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If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) ) OUTDOOR LIFE NETWORK and ) SPEEDVISION NETWORK ) CSR 5044-P ) Petition for Exclusivity ) pursuant to 47 C.F.R. )  76.1002(c)(4) and (5) ) MEMORANDUM OPINION AND ORDER Adopted: June 24, 1998 Released: June 26, 1998 By the Acting Chief, Cable Services Bureau: I. INTRODUCTION 1. Outdoor Life Network, L.L.C. ("Outdoor Life") and Speedvision Network, L.L.C. ("Speedvision"), two cable programming vendors (collectively, "the Networks"), filed a Petition for Exclusivity pursuant to Sections 628(c)(2)(D) and 628(c)(4) of the Communications Act of 1934, as amended ("Communications Act"), and Sections 76.1002(c)(4) and (5) of the Commission's rules. In their Petition, the Networks seek approval to enter into exclusive distribution agreements with multichannel video programming distributors ("MVPDs") in 17 Nielsen Designated Market Areas ("DMAs") and in the State of Connecticut. The Petition was placed on public notice. Seven parties filed timely oppositions to the Petition: BellSouth; Ameritech New Media, Inc. ("Ameritech"); SNET Personal Vision, Inc. ("SNET"); World Satellite Network, Inc. ("WSN"); The Wireless Cable Association International, Inc. ("WCA"); The Outdoor Channel, Inc. ("Outdoor Channel"); and OpTel, Inc. The Networks filed a Consolidated Reply to all oppositions except those of WSN and WCA. BellSouth submitted a letter in response to the Consolidated Reply. The Networks filed a Second Consolidated Reply responding to the oppositions of WSN and WCA. 2. For the reasons discussed below, we find that the exclusive arrangement proposed by the Networks is not in the public interest pursuant to the criteria set forth in Sections 628(c)(2)(D) and 628(c)(4) of the Communications Act. We, therefore, deny the Networks' Petition. II. BACKGROUND 3. Section 628(c)(2)(D) of the Communications Act provides that, in areas served by a cable operator, exclusive contracts for satellite cable programming between vertically integrated programming vendors and cable operators are prohibited unless the Commission determines that such exclusivity is in the public interest. In determining whether the proposed exclusivity is in the public interest, the statute directs the Commission to consider five factors: (a) the effect of such exclusive contract on the development of competition in local and national multichannel video programming distribution markets; (b) the effect of such exclusive contract on competition from multichannel video programming distribution technologies other than cable; (c) the effect of such exclusive contract on the attraction of capital investment in the production and distribution of new satellite cable programming; (d) the effect of such exclusive contract on diversity of programming in the multichannel video programming distribution market; (e) the duration of the exclusive contract. 4. In their Petition, the Networks state that Outdoor Life is owned principally by TMJV, Inc. (Cox Communications, Inc.), Comcast Programming Ventures, Inc., Fostoria Communications, Inc. (MediaOne, Inc.), and TM Programming, L.L.C. (Times Mirror). The Networks assert that Speedvision is owned principally by TMJV, Inc. (Cox Communications, Inc.), Comcast Programming Ventures, Inc., Fostoria Communications, Inc. (MediaOne, Inc.), TM Programming, L.L.C. (Times Mirror), and Daniels Properties, L.L.P. The ownership interests in the Networks constitute an "attributable interest," as defined in Section 76.1000(b) of the Commission's rules, making the Networks vertically integrated satellite cable programming vendors subject to our program access rules. Accordingly, the Networks are prohibited from offering a cable system operator the exclusive right to distribute their programming within the operator's franchise area without an affirmative determination by the Commission that such exclusive distribution meets the public interest criteria set forth in Section 628(c)(4) of the Communications Act. 5. Outdoor Life and Speedvision are start-up programming networks that began distributing niche programming to the public on a 24 hour-a-day basis on June 30, 1995 and January 1, 1996, respectively. Outdoor Life provides programming focused on outdoor and environmental activities and interests. Speedvision offers programming targeted to boating, aviation, automobile and motorcycle enthusiasts. According to the Networks, at the time they filed their petition, Outdoor Life was distributed to 6 million cable subscribers and 1.9 million DBS subscribers, while Speedvision was distributed to 5.1 million cable subscribers and 1.9 million DBS subscribers. The Networks petition the Commission for authority (1) to offer during an enrollment period of not more than one year, (2) to cable operators as well as to non-cable MVPDs that meet the Networks' subscriber penetration requirements and that agree to commence carriage or substantially increase distribution of the Networks, (3) up to a four year term of program exclusivity, (4) in 17 DMAs and in the Networks' home State of Connecticut, (5) subject to the further limitations that existing carriage of the Networks by cable and non-cable MVPDs would be grandfathered, and any such grant of exclusivity would not apply against Direct Broadcast Satellite ("DBS") distribution. 