Definition of Markets for Purposes of the Cable Television Must- Carry Rules

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 76

[CS Docket No. 95-178; FCC 96-197]

Definition of Markets for Purposes of the Cable Television Must-

Carry Rules

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Commission requests comment on transitional mechanisms to

facilitate the switch from a local market definition based on

Arbitron's ``Areas of Dominant Influence'' (``ADIs'') to one using

Nielsen's ``Designated Market Areas'' (``DMAs'') for purposes of the

cable television broadcast signal carriage rules. The Commission

amended its rules to continue to use Arbitron 1991-1992 ADIs to define

local markets for the triennial must-carry/retransmission consent

election that must take place by October 1, 1996, and to switch to

Nielsen's DMAs beginning with the 1999 election in a Report and Order

adopted concurrently with the Further Notice of Proposed Rulemaking

(``Further NPRM'') and summarized elsewhere in this issue of the

Federal Register. The Commission previously anticipated that updated

market lists

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would be available coincident with the triennial must-carry/

retransmission consent election cycle. However, Arbitron ceased

publication of its market lists. The Commission is concerned that a

change in market designation procedures will affect a greater number of

stations, cable systems, and cable subscribers than would have been

affected by simply using a newer ADI market list, as had been

contemplated. Thus, the Further NPRM provides an opportunity for the

Commission and affected parties to further consider issues related to

the transition to a revised definition of local markets. The Further

NPRM also requests comment on procedures to refine the Section 614(h)

ad hoc market modification process in light of the new statutory

requirement that the Commission act on such requests within 120 days.

DATES: Comments are due on or before October 31, 1996, and reply

comments are due on or before November 15, 1996. Written comments by

the public on the proposed and/or modified information collections are

due October 31, 1996.

ADDRESSES: Federal Communications Commission, Washington, D.C. 20554.

In addition to filing comments with the Secretary, a copy of any

comments on the information collections contained herein should be

submitted to Dorothy Conway, Federal Communications Commission, Room

234, 1919 M Street, NW., Washington, DC 20554, or via the Internet to

[email protected].

FOR FURTHER INFORMATION CONTACT: Marcia Glauberman or John Adams, Cable

Services Bureau, (202) 418-7200. For additional information concerning

the information collections contained in this FNPRM contact Dorothy

Conway at 202-418-0217, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's

Further Notice of Proposed Rulemaking, CS Docket No. 95-178, FCC 96-197

adopted April 25, 1996, and released May 24, 1996. The full text of

this decision is available for inspection and copying during normal

business hours in the FCC Reference Center (room 239), 1919 M Street,

NW, Washington, DC. 20554.

Paperwork Reduction Act

This Report and Order and Further Notice of Proposed Rulemaking may

contain either proposed or modified information collections. The

Commission, as part of its continuing effort to reduce paperwork

burdens, invites the general public to comment on the information

collections contained in this Order/FNPRM, as required by the Paperwork

Reduction Act of 1995, Pub. L. 104-13. Public and agency comments are

due at the same time as other comments on this FNPRM. Comments should

address: (a) Whether the proposed collection of information is

necessary for the proper performance of the functions of the

Commission, including whether the information shall have practical

utility; (b) ways to enhance the quality, utility, and clarity of the

information collected; and (c) ways to minimize the burden of the

collection of information on the respondents, including the use of

automated collection techniques or other forms of information

technology.

Synopsis of the Further Notice of Proposed Rulemaking

1. The Further NPRM solicits additional information and provides

parties an opportunity to further consider issues relating to the

transition to market designations based on Nielsen's ``Designated

Market Areas'' (``DMAs''). It also seeks comment on procedures for

refining the section 614(h) ad hoc market modification process which

allows the Commission to modify the market areas of individual stations

and cable systems.

2. Under the signal carriage provisions added to the Communications

Act (``Act'') by the Cable Television Consumer Protection and

Competition Act of 1992 (``1992 Cable Act''), commercial broadcast

television stations are permitted to elect once every three years

whether they will be carried by cable systems in their local markets

pursuant to the must-carry or retransmission consent rules. Section 614

of the Act, 47 U.S.C. 534, provides that a station electing must-carry

status is entitled to insist on carriage of its signal. A station

electing retransmission consent as set forth in section 325 of the Act,

47 U.S.C. 325 negotiates a carriage agreement with each cable operator

and may be compensated for its station's carriage.

