Emerging Video Marketplace Ii

PowerPoint Notes

MVPD = Multichannel Video Programming Distributer
Cable Operator
Multiple System Operator (MSO)
Multiple channel distribution service
Direct Broadcast Satellite (DBS)
television receive only satellite program distributor

How is an MVPD different from MSO? The former is more all inclusive. Includes satellite tv for instance

Vertical Integration = connecting companies in a supply chain through a common owner. Each link produces a different product/service and they combine to satisfy a common need.

Cable Act of 1992 = required cable systems to carry most local broadcast channels and prohibited cable operators from charging local broadcasters to carry their signal. Challenged in Turner v. FCC. Birth of the Medium Scrutiny test for Cable Communications.

1934-1984 Cable TV was regulated by Common Law (‘84 was the first statutory provisions regulating cable law – 1992 was the 2nd act regulating cable tv
congress drank the kool aid
NCTA did a great job lobbying congress – needed deregulation in order to have enough capital in NYC to compete with satellite
Deregulation based on “false” premises

Differences between Broadcast and Cable Regulation as it relates to TV?
Cable began with only carrying a signal – not offering own programming
Cable and Broadcast compete for audience share; cable has fragmented the audience
Audience share has shifted to cable exponentially
Carroll Doctrine (Economic Injury)
Was abandoned late 80’s early 90’s with the expansion of FM

Cable used to just retransmit other signals to rural areas
Now it has premium content
Its own content under vertical Integration
Plus Data & VoIP

Cable has also dipped into local stations = local advertising markets
Affected Newspapers too

In 1992, the FCC has to look at horizontal ownership in MSO’s and Look into [ABC] above

Remanding a case = sending it back to the lower courts

Ownership Limits = allowing a newspaper to own a tv station in the same city, broadcast networks to buy more stations at the national and local levels.
-FCC’s claim was that the limits promote both competition and localism
-FCC incrementally increased the limit from 30-35-45% (share of US TV households)
-Share is calculated by adding the number of TV households in each market that the company owns a station (that is to say that 45% share of TV households does not equal 45% share of TV stations)

The FCC’s looking into [ABC – previous page] was investigated by Time Warner Entertainment v. FCC
Chairman Powel was bad at getting policy thru the courts – he favored no cap on regulation

Court of Appeals said FCC could set structural limits but said no to 30%
The specifics of the rules (not the rule itself) was considered arbitrary

FCC: If Cable company has broadcast system in the same market it cannot carry other broadcast programming on their cable network
Was struck down.

First Report and Order8 FCC Rcd. 3359 (1993)

1. To establish safeguards to prevent undue influence by cable operators upon actions by affiliated program vendors related to the sale of programming to unaffiliated distributors.

To promote increased competition in the MVPD market.

The competitors are satellite and Telephone companies
The competition is limited by vertical integration – can prevent sales
FiOS and Uverse would not be possible without this

2. To prohibit discrimination by vertically integrated satellite cable programming vendors and satellite broadcast programming vendors.

To increase availability of satellite cable programming to persons in rural areas.

Not just true for cable – but also satellite (within satellite providers there is an extensive expansion in competition)

3. To prohibit exclusive contracts between a cable operator and a vertically integrated programming vendor in areas that are not served by a cable operator and any such exclusive arrangements in areas served by cable that are not found in the public interest by the Commission.

Report and Order 17 FCC Rcd. 12,124 (2002)

“This Order also finds that verticallly integrated programmers retain the incentive to favor their affiliated cable operators over competitive MVPDs such that competition and diversity in the distribution of video programming would not be preserved and protected.”

(2007) Cable operators that own satellite-delivered cable networks will be forced to sell them to pay-TV distribution rivals for five more years, under terms of a unanimous Federal Communications Commission’s ruling Tuesday night that gave continued life to program access rules created by the 1992 Cable Act.

In the ruling, the FCC created new rules that will make it easier for parties that file program access complaints to get access to programming contracts to determine if any discrimination exists.

The FCC also voted to launch a notice of proposed rulemaking sought by the American Cable Association that will examine whether Viacom, Disney, Time Warner and other big cable programmers use their clout to force less powerful pay-TV distributors to license more channels than they want to offer their subscribers.

Memorandum Opinion and Order 19 FCC Rcd. 473 (2004)

In 2004, News Corp. purchase DirecTV, and the cable operators pushed for a similar set of program access rules. News Corp. owned Fox Network, Sports Net, Fox News, and other networks.

“We conclude that Applicants’ proposed commitment to allow unaffiliated programmers access to the DirecTV platform on nondiscriminatory terms and conditions adequately addresses concerns raised regarding unaffiliated video programmers’ access to the DirecTV platform.”

Allowed Rupert Murdoch to create a global satellite broadcasting network.
- Came after an attempt of EchoStar to buy DirectTV that was blocked by the FCC

The remaining conditions required News Corp. to participate in arbitrations disputes over carriage of regional sports networks and participate in arbitration over retransmission consent negotiations with multichannel video providers.

"The commission adopted the arbitration conditions to address the same underlying concern as the program access condition - to prevent a vertically integrated News Corp. from using its programming as a means by which to confer on itself and DirecTV an anticompetitive advantage that would harm the public interest," the commission said. "Absent vertical integration between News Corp. and DirecTV," the FCC said, "the arbitration conditions serve no transaction-related purpose."

Consent Decree

A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the FTC issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.

Stipulations:

Limiting TCI’s Ownership Interest in Time Warner
Restrictions on Service Bundling
Removing Barriers to Entry into Cable Program Services
Protecting Program Access by Competing Distributors

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