6. In their Petition, the Networks argue that their ability to offer exclusive program distribution agreements to cable operators is critical to their obtaining carriage on cable systems and that cable carriage is essential to their survival. The Networks state that program exclusivity is important to cable operators because it allows a system to offer one-of-a-kind services. The Networks assert that cable operators seeking to distinguish themselves from competitors are reluctant to add new networks without a guarantee of exclusivity because of the fear of "free-riding." The Networks contend that carriage on the nation's cable systems is vital to the Networks' ability to achieve the subscriber penetration levels necessary to become and remain commercially viable, and that unless they are able to increase their subscriber penetration "rapidly and substantially," they will be unable to generate the revenues essential to their survival. 7. The Networks note that various marketplace factors outside of their control have contributed to their failure to gain more widespread cable carriage, such as a lack of channel capacity combined with an increase in the number of new programming networks competing for carriage. In addition, the Networks assert that their programming is targeted to niche audiences which makes increasing distribution particularly challenging. The Networks further state that Outdoor Life is transmitted only digitally and that few cable systems have upgraded their systems to permit digital transmission. Consequently, the Networks claim, cable systems that are not capable of transmitting digital signals must purchase a $1,500 converter to convert Outdoor Life's digital signal to an analog signal that may be transmitted over the cable system. The Networks state that this financial outlay discourages systems from affiliating with the network. 8. The Networks analogize their situation to that of the petitioners in the two orders in which the Commission granted requests for exclusivity, New England Cable News ("NECN") and NewsChannel, A Division of Lenfest Programming Services, Inc., ("NewsChannel"). The Networks argue that in those cases, the petitioners were, similar to the Networks here, start-up programming services that targeted specific subscriber niches and required increased subscribership to become commercially viable. The Networks also contend that similar to the programming at issue in NECN and NewsChannel, the Networks' programming is not particularly popular with, or critical to the success of, non-cable MVPDs. The Networks distinguish their situation from that of the petitioners in the two cases in which the Commission denied requests for exclusivity, Time Warner Cable ("Time Warner") and Cablevision Industries Corp. ("Cablevision"), arguing that those petitioners, unlike Outdoor Life and Speedvision, sought to enforce exclusive agreements between cable systems and popular, more established programming networks (i.e., Court TV and the Sci-Fi Channel). 9. Opponents to the Networks' Petition argue that the Networks fail to satisfy their burden of demonstrating that the proposed exclusivity provides sufficient public interest benefits to outweigh the presumptively anticompetitive effect on competing distributors. Opponents contend that grant of the Petition would have an adverse precedential effect on the ability of alternative MVPDs to obtain vertically integrated programming. They warn that grant of the Networks' request would open the floodgates for additional petitions for exclusivity filed by similarly situated networks, making exclusive contracts the norm rather than the exception in the MVPD marketplace. Opponents contend that the end result would be that cable's competitors are denied access to quality cable programming and are thereby prevented from competing effectively with incumbent cable operators. III. ANALYSIS Background 10. The program access provisions of the 1992 Cable Act were enacted to increase competition and diversity in the multichannel video programming distribution market by providing greater access to cable programming services. In adopting the program access provisions, Congress sought to address the concern that potential competitors to cable operators often face unfair hurdles when attempting to gain access to the programming they need to compete. Congress found that the cable industry was significantly vertically integrated, i.e., cable systems and programmers are often commonly owned, and vertically integrated program suppliers have the incentive and ability to favor their affiliated cable operators over other multichannel programming distributors. It determined that the effect of those vertical relationships in the cable industry was to restrict the availability of programming to competing distributors. Congress concluded, therefore, that the use of exclusive contracts for the distribution of programming between vertically integrated programming vendors and cable operators inhibited the development of competition among distributors, thereby limiting subscriber choice. 