DA 95-1895 Federal Communications Commission Record 10 FCC Red No. 19
Before the
Federal Communications Commission 
Washington, D.C. 20554
In the Matter of
CABLEVISION INDUSTRIES CORPORATION
and
SCI-FI CHANNEL
CSR-4278-P
Petition for Public Interest Determination 
under 47 C.F.R. § 76.1002(c)(4) 
Relating to the Exclusive Distribution of 
the Sci-Fi Channel
MEMORANDUM OPINION AND ORDER
Adopted: August 28,1995; Released: September 7,1995
By the Chief, Cable Services Bureau:
INTRODUCTION
1. The Commission has before it a petition filed by 
Cablevision Industries Corporation ("CVI"), a cable oper 
ator, and USA Networks ("USA"), a cable programming 
vendor, (the "Petitioners") requesting a public interest de 
termination pursuant to Sections 76.1002(c)(4) and (5) of 
the Commission's rules authorizing the Petitioners to en 
force their exclusive distribution agreement with the Sci-Fi 
Channel programming service ("Sci-Fi"). Petitioners con 
tend that the relief requested is authorized by the Cable 
Television Consumer Protection and Competition Act of 
1992 ("1992 Cable Act") 1 and is in the public interest. The 
petition was placed on public notice on July 29. 1994, and 
is unopposed.
2. Based on the record before us, and pursuant to the 
criteria set forth in the 1992 Cable Act, we have deter 
mined that continued enforcement of this exclusive con 
tract is not in the public interest, and therefore, we deny 
the petition. Furthermore, the Commission determines that 
the exclusive provisions of the contract between USA and 
CVI may not be used to deny programming to any 
multichannel video programming distributor ("MVPD").
BACKGROUND
3. Section 628(c)(2)(D) of the 1992 Cable Act provides 
that, in areas served by a cable operator, exclusive contracts 
for satellite cable programming between vertically inte 
grated programming vendors and cable operators are pro 
hibited unless the Commission determines that such 
exclusivity is in the public interest.2 In determining wheth 
er the proposed exclusivity is in the public interest, the 
statute directs the Commission to consider five specific 
factors:
(a) the effect of such exclusive contract on the devel 
opment of competition in local and national 
multichannel video programming distribution mar 
kets;
(b) the effect of such exclusive contract on competi 
tion from multichannel video programming 
distribution technologies other than cable;
(c) the effect of such exclusive contract on the attrac 
tion of capital investment in the production and 
distribution of new satellite cable programming;
(d) the effect of such exclusive contract on diversity 
of programming in the multichannel video program 
ming distribution market; and
(e) the duration of the exclusive contract.3
The petitioners seek a public interest determination on 
their exclusive distribution arrangements for Sci-Fi.
4. According to the petitioners, Sci-Fi was launched in 
September 1992.4 Sci-Fi is a 24-hour cable programming 
service consisting of "entertainment programming dealing 
with science fiction, fantasy, horror, science fact and/or 
related programming, including advertisements." 5 Petition 
ers state that as of July 1994. Sci-Fi was being distributed to 
approximately 16.3 million subscribers.6 Prior to the 
launch of Sci-Fi, CVI entered into a distribution agreement 
with Sci-Fi. which granted CVI exclusive distribution rights 
in its service areas only with respect to other cable oper 
ators, MMDS operators and SMATV operations located 
within the operating areas of CVI's cable systems. The 
agreement also was subject to several other limitations.7 Pe 
titioners seek to enforce the exclusivity in seventy-eight 
CVI service areas throughout the country;8 for eight more 
years, until September 23, 2002 (the remaining three years 
of the initial term and a five year renewal). Alternatively, 
petitioners seek exclusivity for the remaining three years of 
the initial term, until September 23, 1997.9
1 Pub. L. No. 102-385, 106 Stat. 1460 at § 19 (1992).
2 Section 628(c)(2)(D) of the Communications Act of 1934, as 
amended (hereinafter, the "Communications Act"), 47 U.S.C. § 
548(c)(2)(D). Section 628(c)(2)(C) of the 1992 Cable Act con 
tains a flat prohibition against "practices, understandings, ar 
rangements and activities, including exclusive contracts ... 
between a cable operator and a [vertically integrated program 
ming vendor]" in areas not served by a cable operator as of 
October 5, 1992. 47 U.S.C. § 548(c)(2)(C). We note that this per 
se prohibition against exclusivity is not implicated in this case 
because the petition seeks authority for exclusive distribution in
served areas only.
