Emerging Video Marketplace I

Week #5 - Emerging Video Marketplace I - My Notes from Lecture

From 1934 until the 1984 Cable Act
—-cable was regulated by common law

1992 cable act (2nd statutory)

Cable television was based on distinction that it was only carrying a signal and not a content provider
Broadcasting used to be oligopoly (when had 3 stations)

cable has broadcasting stations
cable has fragmented the audiences
cable programming doesn’t have to be great, just slightly better than everything else

Caroll Doctorine???? (I DO NOT KNOW WHY THIS IS IN MY NOTES)
Cable television is now digital, they own some programming, and they own some telephone and internet services
Cable is now selling advertising against local media (insert ads into none broadcasting television)
Emergence of HD and better quality with fragmentation of channels

Cable act of 1992
congress asked fcc to do these things
—limits on # of cable sub
—limits on # of channels that carry programming owned by cable operators
—appropriateness of limits on creation or production of video programming
(couldn’t own more than 30% of national market)
(couldn't own in the same market)
30% were arbitrary
***didn’t even grant FCC chance to defend itself

Promote increased competition in the MVPD market
Increase availability of satellite cable programming in rural areas
Spurred development of communications technologies

Time Warner v. FCC
1) National owenership limits
2) Program ownership
both were reversed and remanded
3) Programming creation

Report and order 2001
4) Establish safeguards to prevent undue influence
—-keep cable providers from limiting their own channels
5) Prohibit discrimination by vertically integrated sat programming
6) Prohibit exclusive contracts between cable op and vertically integrated programming vendor in areas that are not served by a cable operator

Report and order 2002
- Found that vert integrated programmers retain the incentive to favor ther affiliated cable providers

NewsCorp bought DirectTV
— cable thought they would withhold programming from cable

How is committement to fair access to RSN (regional sports networks)
done by binding arbitration
** unique because there is no requirement for other broadcasters
arbitration governed by independent non-profit org "agree to abide by the rules set by the AAA"
3 arbitrator panel (1 of each side and 1 who both agree)

Arbitration is to reach agreement before final negotiations
—-MVPD allowed to arbitration

**A LOT of law treat sports differently
(Feb 17th chosen for switch from analog to digital because its after superbowl)

Largest merger in history and also largest financial disasters in history
Time Warner-Turner (1996)
TW - fully integrated television and media services company

Changed twaol to tw in 2003
Tw wrote off 54 bill in 2002 and 46 bill in 2003
—-since largest merger, have to have FCC and FTC approval

TCI - John C Malone
**TCI was sold to AT&T in 1999 who later merged with comcast
Which were the top 5 MSO?
-#1 comcast, tw, cox, charter, cable vision
—- brighthouse is a tw company

Today —— Time warner inc no longer owns time warner cable
Liberty Media now runs Direct TV
Top MVPD? #1 comcast, direct tv, dish network (network star), time warner

What is consent decree??
Regulatory consent decree is different than a court order consent decree

Consent decree stip (case study)
A limits tci's owndership interest in time warner
B restriction on service bundling
C must carry
D from discrim against competing distributors
Time warner owned cnn at the time
—-must pick up FOX news
Msnbc - mighty sorry but nobody cares
to compete against FOX as 2nd
microsoft and nbc to become news media on cable but also on the internet

Comcast is NBC
NewsCorp owns Fox

***"industry that eats its young"

Government believes in the idea that people should be able to get information without paying a lot of money

Week #5 - Slide Outlines

The MVPD Landscape
Over 94 million households receive their TV signals from a provider other than over-the-air broadcasters, with 65.4 million subscribing to cable TV and another 26 million subscribing to direct broadcast satellite.
FCC, 2006 Annual Assessment

Cable and Copyright
1968 - Fortnightly v. United Artists - Station cannot demand copyright payments for broadcast.
1974 - CBS v. TelePrompTer - Microwave relay made no material difference to the court in the Fortnightly decision
Changed by Copyright Act of 1976

Copyright and Cable TV
Copyright Act of 1976 set cable licensing fees for all imported – FCC then drops syndex.
Cable firms responsible for royalty payments.
Created Copyright Royalty Tribunal

Copyright Royalty Tribunal
Collect and distribute royalty payments.
Only “distant” and “non-network” programs are covered.
Fashioned after BMI and ASCAP.
Payments collected by FCC and distributed according to formula based on frequency and reach.
Copyright Royalty Tribunal Act (1993).