11. Thus, in the 1992 Cable Act, for a period of ten years, Congress absolutely prohibited exclusive contracts between vertically integrated programming vendors and cable operators in areas unserved by cable, and prohibited such exclusive contracts within areas served by cable absent a specific public interest showing. The 1992 Cable Act recognized that in areas served by cable, some exclusive contracts between vertically integrated programming vendors and cable operators may provide countervailing benefits to the programming market or to the development of competition among distributors. It provided that where such exclusive contracts are demonstrated to be in the public interest, they should be allowed. In evaluating exclusive program distribution agreements, we will consider each of the public interest factors listed in Section 628(c)(4) of the Communications Act. Any party seeking a determination that such an agreement meets that public interest standard bears the burden of demonstrating that the proposed exclusivity provides sufficient public interest benefits to outweigh the presumptively anticompetitive effect on competing distributors. Petitions for exclusivity will be examined on a case-by-case basis. Effects of Exclusivity on the Development of Competition in Local and National Distribution Markets 12. With respect to the first public interest factor, the effect of exclusive contracts on the development of competition in distribution markets, we have previously stated that "it is appropriate to evaluate the geographic extent of the proposed exclusivity to identify the relevant markets within which the proposal may affect the development of competing distributors." The Networks seek authority to offer exclusivity in 17 of the nation's 211 DMAs and in the State of Connecticut. The Networks assert that for the most part these are DMAs in which the Networks' three MSO investors have little or no presence, in which few non- affiliated cable or non-cable MVPDs have subscribed to the Networks, and in which the Networks' subscribership is minimal. However, the Networks do acknowledge that the markets covered by their proposal contain over 24 million cable homes, or 37.6 percent of the total 64.4 million cable households in all DMAs in the United States, and span 14 states plus Washington, D.C. 13. Far from being a narrow request, we find that the Networks are seeking exclusivity in markets containing more than one-third of all homes passed by cable systems nationwide. Opponents to the Networks' Petition, BellSouth and Ameritech, assert that the proposed exclusivity denies programming to potential competitors in local and national markets and inhibits the development of competition in the MVPD market. Ameritech contends that the markets for which exclusivity is sought are in every region of the country and are within the top 27 markets in the nation, including 7 of the top 10 markets. We agree that granting the Networks' exclusivity request would adversely effect competition in local and national MVPD markets by depriving aspiring competitors in 17 of the largest DMA markets and the entire State of Connecticut of access to the Networks' programming. We also agree with BellSouth and Ameritech that the geographic extent of the exclusivity proposed here far exceeds that permitted under either of the other two orders in which we granted exclusivity pursuant to the program access rules. In NECN, we granted exclusivity in six New England states and in NewsChannel exclusivity was granted in four mid-Atlantic states. 14. The presence of non-cable MVPDs in the relevant markets also distinguishes this case from the situation presented in NECN, where competition to cable did not yet exist, and in NewsChannel, where we found that no non-cable competitor had expressed an interest in obtaining the programming in question. Opponents to the Networks' Petition provide evidence that the areas covered by the Networks' request include markets where telephone companies and other alternative MVPDs are actually offering or are poised to offer competition to incumbent cable operators. For example, SNET states that it has a franchise to provide cable service to the entire State of Connecticut, and that it already offers cable service to over 70,000 households in Connecticut. Ameritech states that it is operating in the metropolitan areas of Chicago, Illinois and Cleveland, Ohio. BellSouth states that it is scheduled to launch digital wireless cable service in Orlando and Miami, Florida during the first and second half of 1998, respectively. In addition, SNET, Ameritech and BellSouth have all expressed an interest in carrying the Networks. 15. The Networks contend that non-cable MVPDs have generally expressed little or no interest in carrying their programming and that only a few have actually signed carriage agreements. Recently, however, BellSouth informed the Commission that it signed an agreement to carry the Networks on a non- exclusive basis. In any case, we do not want to foreclose the possibility of alternative MVPDs gaining access to the Networks' programming in the future. Given the existence of competing alternative MVPDs in a number of the markets covered by the Petition, and the interest expressed by such MVPDs in carrying the Networks, we find that grant of the proposed exclusivity would have a limiting effect on the development of competition in local and national markets by denying those MVPDs access to programming. 16. We believe that because Outdoor Life and Speedvision are programming services with national appeal, denial of access to competitors in a substantial number of markets across the country may limit the development of competition in local and national distribution markets. While Outdoor Life and Speedvision are niche networks focused on specialized subject matters, they may appeal to a nationwide audience and are, therefore, national, as opposed to local or regional, programming services. Indeed, underscoring Speedvision's national market potential, Paul Kagan Associates, Inc. identified Speedvision as one of the top ten fastest growing basic cable/satellite networks for the year ended June 30, 1997. In Time Warner, we found that the programming service at issue, Court TV, had "national appeal" and that denial of access to such programming could limit the development of competition in local and national distribution markets. That Outdoor Life and Speedvision did not have as many subscribers when they filed their petition as Court TV did at the time of the Time Warner decision is not relevant to the fact that the Networks have national distribution potential that will be affected by exclusive arrangements. In fact, evidence of the Networks' subscriber growth is clear. Recent reports indicate that Speedvision now has 14.5 million total subscribers, 7.5 million more than at the time the Networks filed their Petition, and Outdoor Life has 13.5 million total subscribers, up 5.6 million from last summer. 