3. For purposes of these carriage rights, a station is considered

local on all cable systems located in the same television market as the

station. As enacted in 1992, section 614(h)(1)(C) of the Act required,

through a cross-reference to a Commission rule dealing with broadcast

ownership issues, that a station's market shall be determined using the

Arbitron Ratings Company's ``areas of dominant influence'' or ``ADI.''

The rules adopted in 1993 to implement these signal carriage provisions

established a mechanism for determining a station's local market for

each must-carry/retransmission consent cycle based on ADI market lists.

For the initial election in 1993, Arbitron's 1991-1992 Television ADI

Market Guide was used to define local markets and for each subsequent

election cycle an updated ADI market list was to be used.

4. However, since we established these procedures, Arbitron left

the television research business and the market list specified in the

rules for this year's election is unavailable. Congress also recognized

that Arbitron no longer publishes television market lists and the

Telecommunications Act of 1996 (``1996 Act''), Pub. L. 104-104, 110

Stat. 56 (1996), amended the definition of local market that referenced

ADIs. Specifically, Section 614(h)(1)(C) of the Act was amended by

Section 301 of the 1996 Act to provide that for purposes of applying

the mandatory carriage provisions, a broadcasting station's market

shall be determined ``by the Commission by regulation or order using,

where available, commercial publications which delineate television

markets based on viewing

patterns * * *.''

5. In addition, section 614(h) of the Act requires the Commission

to consider petitions for market modifications to add communities to or

exclude communities from a station's local market based on historical

carriage, signal coverage, local service, and viewing patterns. The

1996 Act modified this provision to require the Commission to act on

all petitions for market modifications within 120 days.

6. Prior to the 1996 Act, but consistent with its amended

definition of local market, we issued the Notice of Proposed Rulemaking

(``NPRM'') in this proceeding, summarized at 61 FR 1888 (January 24,

1996), seeking comment on three proposals for revising the mechanism

for determining local markets. First, the Commission could substitute

Nielsen Media Research's ``designated market areas'' or ``DMAs'' for

Arbitron's ADIs. While similar in many ways, the differences between

DMA and ADI market areas could result in a change in the area in which

a station can insist on carriage rights and a change in the stations

that a cable system is required to carry. The second option would be to

continue to use Arbitron's 1991-1992 Television ADI Market Guide to

define market areas, subject to individual review and refinement

through the section 614(h) process. Under this option, the local market

definition would remain unchanged, subject only to future individual

market modifications. A third proposal would be to retain the existing

market definitions for the 1996

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election period and switch to a Nielsen based standard for subsequent

elections.

7. In this Further Notice of Proposed Rulemaking, we seek comment

on mechanisms for facilitating the transition from a market definition

system based on ADIs to one based on DMAs. We believe it will be useful

to consider various means of easing the difficulties that may be

associated with what, as the comments indicate, will be changes in the

carriage requirements applicable to many cable operators and

broadcasters. These changes potentially affect mandatory carriage

rights, channel positioning obligations, retransmission consent

negotiations, copyright payments, the expectations of cable

subscribers, programming contracts, and even the physical layout and

construction of cable plant and operations. Thus, by this Further NPRM,

we seek specific suggestions that would assist in this transition

process. In particular, we ask commenters to consider whether special

provisions should be made for particular types of stations or systems

to minimize the disruptions that could occur due to a switch to DMAs.

8. The Further NPRM also requests comment on the consequences of a

shift in definitions on the more particularized market boundary

redefinition process contained in section 614(h) of the statute, the

decisions that have been made under that section, and the proceedings

under it that would result from shifting market definitions. We seek

specific comment on what changes in the modification process might be

warranted given that administrative resources available to process

section 614(h) requests are limited and the 1996 Act establishes a 120-

day time period for action on these petitions. Under the existing

process, a party is free to make its case using whatever evidence it

deems appropriate. One means of expediting the modification process

might be to establish specific evidentiary requirements in order to

support market modification petitions under section 614(h) of the Act

and Sec. 76.59 of the rules. Therefore, in the Further NPRM, we propose

several specific information submission requirements and seek comment

on these and other alternatives that parties believe will assist the

Commission in its review of individual requests.

