On Tuesday, March 25, 2014, the House Energy and Commerce Committee’s Communications and Technology Subcommittee approved by voice vote an as-yet unnamed and unnumbered bill to reauthorize the Satellite Television Extension and Localism Act (“STELA”) and to make certain other modifications to provisions of the Communications Act related to retransmission consent, broadcast ownership, and set-top boxes. The following day, March 26, 2014, the Senate Judiciary Committee held a hearing on the reauthorization of STELA at which it also heard testimony on retransmission consent reform. And the Senate Commerce Committee, having recently solicited comments from industry stakeholders regarding the reauthorization of STELA and other issues, has scheduled a STELA-related hearing for Tuesday, April 1, 2014.

Background. In 1989, Congress enacted legislation authorizing DBS providers to retransmit distant broadcast signals for five years. Since then, Congress has reauthorized and modified this legislation on several occasions. The current iteration, known as STELA, was enacted in 2010 and contains several provisions that are scheduled to expire at the end of 2014. These expiring provisions include not only Communications Act and Copyright Act provisions relating to the importation of distant signals by DBS providers, but also provisions that bar broadcasters and multichannel video programming distributors from entering into exclusive retransmission consent negotiations and requiring that such negotiations be conducted in good faith.

It is considered a given that Congress will extend the expiring provisions, most likely for another five years. However, because the provisions that have to be extended are contained in both the Copyright Act and the Communications Act, the reauthorizing legislation has to work its way through four committees (House and Senate Judiciary Committees and House and Senate Commerce Committees). After a relatively slow start, the reauthorization process has picked up speed in recent weeks with the subcommittee mark-up by the House Energy and Commerce Committee, the Senate Judiciary Committee's hearing, and the Senate Commerce Committee’s questionnaire and scheduled hearing. A brief description of each of these developments follows:

House Communications and Technology Subcommittee Vote. Last year Rep. Walden (R-OR), Chairman of the House Energy and Commerce Committee’s Subcommittee on Communications and Technology, suggested that he might recommend that Congress adopt a “clean” STELA reauthorization that simply extended the expiring provisions for another five years while leaving other issues (such as retransmission consent reform) for consideration as part of a more general re-write of the Communications Act to be undertaken starting in 2015. However, Chairman Walden apparently has changed his mind and has agreed to include non-STELA related provisions in the reauthorization bill that would:

  • prohibit two or more non-commonly owned television stations in a market from jointly negotiating with an MVPD for retransmission consent (unless the MVPD voluntarily agrees to joint negotiations); 
     
  • provisionally bar the FCC from modifying its ownership rules to treat joint sales agreements and similar “sharing” arrangements as “attributable” ownership interest for purposes of applying the FCC’s local station multiple ownership cap; 
     
  • repeal the statutory provision that bars an MVPD from deleting or repositioning local television stations during sweeps ratings period; 
     
  • repeal the FCC rule barring cable operators from leasing “integrated” set-top boxes; 
     
  • require the GAO to prepare a report on the phase-out of compulsory licensing; and 
     
  • require DBS operators to file annual reports with the FCC identifying the markets where they offer local signals and changes in those markets.

A more detailed description of these provisions and of several amendments that were offered during the mark-up session but then withdrawn is attached. It is expected that negotiations among the members of the Subcommittee will continue (particularly on the sharing agreement provision and, possibly, the joint negotiations provision) before the bill moves the full Committee for consideration.

Senate Judiciary Hearing. As indicated, several committees have to consider the STELA reauthorization bill before it can become law. On March 26, 2014, the Senate Judiciary Committee took its first step in this process by holding a STELA reauthorization hearing, featuring testimony from NAB, Dish, the Writers Guild, and Public Knowledge. There was general agreement that STELA should be reauthorized for another five years (although the NAB does not see any need for the DBS distant signal compulsory license to be extended and the Public Knowledge witness called for a phase-out of both the compulsory license and retransmission consent). NAB and the Writers Guild agreed that STELA should not be used to make changes in the retransmission consent rules, but the Guild split with NAB by expressing support for changes in the FCC’s sharing rules. The Guild also opposed changes to the network non-duplication and syndicated exclusivity rules and to the repeal of the set-top box integration ban. On the other hand, Dish supported the inclusion in the STELA bill of provisions that either authorized the FCC to order interim carriage and arbitration to resolve retransmission consent disputes or allowed MVPDs to carry distant signals as replacements for signals blacked out during a retransmission consent dispute. Public Knowledge supported retransmission consent reform and a crackdown on broadcaster sharing agreements, but also argued for preservation of the integration ban and Congressional action in support of “network neutrality." Each witness was asked their view of the Comcast/Time Warner Cable merger, with Dish and NAB indicating that they had not taken a position at this time and Public Knowledge and the Writers Guild expressing their opposition.

Senate Commerce Committee Questionnaire and Hearing. In late February, the Senate Commerce Committee circulated a questionnaire to several dozen entities (including broadcasters, MVPDs, and public interest organizations) asking whether STELA should be reauthorized and seeking input on what other issues, if any, should be considered as part of the STELA reauthorization debate. The Committee has scheduled its first hearing on STELA for next week (April 1, 2014). It is expected that the witnesses will continue to divide along the lines reflected in the House Communications and Technology Subcommittee mark-up and the Senate Judiciary Committee hearing.