Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of: ) ) ECHOSTAR COMMUNICATIONS ) CORPORATION ) ) v. ) File No. CSR-5138-P ) FOX/LIBERTY NETWORKS LLC ) ) FOX SPORTS NET LLC ) ) FOX SPORTS DIRECT ) ) Program Access Complaint ) ORDER ON RECONSIDERATION Adopted: June 28, 1999 Released: June 30, 1999 By the Chief, Cable Services Bureau: 1. EchoStar Communications Corporation ("EchoStar") filed a petition for reconsideration, pursuant to Sections 1.104 and 1.106 of the Commission's rules, of the Cable Services Bureau's Memorandum Opinion and Order ("Order") in the above-captioned proceeding. EchoStar contends that the Bureau erroneously dismissed EchoStar's program access complaint against Fox/Liberty Networks LLC, Fox Sports Net LLC and Fox Sports Direct (collectively "Fox") on the basis that the limitations period set forth in Section 76.1003(r) had expired. Fox filed an opposition seeking denial of EchoStar's petition. EchoStar filed a reply. For the reasons discussed below, EchoStar's petition for reconsideration is denied. I. BACKGROUND 2. On June 26, 1996, EchoStar entered into an agreement ("RSN Distribution Agreement") with Liberty Satellite Sports, Inc. ("LSI") to distribute the regional sports programming controlled by LSI. LSI is a predecessor-in-interest to Fox Sports Direct. The RSN Distribution Agreement provided for a package of regional professional and non-professional sports programming to be delivered nationwide to DBS subscribers. In a letter dated August 29, 1997, Fox offered to amend and extend its RSN Distribution Agreement with EchoStar. Before EchoStar could accept the offer, by letter dated September 5, 1997, Fox revoked the offer made to EchoStar in its August 29, 1997 letter. By letter dated September 24, 1997, EchoStar expressed dissatisfaction with Fox's decision to revoke the terms of its August 29, 1997 offer and gave Fox notice of its intent to file a program access complaint with the Commission. After additional letters between the parties failed to settle the dispute, EchoStar filed a program access complaint on October 27, 1997. EchoStar filed the complaint pursuant to Section 628(c)(2)(B) of the Communications Act of 1934, as amended ("Communications Act") and Section 76.1002(b) of the Commission's rules. EchoStar alleged that Fox had engaged in unlawful discrimination against EchoStar in the prices, terms and conditions that Fox imposed upon EchoStar for making available the regional sports programming that it controls. Fox filed an answer denying discrimination and requesting that the Commission dismiss the Complaint with prejudice because EchoStar's complaint was barred by the limitations period of Section 76.1003(r). 3. In the Order, the Bureau dismissed EchoStar's program access complaint against Fox as untimely filed. Section 76.1003(r) of the Commission's rules states: Any complaint filed pursuant to this subsection must be filed within one year of the date on which one of the following occurs: (1) The satellite cable programming or satellite broadcast programming vendor enters into a contract with the complainant that the complainant alleges to violate one or more of the rules contained in this subpart; or (2) The satellite cable programming or satellite broadcast programming vendor offers to sell programming to the complainant pursuant to terms that the complainant alleges to violate one or more of the rules . . . 4. The Order found that pursuant to Section 76.1003(r)(1) of the Commission's rules, Echostar had one year from the date of entering into the contract with Liberty Satellite Sports, Inc./Fox Sports Direct to file a program access complaint with the Commission. Thus, EchoStar had until June 26, 1997 to file such a complaint. EchoStar did not bring its complaint within that period and was therefore found to be time barred. The Order found that Fox's subsequent August 29, 1997 letter did not revive the limitations period regarding the rates, terms and conditions of the June 26, 1996 contract, nor could Fox's August 29, 1997 letter be viewed as a separate offer which triggered the limitations period. The Order recognized the public policy of avoiding unnecessary regulatory interference regarding contracts entered into by consenting parties, and concluded that once the one year period had elapsed, subsequent renegotiations would not subject such contracts once again to program access review unless the parties entered into a new contract. Because the matter was decided on procedural grounds, the Order did not address the merits of EchoStar's claims regarding violations of the program access rules. II. DISCUSSION 5. EchoStar provides five specifications of error relating to the Bureau's Order. EchoStar argues that the Bureau's Order: (i) ignored the express language of Section 76.1003(r); (ii) relied on a distinction not relevant to Section 76.1003(r); (iii) disregarded other program access precedent; (iv) relied on a previously unmentioned public policy; and (v) failed to apply the "discovery rule" to toll the Section 76.1003(r) limitations period. In addition, EchoStar argues that the Bureau's Order creates the wrong incentives for both allegedly wronged MVPDs and vertically-integrated programming providers. We find that the arguments made by EchoStar in its petition do not warrant reversal of the Bureau's Order. Our conclusions with respect to each of the errors specified by EchoStar are set forth below. 