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Federal Communications Commission
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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

March 15, 2000

News Media Contact:
Michelle Russo at (202) 418-2358

Establishes a Two-Part Test for "Good Faith" Negotiations and Prohibits Exclusivity

Washington, DC The Federal Communications Commission (FCC) today announced rules for good faith negotiations and exclusive agreements for retransmission consent involving TV stations and cable or satellite companies. The FCC established a two-part test for good faith negotiations and prohibited exclusive retransmission agreements that are negotiated before January 1, 2006.

Recognizing the impact these rules have on multichannel video competition and the growth of satellite service, the FCC completed these portions of the retransmission consent rulemaking almost nine months ahead of the statutory deadline. The Satellite Home Viewer Improvement Act (SHVIA), enacted late last year, seeks to place satellite carriers on an equal footing with local cable operators in order to spur competition in the video marketplace and give consumers more and better choices.

SHVIA required the FCC to revise the rules surrounding retransmission consent agreements between television broadcast stations and multichannel video programming distributors (MVPDs), such as cable and satellite companies. The law prohibits a TV station that "provides retransmission consent from engaging in exclusive contracts for carriage or failing to negotiate in good faith" until January 1, 2006. The FCC released a Notice of Proposed Rulemaking on December 22, 1999 to address these issues. The notice also sought comment on the regulations relating to the retransmission consent election cycle for satellite carriers. The FCC will adopt election rules in a separate order within the time limit established by Congress.

The first part of the two-part good faith test consists of a brief, objective list of procedural standards applicable to broadcast stations negotiating retransmission consent agreements:

1) a broadcaster may not refuse to negotiate with an MVPD;
2) a broadcaster must appoint a negotiating representative with the authority to bargain;
3) a broadcaster must agree to meet at reasonable times and locations and cannot delay the course of negotiations;
4) a broadcaster may not offer a single, unilateral proposal;
5) in responding to an offer proposed by an MVPD, a broadcaster must provide reasons for rejecting any aspects of the offer;
6) a broadcaster is prohibited from entering into an agreement with any party conditioned upon denying retransmission consent to any MVPD; and
7) a broadcaster must agree to execute a written retransmission consent agreement that sets forth the full agreement between the broadcaster and the MVPD.

Under the second part of the good faith test, an MVPD may present facts to the FCC which, even though they are not a specific violation listed above, given the totality of the circumstances constitute a failure to negotiate in good faith.

The SHVIA notes that "it shall not be a failure to negotiate in good faith if the television broadcast station enters into retransmission agreements containing different terms and conditions [if the agreements are] based on competitive marketplace considerations." The FCC concluded that it is not possible to identify objective competitive marketplace factors that broadcasters must use in negotiating. To provide guidance, the FCC listed some conditions that are potential competitive marketplace considerations and some that are not. For instance, the order notes that any effort to stifle competition through the negotiation process would not meet the good faith negotiation requirement.

Today's rules also prohibit TV stations from entering exclusive retransmission consent agreements and from negotiating exclusive contracts that would take effect after the sunset of the prohibition, January 1, 2006.

The order directs the Commission staff to expedite resolution of good faith and exclusivity complaints and notes that the burden of proof is on the MVPD complainant. The order also allows parties to pursue voluntary mediation and the FCC will consider favorably a broadcaster's willingness to participate, but non-participation will not constitute a violation of good faith.

Action by the Commission, March 14, 2000, by First Report and Order (FCC 00-99). Chairman Kennard, Commissioners Ness, Furchtgott-Roth, Powell and Tristani.

Cable Services Bureau Contacts: Steve Broeckaert and Jay Heimbach at (202) 418-7200.

CS Docket No. 99-363