17. The Networks analogize their programming to the local/regional news networks at issue in NECN and NewsChannel, arguing that Outdoor Life and Speedvision are tailored to a narrow group of subscribers just as the news networks were addressed to a particular geographic area. We reject this analogy. The cable networks in both NECN and NewsChannel were regional or local news services whose regionally or locally oriented programming naturally limited the size of their audience and made it unlikely that the proposed exclusivity would affect the development of competition in the national MVPD market. In contrast, as argued by BellSouth and Ameritech, Outdoor Life and Speedvision are programming services with nationwide appeal and distribution potential and are, therefore, akin to the programming that was at issue in Time Warner. Granting the Networks' petition would impair competition in both local and national MVPD markets by depriving cable's competitors of the ability to distribute programming of national interest. We conclude that the effect of the proposed exclusivity on the development of competition in distribution markets weighs against finding that grant of the Networks' request is in the public interest. Effects of Exclusivity on Competition from MVPD Technologies Other Than Cable 18. Regarding the second public interest factor, the effect of the exclusive contract on competition from MVPD technologies other than cable, the Networks maintain that their proposed exclusivity arrangement would not interfere with the ability of non-cable MVPDs effectively to compete with cable operators. The Networks assert that their proposed exclusivity arrangement would be offered on a technologically neutral basis to all qualified MVPDs, not just to cable operators. Specifically, the Networks state that exclusivity would be available to any MVPD in the community, cable or non-cable, with "sufficiently high subscriber penetration" that is willing to launch, or substantially increase distribution of, one of the Networks immediately. The Networks, however, do not specify in their Petition the subscriber penetration requirements. Without specific subscriber penetration figures, we find it difficult to evaluate the effects of the proposed exclusivity on non- cable MVPDs. In all likelihood, the MVPDs most likely to achieve penetration levels significant enough to meet the Networks' requirements would be incumbent cable operators rather than alternative MVPDs because cable operators have comparatively higher penetration rates. We find, therefore, that a "sufficiently high subscriber penetration" requirement is a criterion that discriminates against alternative MVPDs and in favor of incumbent cable operators. Exclusive contracts between the Networks and cable operators in those local markets in which alternative MVPDs already exist or are emerging would limit the development of competition by denying such MVPDs access to programming. As noted above, Congress and the Commission have found that access to programming is an essential prerequisite to the ability to compete against incumbent cable operators. Thus, while in theory the Networks' proposal may not discriminate against non-cable MVPD technologies, in practice we believe that the proposed exclusivity would negatively affect non-cable MVPDs by precluding them from obtaining programming. 19. We reject the Networks' argument that the effect of their proposed exclusivity on MVPD competition is limited by the fact that the requested exclusivity would not apply against DBS distributors, such as DirecTV. The Networks claim that DBS was excluded because distributors such as DirecTV and Primestar had already agreed to carry the Networks, unlike wireless cable operators or cable overbuilders. The Networks assert that given that pattern of distribution and the fact that it is not technically feasible to enforce exclusivity against DBS carriage on a market-by-market basis, applying exclusivity to DBS would require the Networks to forego DBS carriage nationally, a policy that is contrary to their need to increase distribution. As BellSouth points out, granting the Networks' Petition would still harm wireless cable operators and cable overbuilders who are poised to provide competition to the cable industry. WCA contends that the Networks are asking for authority to discriminate against non-cable, non-DBS MVPDs in violation of Section 628(c)(2)(B) of the Communications Act. Ameritech similarly argues that the proposed exclusivity discriminates against terrestrial competitors to incumbent cable operators. In Time Warner we noted that "the statutory public interest test requires us to consider the effect of exclusivity on all alternate technology competitors, not just DBS." We agree with Opponents that allowing DBS distribution, while enforcing exclusivity against SMATV and MMDS operators, would adversely affect non-cable, non-DBS competitors by potentially denying them access to programming. Access to programming by all non-cable MVPDs is crucial to the development of vigorous and widespread competition in the distribution market. 