6. EchoStar argues the Bureau's decision contravenes the Commission's program access rules regarding the filing of discrimination complaints. EchoStar argues that under the express language of Section 76.1003(r)(2), an offer is just as adequate as the execution of a contract for starting the clock for the program access limitations period. EchoStar contends that the Bureau's finding that a new offer does not restart the clock if there is a contract between the parties at the time the offer is made is contrary to the clear language of Section 76.1003(r)(2). EchoStar maintains that the Bureau's decision effectively rewrites the rule by adding language to subsection (r)(2) to limit its application to situations in which there is no contract between the parties. EchoStar believes that the Bureau has acted beyond its delegated authority to implement the Commission's rules by introducing exceptions to them. In response, Fox argues that the letter of August 29, 1997 did not start a new one year limitations period or afford an independent basis for jurisdiction because the parties were bound by the RSN Distribution Agreement that had been in effect for fourteen months. Fox maintains that allowing correspondence and discussion about existing contracts between the parties to form the basis for program access complaints would render the limitations period meaningless. Further, Fox argues that the Bureau acted within the limits of its jurisdiction by acting within the plain meaning of the Commission's rules. 7. We are unpersuaded that the decision in the Order is contrary to the language of Section 76.1003(r), and affirm our conclusion that EchoStar's program access complaint is barred by the limitations period. Looking at the particular language at issue, Section 76.1003(r)(1) establishes a firm period for bringing program access claims once the parties have entered into a contract. The Order found that the parties were bound by this limitations period regardless of Fox's subsequent offer. Limited regulatory oversight of the relationship between an MVPD and a vertically integrated programming vendor serves the Congressional intent of prohibiting unfair or anticompetitve actions without undue regulatory disruption of the multichannel video programming market. The purposes of Section 628 are: (1) promoting the public interest by increasing competition and diversity in the multichannel video programming market; (2) increasing the availability of satellite cable and broadcast programming to persons in rural and other areas that are not currently able to receive such programming; and (3) encouraging the development of communications technologies. Section 76.1003(r) furthers these goals by establishing a limited period for a party aggrieved by conduct alleged to violate the program access provisions to commence an adjudicatory proceeding before the Commission. A party has one year to seek redress for actions that entail unfair or anti-competitive practices by a vertically- integrated program supplier. After that period, the parties should rely on the marketplace to dictate their business relationship. We believe this is consistent with the realities of the marketplace and best achieves the goals of Section 628. 8. Parties may have numerous reasons for seeking a change of the terms of a programming contract. For instance, a programmer may offer a new channel of programming or technological changes in the delivery in programming, or an MVPD may add subscribers and thus seek a different price for programming based on the new volume of subscribers. Under EchoStar's interpretation of Section 76.1003(r), any interaction subsequent to the program vendor entering into a contract with a MVPD could lead to a program access complaint regardless of the period of time that has passed since the parties entered into a contract. This was not the Commission's intent. Accordingly, the Commission adopted the limitations period set forth in Section 76.1003(r). EchoStar's interpretation of that provision could thwart a programmer's ability to offer new programming, or even suggest a lower price for existing programming. Allowing EchoStar's interpretation of Section 76.1003(r) could affect the ability of consumers to receive new programming or services. We do not believe such consequences are consistent with the Congress' purposes in creating Section 628. 9. Secondly, EchoStar argues that the Order relied on a distinction not found in the rules. EchoStar believes that the decision attached importance to whether the parties contract amendment discussions took place more than one year after the date of the initial contract. EchoStar argues that there is no basis in the program access rules for a distinction based on the timing of the offer because any offer restarts the clock without regard as to when negotiations started. EchoStar contends that in any event, the negotiations that formed the basis of its complaint had started less than one year after execution of the agreement, citing a letter between the parties dated April 9, 1997. 10. Our decision in the Order to dismiss EchoStar's complaint was not based on the timing of the parties contract amendment discussions. As stated in the Order, EchoStar's complaint was dismissed because it was not brought within one year following the execution of the RSN Distribution Agreement. The Order found that subsequent discussions following the execution of a contract do not revive the limitations period unless the parties enter into a new contract. EchoStar's contention that renegotiations started before the limitations period had expired does not bear on this conclusion. Under Section 76.1003(r), the limitations period began to run once the parties entered into a contract and was unaffected by their subsequent negotiations. 