See Communications Act § 628(c)(4), 47 U.S.C. § 548(c)(4).
Petition at 5 n.7.
Id. at 3.
Id. at 5 n.7.
Id. at 1, 2 n.5, and 4.
Id. at 4 and Exh. A.I. According to petitioners, the contract 
permits exclusivity in later acquired systems in addition to the 
seventy-eight markets listed. However, petitioners limit their 
request for exclusivity to those systems listed in Exhibit A.I. Id. 
at 4. 
9 Id. at 3.
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10 FCC Red No. 19 Federal Communications Commission Record DA 95-1895
5. The petition states that Sci-Fi is owned by USA, a 
general partnership between MCA, Inc. and Paramount 
Communications, Inc ("Paramount"). 10 According to Peti 
tioners, Paramount has now been acquired by Viacom 
International, Inc. ("Viacom"). One of Viacom's subsidiar 
ies owns cable television systems. 11 Because of its owner 
ship of Paramount, Viacom's interest in USA is 
"attributable" under the standards set forth in Section 
76.1000(b) of the Commission rules,12 making USA a verti 
cally integrated programming vendor subject to the Com 
mission's program access rules. Accordingly, USA may not 
provide a cable system operator the exclusive right to dis 
tribute Sci-Fi within the operator's franchise area without 
an affirmative determination by the Commission that such 
exclusive distribution meets the public interest criteria set 
forth in Section 628(c)(4) of the 1992Cable Act. 13 Petition 
ers further state that since its acquisition by Viacom, USA 
has received one request from a MVPD in Daleville, Ala 
bama (a cable overbuilder in a CVI service area) for the 
rights to carry Sci-Fi. 14 Petitioners filed this petition in 
response to that request and to seek authorization to en 
force the exclusivity provisions of their agreement.
SUMMARY OF PETITIONERS' ARGUMENTS
6. Petitioners argue that CVI should not lose its exclusive 
programming affiliation agreement based upon corporate 
transactions in which it was "neither a participant in nor a 
beneficiary of any of these corporate transactions. . ," 15 Pe 
titioners further argue that to deny CVI's right to enforce 
the exclusivity is particularly unfair here because "CVI was 
the party that took the risks inherent in supporting the 
launch of a new, untested, service." 16 Moreover, petitioners 
argue that due to the contractual limitations on CVI's 
exercise of exclusivity, the development of local and na 
tional competition in the distribution markets will not be 
adversely affected. 17
7. According to petitioners, CVI entered into a distribu 
tion agreement with Sci-Fi on August 1, 1991. At that 
time, Sci-Fi was not a vertically integrated programming 
vendor and had no prospects of acquiring any vertical 
affiliation. 18 According to petitioners, at the time of the 
agreement, Sci-Fi was only a programming concept, for 
which two Florida entrepreneurs were "struggling to secure 
enough carriage commitments and financial backing to 
launch the service." 19 Petitioners state that CVI viewed 
carriage of Sci-Fi as a "risky proposition" given the num 
ber of subscribers CVI was committing (75,000)20 and the 
lack of programming experience on the part of Sci-Fi's
management. Petitioners state that CVI mitigated this risk 
by negotiating for exclusive distribution in the affiliation 
agreement.21 Petitioners further state that although CVI 
asked for total exclusivity, Sci-Fi only accepted exclusivity 
with respect to cable operators, SMATV and MMDS op 
erating in a CVI service area.22
8. Petitioners attached portions of the exclusive contract 
to their petition. In sum, the contract terms grant CVI an 
exclusive license to distribute Sci-Fi in its service areas 
with respect to MMDS, SMATV and cable operators 
overbuilding in a CVI service area.23 The agreement states 
