Senators Rockefeller (D-WV) and Thune (R-SD), the chairman and ranking member of the Senate Committee on Commerce, Science and Transportation, have released a revised version of S. 2799, the “Satellite Television Access and Viewer Rights Act” (STAVRA). The full committee is scheduled to vote on the revised bill at a markup session on Wednesday, September 17, 2014 at 2:30 pm. 

Background. In 2010, Congress passed STELA (the “Satellite Television Extension and Localism Act”) extending certain expiring provisions of the Copyright Act and Communications Act (i) granting a compulsory copyright license for DBS carriage of distant signals; (ii) granting DBS operators an exemption from retransmission consent for the carriage of distant network signals to “unserved” households; and (iii) barring exclusive retransmission consent agreements and requiring “good faith” retransmission consent negotiations. 

Earlier this year, the House passed legislation (H.R. 4572) that extended the expiring provisions of the Copyright and Communications Acts and made several other changes to the Communications Act. These additional changes include the adoption of provisions (i) banning joint retransmission consent negotiations by non-commonly owned stations in a market; (ii) delaying the application of the FCC’s new rule deeming joint sales agreements attributable for purposes of the broadcast ownership rules; (iii) repealing the provision barring a cable operator from deleting or repositioning a station during a sweeps period; (iv) repealing the ban on “integrated” set-top boxes; (v) requiring DBS operators to submit annual reports regarding its local signal carriage; (vi) requiring the FCC to submit to Congress a report on whether there are feasible alternatives to the use of DMAs to define markets; and (vii) directing the Comptroller General to prepare a report on the changes to the DBS and cable carriage rules that would be required or beneficial to consumers if Congress phased-out the DBS and cable compulsory copyright licenses (and the impact such phase-out and related changes would have on consumer prices and access to programming). 

The process has moved more slowly in the Senate. However, shortly after Labor Day, the Senate Commerce Committee leadership circulated a “discussion draft” that focused exclusively on Communications Act issues, including the extension of the expiring STELA provisions. A major element of the discussion draft was the “Viewer Choice Act,” an amendment that would replace the current retransmission consent regime with an “a la carte” approach under which local television stations would have to choose whether to seek carriage on a must-carry (and uncompensated) basis or on an a la carte basis (at a per channel price set by the station). After push-back from the broadcast industry, the Committee leadership decided to scale back their bill by deleting the Viewer Choice Act. The revised draft also dropped certain other provisions that were designed to strengthen the good faith negotiation requirement. 

Summary of the revised STAVRA draft. The terms of the revised version of STAVRA are summarized below:

  1. Extension of Expiring STELA Provisions. The provisions of the retransmission consent section of the Communications Act (Section 325) barring exclusive retransmission consent agreements and requiring that retransmission consent negotiations be conducted in “good faith” are scheduled to expire at the end of 2014. The bill extends those provisions for another five years (until the end of 2019). In addition, the bill extends for five years the provision exempting the DBS industry from having to obtain retransmission consent for the carriage of distant network signals to “unserved households.”
  2. Market Modifications for DBS and Cable Carriage. Currently, the Communications Act provides a mechanism whereby cable operators and broadcasters may petition the FCC to modify a station’s local market for purposes of the cable must carry and retransmission consent rules by adding or deleting communities from that market. However, there is no parallel provision allowing for modification to the local markets of television stations for purposes of the DBS carriage rules. The bill rectifies that disparity by adding language giving DBS operators and stations the right to seek market modifications based on similar factors as those applicable to cable market modification petitions. In addition, the bill
  • adds a new factor to be considered by the FCC in deciding both cable and DBS market modification petitions – whether modifying the local station will promote consumers’ access to in-state television stations; 
  • instructs the FCC to consider a station’s historical carriage by either cable or DBS (rather than just by cable) in deciding DBS and cable market modification petitions;
  • exempts DBS operators from having to carry a signal pursuant to a market modification if “it is not technically and economically feasible for [the DBS operator] to accomplish such carriage by means of its satellites in operation” at the time of the market modification decision; 
  • provides that market modifications shall not have any effect on the eligibility of DBS households in the affected community to receive distant signals (i.e., the “if local, no distant" rule would not apply where the “local” signal is the product of a market modification); and 
  • directs the FCC to update what it considers a “community” for purposes of cable and DBS market modifications (thereby seeking to address the fact that the FCC currently equates a “community” with a franchise area for purposes of a cable market modification).
  1. Joint Retransmission Consent Negotiations. Under STAVRA, stations could not coordinate retransmission consent negotiations or conduct such negotiations jointly with another station in the same market, unless the stations were under direct or indirect “de jure” common control (i.e., more than 50 percent common ownership).  
  2. Protection for Significantly Viewed and Other Television Signals. The bill would prohibit a television station from limiting an MVPD’s ability to carry a significantly viewed signal or any other station that the MVPD is “authorized to carry” under the Communications Act provisions governing the carriage of broadcast signals by cable and DBS operators. One potential concern about this provision is that the referenced provision regarding cable carriage applies only to local signals, while the DBS-related provisions apply to both local and distant signals. 
  3. Update to Good Faith Negotiation Rules. The revised draft drops language from the earlier draft that would have required the FCC to consider whether online blocking and network approval of retransmission consent terms constitute violations of the duty to negotiate in good faith. It also drops a provision that would have allowed the FCC, where parties fail to extend an expiring retransmission consent agreement, to demand such information from the parties as the Commission deemed necessary to ensure that neither party had violated the good faith negotiation rules and to make a judgment as to whether such a violation had occurred. What is left is a provision that directs the FCC to update the “totality of the circumstances” test for finding a good faith violation to ensure that such test encourages the parties to present “bona fide” proposals and engage in timely negotiations to reach an agreement. 
  4. Update to Cable Rates Report. The FCC is directed to include in its annual cable price reports information regarding the “average aggregate total amount” of retransmission consent compensation paid by cable operators. It does not provide for the collection or reporting of such information with respect to DBS operators. 
  5. Integration Ban Repeal and Downloadable Security Working Group. The bill terminates the integration ban, effective two years from the date the bill is enacted. The FCC is required to implement that repeal by revising its rules within 180 days after the repeal takes effect. Not later than 60 days after enactment of STAVRA, the FCC is to convene a working group of technical experts to identify, report, and recommend performance objectives, technical capabilities, and technical standards for a technology and platform-neutral, software-based downloadable security system that will promote the competitive availability of navigation devices. 
  6. Streamlined Effective Competition Process for Small Cable Operators. The FCC would have 180 days to establish a streamlined process for small cable operators (particularly those serving rural markets) to file effective competition petitions. A small cable operator for these purposes is an operator that, directly or through an affiliate, serves in the aggregate fewer than one percent of the all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250 million. 

Overlap with House-passed bill. The revised STAVRA draft has the following provisions in common with H.R. 4572 as passed by the House: (i) the extension for five years of the expiring exclusive retransmission consent and good faith negotiation provisions and the retransmission consent exemption for the delivery of distant network signals to unserved households and (ii) the prohibition on joint negotiations; and (iii) the repeal of the integration ban (except that the House bill would make the repeal effective immediately and does not provide for the creation of a “Working Group” to study downloadable security). STAVRA does not include a provision delaying the implementation of the FCC’s new rules making JSAs attributable or repeal the prohibition on deleting or repositioning stations during a sweeps period.