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Broadcasters bemoan possible loss of exclusivity rules

Broadcasters haven’t had an easy time under the Tom Wheeler Federal Communications Commission, and now the chairman is proposing eliminating the exclusivity rules that have served as a backstop for TV localism in retransmission consent disputes.

The network non-duplication and syndication exclusivity rules codify a TV station’s sole right to carry a network or syndicated TV program in its local market. The rules prevent a pay TV provider from carrying out-of-market TV stations that duplicate the programming of the local outlet. Pay TV providers have argued that puts them at a distinct disadvantage when negotiating carriage deals with TV stations that carry “must have” content.

In a blog post, Wheeler called the rules “outdated,” but the National Association of Broadcasters, which said it would oppose the order, called the rules the “lynchpin of the local broadcast business model.”

“The order currently circulating at the commission imposing changes to these rules would threaten the vibrancy of our uniquely free and local broadcast system,” said Dennis Wharton, executive vice president of communications for the NAB. “It is curious that the FCC keeps relying on the rationale that it is taking such pro pay-TV actions because the rules are decades-old, but refuses to even review or remove broadcast ownership rules that were imposed under market circumstances that clearly no longer exist.”

While the contracts TV stations sign with content providers is the strongest legal impediment to the importation of out of market signals, the FCC’s rules – like the sports blackout rule the FCC recently eliminated – have played suspenders to the content providers’ belt in retransmission disputes.

The syndication exclusivity rules were first implemented in 1972. The rules were repealed in 1980 when Wheeler just happened to be the chairman of the National Cable and Telecommunications Association. In 1988, the FCC reinstated the rules.

If the FCC lifts the rules again, it’s practically a sure bet that a cable system will import a distant signal in the next retransmission consent standoff, figuring that a civil law suit filed by a content provider or a TV station would be tied up in court long enough to materially alter their negotiation leverage.