11. Third, EchoStar argues that the Bureau's decision is inconsistent with its decision in a prior program access complaint, Turner Vision v. Cable News Network, Inc. EchoStar argues that, in Turner Vision, the Bureau held that post-contract negotiations are enough to restart the statute of limitations. EchoStar maintains that the instant situation presents a more compelling reason to restart the clock because the parties moved beyond discussions after Fox made a written offer, and had the offer been accepted, the limitations period would have restarted under the Commission's rules. In opposition, Fox contends that the Bureau's decision is consistent with Turner Vision. Fox argues that the Turner Vision decision noted that the defendants had agreed to prevent the statute of limitations from tolling because of ongoing negotiations, which is dissimilar to the instant situation. Fox maintains that EchoStar was solely responsible for the delay in filing the complaint. 12. We believe that the facts underlying Turner Vision are distinguishable. In Turner Vision, the parties recognized that their underlying contract was subject to a limitations period. In order to protect their rights to file a program access complaint, the parties executed agreements expressly tolling the limitations period. In the present situation, the parties made no similar arrangement. Unlike the situation in Turner Vision, the record lacks evidence showing that both parties intended to extend the deadline for filing program access complaints. 13. One of the reasons cited for dismissing EchoStar's program access complaint was to avoid unnecessary regulatory interference regarding contracts entered into by consenting parties. EchoStar's fourth error specification maintains that the Bureau's narrowing the statute of limitations rules in the name of a policy of avoiding interference with private contracts is not a policy determination recognized by the Commission. EchoStar argues that the Order implementing the program access rules does not discuss a Commission policy regarding interference with private contracts. EchoStar contends, that contrary to the position espoused in the Bureau's Order, Congress made the determination to interfere with private contracts in order to prevent discrimination by cable-affiliated programming vendors. EchoStar believes the determination in the Order to view the limitations period in light of a policy of minimizing interference with private contracts is contrary to that Congressional determination. 14. We affirm the conclusion in the Order that public policy requires minimal regulatory interference with private contracts entered into by consenting parties. All limitations periods and statutes of limitations are premised upon a recognition that, at some specified point in time, potential defendants should be able to proceed with their affairs without the looming possibility of liability. By adopting a limitations period for program access complaints, the Commission inherently recognized that, following a reasonable period of time in which to raise allegations of discrimination or unfair practices, the parties to a programming agreement must operate under the terms thereof or negotiate amendments thereto free of the program access specter. 15. We believe that the policy adopted by the Commission is consistent with the Congressional policy of the Cable Television Consumer Protection and Competition Act of 1992, the legislation that mandated implementation of the program access rules. The statement of policy of the Act included a determination by Congress to rely on the marketplace, to the maximum extent possible, to achieve the availability of a diversity of views and information through cable television and other video distribution media. The limitations period provides a limited period of time to contest allegedly unfair or discriminatory contracts and is consistent with Congress' policy of reliance on the marketplace to the maximum extent possible. For the one-year limitations period, an exception to reliance on the marketplace is allowed because of Congress' concern that vertically- integrated program suppliers have the incentive and ability to favor their affiliated cable operators over other MVPDs. 16. Finally, EchoStar argues that even if the Bureau's determination that Fox's August 1997 offer did not restart the statute of limitations was correct, the statute should have been tolled because EchoStar was not aware of the discrimination to which it was subject until it received the August 29, 1997 letter. EchoStar maintains that prior Commission decisions finding that the "discovery rule," which postpones the beginning of the limitations period until the discovery of the right or wrong or facts on which such knowledge is chargeable in law, is applicable to program access complaints. EchoStar believes that the discovery rule has special importance in the program access area where facts needed to establish a discrimination claim are typically in the exclusive possession of the vendor, making discovery of a wrong particularly difficult. EchoStar maintains that throughout this litigation, it has requested that Fox provide it with information necessary to allow it to determine the extent of Fox's discrimination, but Fox has refused. EchoStar argues that refusing to apply the discovery rule would allow Fox to profit from withholding the very information that would have enabled EchoStar to proceed with its complaint. 