ADMs, MFNs Becoming Centerpiece of Indie Programming NOI
Alternative distribution method and most-favored-nation language in carriage contracts are emerging as a major point of contention in the FCC's notice of inquiry on carriage hurdles faced by independent and diverse programmers (see 1602180044). The deadline for comments in docket 16-41 was Wednesday, with indie programmers and allies raising ADMs and MFNs as problematic, while Comcast and its NBCUniversal defended them.
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MVPDs often saddle independent networks with burdensome conditions that can range from "hunting license agreements" -- which are affiliation agreements that don't contain any commitments to actually launch the network -- to limited system rollouts, where indie networks are extended carriage only in some markets and not in a MVPD's full footprint, Ride TV said in a filing Wednesday in the docket. The list of hurdles independent channels face range from the unfair advantages given to MVPD-affiliated networks, such as broad distribution and preferred channel placement, to retaliation for speaking out on such practices, Ride TV said. Bundling has resulted in basic packages being full and programming dollars being accounted for in a way that leaves little room for indie networks, it said. According to Ride TV, other MVPD conditions can include being forced into low-penetration programming tiers, having to accept lower-than-market rates for programming, MFN provisions that guarantee all MVPDs pay the same costs, MVPD drop rights and clauses limiting ADMs via the Internet.
Common Cause said "creeping consolidation" of MVPDs is giving distributors more leverage in carriage negotiations and making it tougher for independent programmers to succeed, while the boom in over-the-top delivery "offers a unique opportunity to disrupt the status quo," it said in a filing in the docket Wednesday. Common Cause also cited MFN and ADM provisions as 'intentionally or coincidentally [reducing] the opportunities for carriage for diverse programmers." It said public, educational, and government access channels have struggled to get their information into channel guides.
"For producers and consumers of video programming it is the best of times," Comcast said in its filing to be posted Wednesday, saying the NOI indicates content creators "have more distribution outlets than ever before." But it said "the NOI still strains to see a glass half empty," and said the competitive marketplace points to no need for increased government oversight or regulation.
The NOI singled out ADMs and MFNs for their effects on the marketplace, and "the level of attention ... is unjustified," Comcast said. For MVPDs, they "reduce transaction costs, risks and uncertainties and foster workable agreements ... particularly with respect to new networks for which ... risks and uncertainties may be greater," it said. And while some MFN and ADM provisions could end up raising consumer costs or inhibiting competition, there's no evidence of a material marketplace problem specifically due to them, nor do they present any issues that outweigh "the legitimate pro-competitive and pro-consumer 'shield' role they play in this highly competitive marketplace," Comcast said.
The NOI asked about bundling and tier placement issues' effect on indie programmers, and NAB in a filing Wednesday defended the practices, saying programmers don't have the market power over MVPDs that would be necessary to force anticompetitive bundling and tiering arrangements on them. NAB also said MVPD arguments that restricted channel capacity limits their ability to add more diverse or independent programming are undermined by the fact MVPD channel capacity roughly doubles every decade.