20. We do not accept the Networks' argument that the grandfathering of all existing carriage agreements involving Outdoor Life and Speedvision, including any carriage agreements reached during the pendency of this Petition, significantly minimizes the effect of the proposed exclusivity on competition. While grandfathering existing carriage agreements may reduce the anticompetitive effects of the Networks' proposed exclusivity, it does not entirely eliminate such effects. Even if existing carriage agreements are grandfathered, new and emerging alternative MVPDs or existing MVPDs that have not yet signed with the Networks would unfairly be denied access to the Networks' programming. 21. We also reject the Networks' argument that grant of their petition would not interfere with the ability of non-cable MVPDs to effectively compete with cable operators because carriage of the Networks' programming may not be considered essential to an MVPD's ability to compete. The Networks contend that non-cable MVPDs have expressed little or no interest in carrying their programming and that the Networks should not be prohibited from entering into exclusive distribution agreements with cable operators in order to preserve access for non-cable MVPDs not interested in carrying their programming. The Networks further argue that there are other programming networks available whose subject areas overlap, to some extent, with those of the Networks and could thus be carried as substitutes for them. We again note that contrary to the Networks' assertions, alternative MVPDs in this proceeding have expressed an interest in carrying the Networks. We do not want to foreclose the possibility of alternative MVPDs gaining access to the Networks' programming in the future. We believe that grant of the Petition would adversely affect competition by denying cable's competitors the same access to programming as would be enjoyed by cable systems. We conclude that the overall effect of the proposed exclusivity on competition from non-cable MVPDs weighs against grant of the Networks' request. Effects of Exclusivity on Attraction of Capital Investments in Production and Distribution of Programming 22. The third public interest factor is the effect of the exclusive contract on the attraction of capital investment in the production and distribution of new satellite cable programming. By including this third criterion in the statutory public interest test, Congress recognized that in some circumstances exclusivity can serve as an investment incentive for cable operators to finance, promote and carry a new programming service. The Networks maintain that without the authority to enter into exclusive distribution arrangements, they will be unable to achieve the level of distribution they need to become and remain financially viable. The Networks contend that they cannot afford to continue producing quality, original programming without a rapid and substantial increase in revenues generated by expanded distribution. In contrast, Ameritech argues that because the Networks' programming has "nationwide appeal" Outdoor Life and Speedvision are more capable of attracting viewers and capital investment than the regional network involved in the NECN case. The Networks respond that although they focus on the national television market, the niche audiences to which they appeal are a narrower subset of the total viewing public. In addition, the Networks assert that while the regional news networks involved in the NECN and NewsChannel cases served audiences with limited distribution potential, they also had far lower programming, operating and distribution expenses than those incurred by Outdoor Life and Speedvision. 23. The Networks further contend that unlike other programming services, they cannot offer cable operators incentives in exchange for carriage such as substantial up-front cash payments, periods of free service, tie-ins of new programming to established networks, or retransmission consent. BellSouth and WCA dispute the Networks' contention that they do not have the financial resources to pay for cable carriage. BellSouth asserts that "there is no statutory or policy justification" for granting a vertically integrated programmer's exclusivity petition "simply to reduce its costs of doing business." Ameritech similarly argues that the Networks are, in essence, "requesting a bailout for their business," which is not the purpose of the program access rules. The Networks insist that exclusivity is necessary to attract operating revenues. 