As the GAO recognized, local television stations negotiate with content providers, including national networks and syndicators, for the right to be the exclusive provider of that content in their markets. The exclusivity rules help protect these contractual rights be requiring the blackout of duplicative programming from other sources. Thus, the GAO found that if the exclusivity rules were eliminated, local stations “may no longer be the exclusive providers of network and syndicated content in their markets” due to cable providers’ ability to import distant signals. As a result, stations’ bargaining position in retransmission consent negotiations could be reduced, which could in turn cause stations to agree to lower retransmission consent fees. This potential reduction in revenues could reduce stations’ investments in content, including local news and community-oriented content, and could affect the fees households pay for cable television service. However, “because multiple factors may influence investment in content and fees,” the GAO stated that it could not quantify these effects. Continue Reading