President Obama has signed H.R. 5728, reauthorizing the Satellite Television Extension and Localism Act of 2010 (“STELA”) which was set to expire at the end of this year. The new law, entitled the STELA Reauthorization Act of 2014 (“STELAR”), extends until Dec. 31, 2019 the compulsory copyright license that authorizes the delivery of distant broadcast network and non-network (i.e. superstation) television signals to home satellite dish subscribers.

STELAR also amends provisions governing other aspects of satellite television and cable service regarding market modifications and retransmission consent, as well as cable-specific provisions pertaining to signal carriage, set-top box security, and regulation of cable rates in markets where there is effective competition. Other STELAR provisions delay the application of the FCC’s restrictions on same market television station joint sales agreements (“JSAs”) and establish various reporting requirements as described below.

STELAR provisions applicable to DBS:

Extension of Copyright and Retransmission Consent Provisions

In 1988 Congress first created a statutory copyright license for DBS companies – including DirecTV and Dish – to provide distant broadcast network television programing via satellite to subscribers in “unserved households” until the end of 1994. Subsequent laws generally expanded and extended the right of DBS companies to retransmit distant broadcast television stations for successive five year periods.  STELAR extends this satellite copyright license for another five years (until Dec. 31, 2019). It also renews two other Communications Act provisions pertaining to retransmission consent. The first is Section 325(b)(2)(C), which exempts DBS providers from having to obtain retransmission consent for the carriage of distant network signals to unserved households. The second provision is Section 325(b)(3)(C), which prohibits broadcast stations from engaging in exclusive contracts for carriage, and requires both broadcasters and MVPDs to negotiate in good faith for retransmission consent. Under STELAR, both of these provisions are extended through the end of 2019.

STELAR provisions applicable to DBS and Cable:

Market Modifications

The Communications Act currently sets forth a process by which cable operators and broadcast television stations may petition the FCC to modify the local television market of a particular broadcast television station to exclude or include communities for purposes of determining the station’s cable carriage rights and obligations. STELAR extends the availability of this “market modification” process to DBS providers, permitting both stations and DBS providers to seek a market modification from the FCC based on factors similar to those for cable operators.

STELAR also amends the processes for considering and implementing both DBS and cable market modifications with respect to defining local markets and signals eligible for carriage.  It gives the FCC nine months to promulgate regulations to implement these changes in market modifications.

Consumer Protections in Retransmission Consent Negotiations

  1. Joint Retransmission Consent Negotiations  

STELAR prohibits television stations from coordinating or engaging in joint retransmission consent negotiations with any other local television stations, unless the stations are “directly or indirectly under common de jure control” pursuant to FCC regulations. This expands the FCC’s previous ruling prohibiting joint negotiations only among the top four stations in a market.

  1. Protection of Significantly Viewed and Other Television Signals

STELAR also prohibits a local television station from limiting an MVPD’s ability to carry other television signals that have been deemed by the FCC to be “significantly viewed” or to carry any other television signal the MVPD is otherwise entitled to carry under the Communications Act, unless such stations are “directly or indirectly under common de jure control” pursuant to FCC regulations.

  1. Good Faith

The new law instructs the FCC to commence a rulemaking proceeding to review its “totality of circumstances” test for ensuring that television stations and MVPDs negotiate retransmission consent agreements in “good faith.”

STELAR provisions applicable to Cable:

Removal of “Sweeps” Carriage Requirement

STELAR eliminates the “sweeps” rule that prevents cable operators from removing or repositioning local broadcast channels during a period in which major ratings services measure the size of television audiences of local stations.

Repeal of Integration Ban for Set-Top Boxes

STELAR ends the “integration ban” which requires that most leased set-top boxes include CableCARDs, effective one year after the law is enacted and extends until the end of 2015 existing waivers of the integration ban that are in effect on or granted after the effective date of the law.  STELAR also directs the FCC to establish within 45 days of enactment, a “working group of technical experts” to identify and report on downloadable security design options that are not unduly burdensome and that promote competition with respect to the availability of navigation devices.  

Effective Competition Petitions for Small Cable Operators

STELAR directs the FCC to establish a streamlined process for small cable operators to file petitions for “effective competition,” particularly those serving primarily rural areas. If the FCC determines there is “effective competition” in a particular community, the cable operator is no longer subject to regulation of basic tier service and equipment rates. For purposes of this provision, a “small cable operator” generally is defined as an operator that serves in the aggregate less than one percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues exceed $250 million. STELAR requires the FCC to complete a rulemaking regarding the streamlined effective competition process within 180 days of enactment.  

Expansion of Low Power Television Service Area

STELAR expands the local service area of an LPTV station for purposes of the cable compulsory license to include the DMA that encompasses the station’s community of license, and any community located outside the DMA that is within 35 or 25 miles from the station’s transmitter (depending on the size of the market).   

STELAR provision applicable to broadcasters:

Delayed Application of the JSA Attribution Rule

On March 31, 2014 the FCC issued an order restricting same market television joint sales agreements (“JSAs”). In that order, the FCC decided if a television station enters into a JSA with a television station in the same market for more than 15% of that station’s advertising time, the second station would be “attributed” to the first station for purposes of the FCC’s local television ownership rule, potentially requiring termination of the JSA absent a waiver. The FCC gave stations two years to come into compliance with the new rule. STELAR extends that period for an additional six months until Dec. 19, 2016.   

STELAR provisions establishing reporting requirements:

  • Comptroller General to study what changes to signal carriage would be needed if compulsory license phased out
  • FCC to include rate comparisons for competitive and non-competitive communities
  • FCC to study rule changes to foster localism and more programming options
  • DBS providers to furnish details on local signal retransmissions