Indie Programmers Take Aim at Bundling in Diverse Content Proceeding
Video bundling is in the crosshairs of numerous small programmers and allies, with many of them urging the FCC to add it to its rulemaking on independent and diverse programming. An NPRM looking at only unconditional most-favored-nation (MFN) provisions and unreasonable alternative distribution method (ADM) provisions in carriage agreements "is like the Fire Department attempting to douse a four-alarm fire using Solo cups of water," said the American Cable Association and multiple indie programmers in joint comments posted Friday in docket 16-41.
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Many see the NPRM -- championed by Commissioner Mignon Clyburn (see 1601290047) -- not going any further because of new Chairman Ajit Pai's deregulatory priorities (see 1701180025). Clyburn didn't comment. Thursday was the deadline for comments on the NPRM, with replies due Feb. 22.
Focusing on MFNs and ADMs is somewhat superfluous since indie programmers "never even get to that point" given small cable operators' lack of money and network capacity due to bundling, said ACA and programmers MAVTV Motorsports Networks, Ride TV and sister networks One America News Network and AWE. Also pointing at bundling as an unaddressed problem were beIn Sports and NTCA in separate comments.
The ACA group said unconditional MFNs can prevent indie programmers from getting carriage, and unreasonable ADMs can stop programmers from reaching the online viewers "who are vital to their future." They urged the FCC to modify the proposed rules, restricting only large MVPDs from using unconditional MFNs, since there's no evidence small MVPDs use them or that they affect indie programmers. They said the agency should specify some practices as presumptively reasonable, such as short-term limits on distributing programming for free online.
“The ends sought through the NPRM do not justify the means proposed,” programmers CBS, Disney, Time Warner, 21st Century Fox and Viacom said in joint comments, saying the agency should reject calls to ban bundling, tiering and penetration arrangements, as it has in the past. They said NPRM fails to lay out what authority the FCC even has under Communications Act sections 616 or 628 to regulate program carriage agreements so broadly.
Bundling had some defenders. "Wholesale bundling of programming networks can create opportunities for ... diverse content that may not otherwise have an opportunity to fully flourish to be carried," Comcast said. It pointed to the growth of the online video distribution market and said that with the video market being "competitive and diverse at all levels," the FCC should terminate the proceeding. NAB said bundling lets programmers bargain for carriage of niche channels or networks that might not get stand-alone carriage. It said limiting programmers' abilities to negotiate for bundles will give multichannel video programming distributors even more power in carriage talks.
MVPDs obviously force programmers to limit how and to whom they sell as a way to try to stifle competition from new services, Public Knowledge said, and market complexities make it tough to conclude any specific type of contractual provision is per se unreasonable. PK said the FCC should take a contextual approach to enforcement instead of a bright-line rule and avoid "being overly prescriptive.”
Bundling can create pro-consumer efficiencies, ITTA said, but forcing MVPDs to buy content they otherwise wouldn't want "unduly increases costs that are passed on to consumers and restricts competition and consumer choice." It said the agency should require programmers to offer MVPDs individual programming "at prices that represent a real economic alternative to a bundle.”
Indie programmers "are being crowded out of legacy platforms by media consolidation," necessitating industry-wide prohibitions against unconditional MFN and unreasonable ADM provisions, said Writers Guild of America, West. Citing conditions put on Comcast buying NBCUniversal and Charter/Time Warner Cable/Bright House Networks that limited use of ADMs and MFNs, it said the NPRM "is a logical and necessary next step to extend such prohibitions around the industry.”
With President Donald Trump having complained during the election campaign about media consolidation, the indie programming NPRM gives the FCC a chance "to put into action [those] campaign positions," beIn Sports said.
Cable network INSP backed carriage rules requiring MVPDs to take part "in bona fide negotiations" with indie programmers on "fair, reasonable and nondiscriminatory" carriage terms and have a transparent selection and evaluation process. It said nondiscrimination should be based on objective matters like ratings, uniqueness of programming and consumer demand, and a remedial complaint process should allow indie networks "obtain timely, cost-effect relief free of fear of retaliation.”
There was no clear agreement about how to even define an indie programmer. Programmer Cinemoi said it should exclude any programmer affiliate with an MVPD, broadcast TV licensee or programming conglomerate with control of more than three networks. It suggested the agency further define it based on ownership or appeal to underserved or minority populations. NAB said the FCC should use the definition it used in its notice of inquiry -- a programmer "not vertically integrated with an MVPD." It said any other definition would be arbitrary and not consistent with the proceeding's intent. CBS and the other programmers also backed staying with the traditional definition of not being vertically integrated with an MVPD. ITTA pushed for "a video programing vendor ... not affiliated with a broadcast network, movie studio or MVPD.”