Compulsory License
The 1976 Copyright Act permits cable systems to obtain a compulsory license for retransmission of all television an radio signals that they carry.

Compulsory Licensing
To balance interests concerning copyrighted works
Cable Television
Satellite Delivery of Video
Copyright Royalty Arbitration Panel becomes Copyright Arbitration Royalty Panel (CARP)

Syndicated Exclusivity Rules. The FCC rule which states cable systems must black out syndicated shows from distant signal, imported stations when those shows also air on a local broadcast station which owns those shows' exclusive rights for that market.
Network Non-Duplication. This rule requires cable operators to black out a network show from a distant station if the local affiliate plans to broadcast the same program.

Syndex History
“Syndex” programs are syndicated programs with market exclusivity.
Station may forbid cable company from importing same program from a distant market.
The 1976 Copyright Act intervened. It set cable licensing fees for all imported signals. As a consequence, FCC drops syndex rules.
1988, FCC reinstates syndex. Court upheld in United Video v. FCC, 890 F.2d 1173 (D.C. Cir 1989)

Cable Communications Policy Act (1984)
Purpose: to establish a national policy
Cable subject to federal jurisdiction
Capped municipality “franchise fees” at 5%
Limited cable fee rate regulation

Cable Communications Policy Act (1984)
Made franchise renewal easier – borrowed the broadcast concept of “renewal expectancy”
Legalized home satellite dishes, but permitted signal scrambling
Protected subscriber’s right of privacy
Cable company could not redline

Cable Act of 1992
From 1984 to 1992 cable rates rose 61%
Congress felt cable industry was:
becoming vertically monopolistic
presenting barriers to operators and program suppliers
jeopardizing viability of local TV stations
Municipalities given power to regulate rates on basic channels where there is no “effective competition”

Cable Act of 1992
Defined what must be on basic tier
FCC oversees municipality’s rates
Stations must give permission to carry signal; station may negotiate payment This is the “retransmission consent” regulatory system, which now also applies to satellite carriage of stations
MSOs & Independent operators must be charged equally for programming (Vertical integration of ownership of systems and programmers)

Direct Broadcast Satellite
The Primetime Litigation
CBS Broadcasting v. Primetime 24, 48 F.Supp.2d 1342 (1998)
- Copyright Infringement
- “underserved household”
- “over-the-air signal of grade B intensity”
- 90-day waiting period for households once served by cable television

Direct Broadcast Satellite
Satellite Home Viewer Improvement Act of 1999
Compulsory license; “unserved households”; retransmission consent; must carry; sports blackout rule
Educational Programming on DBS
Time Warner Entertainment Co. v. FCC, 93 F.3d 957 (D.C. Cir 1996)

Regulation of Cable TV
Circa 1948
CATV begins in small communities in rural Oregon and Pennsylvania where hilly terrain prevents broadcast television signals from reaching customers' homes. Coaxial cable, amplifiers and electronic equipment are modified by CATV pioneers to meet emerging needs. CATV delivers off-air television programming to homes that would otherwise not receive it.

Structure of the Cable Business
Originally called CATV
No money-making intent
No competition for broadcast television
Win-Win-Win for broadcasters, cable operators and viewers.