17. We are not persuaded that the discovery rule is applicable to the instant proceeding. In other contexts, the Commission has found that a limitations period is not discretionary. Its purpose is to protect a potential defendant against "stale and vexatious claims by ending the possibility of litigation after a reasonable period of time has elapsed." The discovery rule postpones the beginning of the limitations period from the date when the plaintiff is wronged to the date he discovers he has been injured. The Commission has recognized the discovery rule to toll a limitations period in situations when it cannot be clearly determined when the plaintiff's claim accrued. EchoStar's situation is distinguishable because there is no uncertainty regarding when the right to sue accrued. Under Section 76.1003(r)(1), a cause of action accrues upon the occurrence of a specific act; EchoStar's execution of the allegedly discriminatory contract between the parties. Accordingly, the application of the discovery rule is not appropriate in this proceeding. 18. Nor do we find merit in EchoStar's claim that the beginning of the limitations period should be postponed by Fox's failure to provide information. In the program access context, the Commission has addressed concerns regarding MVPDs' lack of access to information. The program access complaint procedures were designed to place the least necessary evidentiary burden on those seeking relief under the program access rules. For discrimination complaints, the Commission allows an MVPD that has been unable to obtain rate information from a program vendor to file a complaint based on information and belief of an impermissible rate differential, supported by an affidavit, along with a statement that the vendor refused to provide the necessary specific comparative information. The rules provided EchoStar a suitable method to provide evidence in support of its program access complaint regardless of the information supplied by Fox. 19. EchoStar also argues that the Bureau Order creates undesirable policy incentives for both vertically-integrated programmers and MVPDs. While these arguments are not legal specifications of error, we will address them in the interests of fully explicating our rationale in this matter. EchoStar asserts that the Bureau's determination that an offer to renegotiate an existing contract does not restart the statute of limitations eliminates programming vendors' incentive to renegotiate a discriminatory contract once the statute of limitations has expired. EchoStar maintains that a vendor that has signed a discriminatory contract does not have any basis to make a non-discriminatory offer unless there is a commercial advantage to make a new offer. 20. We disagree with the claim that the decision eliminates vendor's incentives to renegotiate existing contracts. To the contrary, we believe that a clearly defined limitations period for parties that have entered into a contract encourages unsolicited offers. A statute of limitations requires a party to exercise its rights within a reasonable time period. Parties that do not exercise their rights within the limitations period forego those rights. After the limitations period has elapsed, the parties may renegotiate the terms of an existing contract without fear that the negotiations could lead to the filing of a program access complaint. 21. EchoStar asserts that the Bureau's erroneous decision has the effect of rewarding Fox for its retraction of the offer. EchoStar maintains that if the offer had not been retracted and led to a new contract, the new contract would have restarted the statute and allowed a program access complaint to be brought. EchoStar believes this decision signals to MVPDs who believe their existing contracts are discriminatory to accept contract offers they know are discriminatory in order to have a cause of action when the limitations period will not let them bring an action under the existing contract. 22. We disagree with EchoStar's contention. The Bureau's decision is not intended to reward either party. The decision allows the parties to receive the benefits of the contract they entered subject to program access scrutiny for one year. Under EchoStar's view, the Commission must arbitrate program access disputes between EchoStar and Fox for the entire period that a contract exists between them because at any time, one of the parties may seek to renegotiate it. As discussed above, such a situation is precisely what the program access limitations period is intended to avoid. EchoStar believes the decision signals to MVPDs to accept discriminatory contract offers in order to have a cause of action when the statute of limitations has run on an existing contract. Again, we disagree with EchoStar. If, after the one year limitations period has expired, a vertically integrated programmer offers new contract terms, an MVPD is free to accept or reject those terms in its business judgement. If the MVPD finds the new terms acceptable, it will contract with the programmer. If the terms are unacceptable, the MVPD will reject them and continue under the existing contract. We do not believe that MVPDs will generally enter into contracts that they believe to be discriminatory, based on the possibility that the Commission will in the future rule favorably on a program access claim. However, if a MVPD does contract with the vertically integrated programmer, it will have one year from the date of such contract to bring its claim. III. ORDERING CLAUSES 23. Accordingly, IT IS ORDERED that the petition for reconsideration filed by program access complaint filed by EchoStar Communications Corporation against Fox/Liberty Networks LLC, Fox Sports Net LLC and Fox Sports Direct IS DENIED. 24. This action is taken by the Chief, Cable Services Bureau, pursuant to authority delegated by Section 0.321 of the Commission's rules. FEDERAL COMMUNICATIONS COMMISSION Deborah A. Lathen Chief, Cable Services Bureau