24. We believe the Networks have failed to demonstrate that they face hurdles that are different from those encountered by other new programming services trying to expand their subscribership. We agree with BellSouth and WCA who maintain that the Networks' circumstances are not unique and therefore do not justify an exemption to the prohibition on exclusive distribution arrangements. Presumably, the Networks embarked on a business plan with foresight regarding the market conditions and the costs involved in becoming commercially viable. BellSouth and WCA argue that although the Networks contend that exclusivity is their only option for continued viability, the Networks also acknowledge that cable operators are willing to carry cable networks in exchange for cash payments rather than exclusivity. We believe that the fact that the Networks have chosen to invest their money in ways other than to pay for cable carriage or otherwise provide for their commercial viability is a calculated business decision. The Networks' alleged inability to pay for cable carriage, therefore, cannot be construed as a unique circumstance justifying grant of their petition. Indeed, the public interest exception to the prohibition on exclusive distribution arrangements is intended to benefit the public at large, rather than the needs of individual programmers. The difficulties the Networks describe in persuading cable operators to add Outdoor Life and Speedvision as new services on their systems are shared, to a certain extent, by all new programming services. As BellSouth, WCA and SNET argue, the Networks admit that their failure to obtain more widespread cable carriage is attributable to a variety of marketplace factors unrelated to exclusivity that are common to other start-up cable programming services. The early investment losses sustained by the Networks cannot, alone, justify enforcement of the proposed exclusivity arrangement because few programming services are profitable in the first two years. In granting the exclusivity petition in NECN, we found that the distribution potential for that particular programming service was limited by the regional focus of the programming, thereby constraining its revenue potential. This limitation distinguished the service from other new launches and justified NECN's use of exclusivity as a tool to attract financial investments and carriage commitments. The Networks, in contrast, have national distribution potential and, therefore, are not similarly constrained. In addition, the Networks' contention that a service that cannot offer exclusivity to a cable operator is "significantly less attractive" also does not identify a unique obstacle facing the Networks. Indeed, as WCA notes in its opposition, the Networks' Executive Vice President/Chief Operating Officer, Roger Williams, admitted to Broadcasting & Cable magazine that "the two [Networks] are unlikely to dry up and blow away" if the Commission denies the Petition. 25. The Networks' argument that exclusivity is necessary to prevent "free-riding" is equally unpersuasive. While the Networks attach affidavits of cable operators stating that "free-riding" is a concern, the Networks do not provide evidence that any cable operator has expended significant resources in promoting the Networks on which other MVPDs could possibly "free-ride." Moreover, the program access rules were adopted specifically to allow competing MVPDs access to vertically integrated programming on nondiscriminatory terms and conditions in order to spur competition in the provision of video programming. We also note that Commission rules provide that in setting the price for their services, programming vendors may establish price differentials based on a number of factors including "date of purchase [of the programming service], especially purchase of service at launch." Thus, those MVPDs that purchase programming at its inception may benefit from their early investment by paying lower prices than would other distributors who only carry the programming once it becomes popular. We conclude, therefore, that the effect of the proposed exclusivity on the attraction of capital investments in the production and distribution of programming does not support a grant of the Networks' Petition. Effects of Exclusivity on Diversity in Programming 26. The fourth public interest factor is the effect of exclusivity on diversity in the programming market. Exclusivity may promote diversity by providing incentives for cable operators to promote and carry new and untested programming services. We believe that the benefits of exclusivity to the development and distribution of new and diverse programming must be balanced against the overarching goal of the program access rules to foster the development of competition in the distribution marketplace. The Networks argue that permitting the proposed exclusivity would promote diversity in programming. BellSouth and Ameritech note that the Networks identify other cable networks whose programming is similar to that of the Networks and could be carried as substitutes for the Networks. The Networks argue that the existence of similar networks, however, does not mean that loss of either Outdoor Life or Speedvision, or both, would not diminish program diversity. In light of Outdoor Life's and Speedvision's current subscriber penetration figures of 13.5 million and 14.5 million, respectively, as well as the interest expressed by various MVPDs in carrying the Networks, we conclude that the Networks have failed to demonstrate that exclusivity is currently necessary to promote diversity in programming. We note that granting the Petition would have the effect of limiting the availability and diversity of the Networks' programming for subscribers to cable's competitors. Duration of Exclusivity 27. The final public interest factor to be considered in determining whether the proposed exclusivity is in the public interest is the duration of the proposed exclusivity arrangement. The Networks explain that the duration of their proposed exclusivity agreement is limited to the earlier of a period of four years or until December 31, 2001. The Networks contend that the duration of their proposed arrangement is limited to the time needed to achieve the level of subscribership