9. A second potential means of increasing the efficiency of the

decision making process with respect to market modification petitions

would be to alter to some extent the burden of producing the relevant

evidence. In particular, we seek comment on whether the process could

be expedited by permitting the party seeking the modification to

establish a prima facie case based on historical carriage, technical

signal coverage of the area in question, and off-air viewing, which

could then trigger an obligation on the part of any objecting entity to

complete the factual record by presenting conflicting evidence as to

the actual economic market involved.

Initial Regulatory Flexibility Analysis

10. Pursuant to section 603 of the Regulatory Flexibility Act, the

Commission has prepared the following initial regulatory flexibility

analysis (``IRFA'') of the expected impact of these proposed policies

and rules on small entities. Written public comments are requested on

the IRFA. These comments must be filed in accordance with the same

filing deadlines as comments on the rest of the Further NPRM, but they

must have a separate and distinct heading designating them as responses

to the IRFA. The Secretary shall cause a copy of the Further NPRM,

including the IRFA, to be sent to the Chief Counsel for Advocacy of the

Small Business Administration in accordance with section 603(a) of the

Regulatory Flexibility Act, Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 601

et seq. (1981). Objectives. The objective of the Further NPRM is to

solicit comments on ways to ease the transition to a revised market

definition of local television markets based on Nielsen's DMAs for

must-carry/retransmission consent elections beginning in 1999. We

request information that will permit us to develop transitional

mechanisms to minimize problems that could result from changing market

designations on broadcasters' must-carry rights, cable operators'

signal carriage obligations, and the availability of local television

service to cable subscribers. The Further NPRM also seeks comment on

requirements intended to make the Section 614(h) market modification

process more efficient.

Legal Basis. Authority for this proposed rulemaking is contained in

sections 4(i), 4(j) and 614 of the Communications Act of 1934, as

amended, 47 U.S.C. 154(i), 154(j) and 534, and in section 301 of the

Telecommunications Act of 1996, Pub. L. 104-104 (1996).

Description, Potential Impact and Number of Small Entities

Affected. Changing from a market definition based on ADIs to one based

on DMAs could affect the area in which certain small commercial

broadcast television stations are entitled to elect must-carry/

retransmission consent rights and change the signal carriage

obligations of certain small cable systems. The further NPRM requests

proposals to minimize the impact on such small entities as well as

other stations and cable systems.

Reporting, Recordkeeping and Other Compliance Requirements. None.

Federal Rules which Overlap, Duplicate or Conflict with these

Rules. None.

Any Significant Alternatives Minimizing Impact on Small Entities

and Consistent with Stated Objectives. None.

Ex Parte

11. Ex parte Rules--Non-Restricted Proceeding. This is a non-

restricted notice and comment rulemaking proceeding. Ex parte

presentations are permitted, except during the Sunshine Agenda period,

provided that they are disclosed as provided in the Commission's rules.

See generally, 47 CFR 1.1202, 1.1203, and 1.1206(a).

Comment Dates

12. Pursuant to applicable procedures set forth in Secs. 1.415 and

1.419 of the Commission's rules, interested parties may file comments

on or before October 31, 1996, and reply comments on or before November

15, 1996. To file formally in this proceeding, you must file an

original plus six copies of all comments, reply comments, and

supporting comments. If you would like each Commissioner to receive a

personal copy of your comments and reply comments, you must file an

original plus 11 copies. You should send comments and reply comments to

the Office of the Secretary, Federal Communications Commission, 1919 M

Street, NW., Washington, DC 20554. Comments and reply comments will be

available for public inspection during regular business hours in the

FCC Reference Center, Room 239, Federal Communications Commission, 1919

M Street NW., Washington DC 20554.

Ordering Clauses

13. Authority for this proposed rulemaking is contained in sections

4(i), 4(j) and 614 of the Communications Act of 1934, as amended, 47

U.S.C. 154(i), 154(j) and 534, and section 301 of the

Telecommunications Act of 1996, Pub. L. 104-104 (1996), part 76.

14. It is ordered that, the Secretary shall send a copy of the

Further Notice of Proposed Rulemaking, including the Regulatory

Flexibility Analysis, to the Chief Counsel for Advocacy of the Small

Business Administration in accordance with paragraph 603(a) of the

Regulatory Flexibility Act, Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C.

Secs. 601 et seq. (1981).

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List of Subjects in 47 CFR Part 76

Cable television.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 96-14567 Filed 6-7-96; 8:45 am]

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