Early Cable Regulation
Early years marked by inconsistency
No Congressional mandate
FCC felt they lacked authority to regulate (1959)
did not originate programming
did not cross state boundaries
did not broadcast (except microwave links)

Frontier Broadcasting v. Collier, 24 FCC 251 (1958)
Carter Mountain Transmission Corp., 321 F.2d 359 (D.C. Cir. 1963)
First Report and Order (1965)
Second Report and Order (1966)

1965The First Report and Order by the FCC, based on the Carter Mountain decision, begins regulation of all cable systems receiving distant broadcast signals by microwave, including must-carry and non-duplication requirements. (Dockets 14895 and 15233, 38 FCC 683). 1966The FCC extends regulation to all cable systems and requires systems in the top 100 television markets to obtain FCC approval to import distant signals via microwave. (Second Report and Order in Dockets 14895, 15233 and 15971, 2 FCC 2d 725, aff'd, 399 F.2d 65 (8th Cir. 1968)).

U.S. v. Southwestern Cable Co., 392 U.S. 157 (1968)
Midwest Video v. U.S., 406 U.S. 649 (1972)
[ a/k/a Midwest Video I]
Home Box Office (HBO) v. FCC, 567 F.2d 9 (D.C. Cir 1977), cert. denied, 434 U.S. 829 (1978)

Cable Jurisdiction
Cable Franchise Policy and Communications Act of 1984
Cable Television Consumer Protection and Competition Act of 1992
Telecommunications Act of 1996

Local Regulation
Group W Cable, Inc. v. City of Santa Cruz, 669 F.Supp. 954 (N.D. Cal. 1987)
- and –
The 1984 Cable Policy Act

First Amendment
FCC v. League of Women Voters, 468 U.S. 364 (1984)
Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691 (1984)
City of Los Angeles v. Preferred Communications, Inc., 476 U.S. 488 (1986)

First Amendment
Home Box Office (HBO) v. FCC, 567 F.2d 9 (D.C. Cir 1977), cert. denied, 434 U.S. 829 (1978)
FCC v. Midwest Video Corp., 440 U.S. 689 (1979) [a/k/a Midwest Video II]
Time Warner Entertainment Co. v. FCC, 93 F.3d 957 (D.C. Cir. 1996)

Must Carry
Carter Mountain Transmission Corp., 32 FCC 459 22 RR 193 (1962)
First Report and Order in Dockets 14985 and 15233, 38 FCC 683 (1965)
Retransmission Consent
Local stations only
Not super stations (WGN, WTBS, etc.)

Must Carry
Quincy Cable TV, Inc. v. FCC, 768 F.2d 1434 (D.C. Cir.1985), cert. denied, 476 U.S. 1169 (1986)
Century Communications Corp. v. FCC, 835 F.2d 292 (D.C. Cir., 1987), cert. denied, 486 U.S. 1032 (1988)

Must Carry
Cable Television Consumer Protection and Competition Act of 1992
Turner Broadcasting System Inc. v. FCC [Turner I], 512 U.S. 622 (1994)
Turner Broadcasting System, Inc. v. FCC [Turner II], 520 U.S. 180 (1997)

Must Carry
Turner Broadcasting System Inc. v. FCC [Turner I)], 512 U.S. 622 (1994)
Important Governmental Interests
Preserving over-the-air broadcast television.
Promoting multiplicity of interests.
Promoting fair competition.

Must Carry
Turner Broadcasting System, Inc. v. FCC [Turner II], 520 U.S. 180 (1997)
Policy Research Question Presented
Is the 1992 "must carry" law an unconstitutional intrusion on cable operators' editorial autonomy, a form of Government-compelled speech that violates the First Amendment?

Digital “Must Carry” – The Big One
2002 — FCC gave “tentative” decision to allow a broadcaster to demand “must carry” of either analog or digital signal – not both. FCC tentative view is that cable operator only has to carry “primary video” of a digital stream.
Broadcasters asking for carriage of entirety of digital bitstream.
February 2005 – The FCC soundly rejected “Dual Must Carry” and the “Multi-Cast Must Carry” proposals that would have forced cable operators to give broadcasters enough space on their systems to deliver several digital broadcast signals instead of just one.
Broadcasters may use “retransmission consent” as back-door play to get full digital must carry.
In late 2008, the FCC required most cable systems to take steps to provide a “viewable” picture of all local stations for at least three years after the end of analog broadcasting (which happened on June 12, 2009).

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