necessary to become commercially viable. The Networks also state that they are seeking only a limited period within which each Network would be permitted to offer exclusivity-- up to twelve months or until the Network is distributed to 20 million households, whichever occurs first. Opponents to the Petition contend that the duration of the proposed exclusivity arrangement is too long and, therefore, anticompetitive. In general, we believe that in situations where the duration of the exclusivity is tailored to the minimum period of time reasonably necessary to develop and firmly establish the programming service without unduly denying the availability of the service to competing distributors, such limited duration may weigh in favor of allowing exclusive distribution by cable operators. However, in this instance, because we found little or no public interest benefits to the programming market to offset the adverse effects on competition in the distribution market which would result from a grant of the Networks' Petition, we do not find it necessary to make a specific determination regarding the duration of the proposed term. IV. CONCLUSION 28. Upon consideration of the five statutory public interest factors, we find that the Networks have failed to demonstrate that enforcement of their proposed exclusive distribution arrangement is in the public interest. The proposed exclusivity withholds programming services with nationwide appeal from emerging competitors to cable, such as cable overbuilders, MMDS, and telephone companies, thereby directly constraining competition in the local distribution markets at issue as well as the national distribution market. We further find that no countervailing public interest benefits would be derived from allowing enforcement of the proposed exclusivity and therefore deny the Networks' Petition. V. DISCLOSURE OF INFORMATION 29. In addition to the issue of program exclusivity, a separate matter arose in this proceeding concerning the disclosure of information. The Networks filed two versions of their Petition for Exclusivity: a confidential version for the Commission, along with a Request to Withhold Information from Public Inspection, and a redacted version for the public. In response, WCA filed a Freedom of Information Act ("FOIA") request asking the Commission to make available for public inspection the information that had been redacted from the confidential version of the Petition. The Cable Services Bureau denied WCA's FOIA request and urged all of the parties to craft a protective order under which the redacted information could be disclosed. The parties subsequently informed the Bureau that they were unable to agree on the terms and conditions of a protective order. Because we have determined that there is sufficient information before us to render a decision, we need not impose our own protective order on the parties here. As discussed above, based on the information before us and pursuant to the criteria set forth in Section 628(c)(2)(D) and 628(c)(4) of the Communications Act and Sections 76.1002(c)(4) and (5) of our rules, we find that the arrangement proposed by the Networks for the exclusive distribution of programming is not in the public interest. Since we are denying the Petition for Exclusivity filed by Speedvision and Outdoor Life, we do not believe that Opponents of the Networks will be prejudiced by their lack of access to the redacted information. VI. ORDERING CLAUSE 30. Accordingly, IT IS ORDERED that the Petition for Exclusivity filed by Outdoor Life Network, L.L.C., and Speedvision Network, L.L.C., requesting a finding that their proposed contract for the exclusive distribution of programming is in the public interest IS DENIED. 31. This action is taken pursuant to authority delegated by Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION John E. Logan Acting Chief, Cable Services Bureau APPENDIX The Networks' Proposal for Exclusivity The Networks seek Commission authorization to offer program exclusivity to cable operators and other MVPDs under the following conditions: (1) Exclusivity would be offered in the State of Connecticut and in the following 17 DMAs: New York, NY; Los Angeles, CA; Chicago, IL; San Francisco-Oakland-San Jose, CA; Boston, MA; Washington, D.C.; Dallas-Ft. Worth, TX; Houston, TX; Seattle-Tacoma, WA; Cleveland, OH; Minneapolis-St. Paul, MN; Miami-Ft. Lauderdale, FL; Denver, CO; Pittsburgh, PA; St. Louis, MO; Orlando-Daytona Beach-Melbourne, FL; Portland, OR. (2) Exclusivity would be offered on a system-by-system basis to any cable operator or other MVPD that meets the Networks' subscriber penetration requirements and that will commence, or substantially expand, carriage of the Network(s) within 120 days of entering into an exclusivity agreement; (3) Exclusivity would be offered subject to all existing carriage of the Networks (i.e., existing carriage of the Networks by cable systems and non-cable MVPDs, including carriage commenced during the pendency of this petition, would be grandfathered); (4) Exclusivity would not preclude the Networks from entering into additional agreements for new or expanded distribution via DBS; (5) Exclusivity would last for a period of up to four years but not beyond December 31, 2001; and (6) Exclusivity would be offered by each of the Networks to MVPDs in the designated markets during an enrollment period of 12 months from the release date of the Commission's grant of the Networks' petition, or until the Network is distributed to 20 million households, whichever occurs first.