that the exclusivity is not effective against direct broadcast 
satellite ("DBS") or television receive-only ("TVRO") dis 
tributors.24 Moreover, petitioners maintain that the agree 
ment limits CVI's exclusivity in several ways: first, 
exclusivity is not effective against distributors with Sci-Fi 
affiliation contracts existing as of August 1, 1991; second, 
the exclusivity applies only to cable and SMATV operators 
within a CVI system's operating area, and does not apply to 
competitors in other areas of the CVI franchise area; and 
third, a cable, SMATV, or MMDS operator in an area 
where CVI currently is not distributing Sci-Fi, and who 
wishes to distribute Sci-Fi, can notify USA and CVI must 
launch Sci-Fi within six months of such notice in order to 
retain its exclusivity.25 Petitioners also claim that while the 
contract entitles CVI to exclusivity with respect to cable 
systems acquired later by CVI, petitioners only request the 
Commission to grant the petition with respect to a finite 
list of systems.26
9. Petitioners argue that the limited exclusivity sought 
will not be a competitive threat to the national 
multichannel video programming distribution market. Peti 
tioners claim that they seek only to enforce the contract in 
a finite number of communities which represent only 2% 
of the total number of cable households in the United 
States.27 In contrast, petitioners point to the Commission's 
previous grant of exclusivity to New England Cable News 
("NECN") that covered the entire New England area28 and 
which "creates the potential for a much larger number of 
'exclusive' subscribers than is represented by this Petition 
for Exclusivity." 29 Petitioners further argue that viewers in 
those communities still may receive Sci-Fi through DBS or 
TVRO distribution, or from a local competitor if a. CVI 
system is unwilling or unable to launch the service in a 
short time period. Moreover, petitioners argue that the 
exclusivity agreement involves a small number (approxi 
mately 7-8%) of total Sci-Fi subscribers and cannot be 
viewed as a serious threat to the national distribution mar ket.31
10 id. at 2-3.11 Id. at 3.
12 47 C.F.R. § 76.1000(b).
13 Implementation of Sections 12 and 19 of the Cable Television 
Consumer Protection and Competition Act of 1992, First Report 
and Order in MM Docket 92-265 ("First Report and Order") 8 
FCC Red 3359, 3384 (1993). See also para. 3, supra.
14 Petition at 9 n. 13.
15 Id. at 516 Id.
17 Id. at 8.
18 Id. at 2-3.
19 Id. at 1-2.
20 Id. at 2 n.4. Petitioners state that since its launch, CVI has 
made Sci-Fi available to 875,000 of its subscribers.
21 Id. at 2.
22 Id. at 2 n.5.
23 Id. at 4 and Exh. A.24 Id.
25 Id. at 4.
26 Id. The systems are listed in Exhibit A.I of the petition.
27 Id. at 7. Approximately 1,250,000 subscribers as of the date 
of the petition.
28 Id. at 7-8. See New England Cable News, Memorandum 
Opinion and Order, ("NECN"), 9 FCC Red 3231, 3238 (1994). 
The NECN decision was limited to the six New England states.
29 Petition al 7-8.
30 Id. at 8.31 Id.
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DA 95-1895 Federal Communications Commission Record 10 FCC Red No. 19
10. Petitioners further argue that CVI's competitors, both 
on a national and local level, will not be harmed if the 
Commission grants the petition. Petitioners state that since 
USA has become a vertically integrated programming ven 
dor, only one MVPD, a cable overbuilder in Daleville, 
Alabama, has requested carriage of Sci-Fi and that no 
MMDS or SMATV operators in areas where exclusivity is 
being sought has requested carriage of Sci-Fi.32 Moreover, 
petitioners state that the exclusive contract contemplates 
that SMATV, MMDS and other cable operators may carry 
Sc-Fi in areas covered by the agreement if the CVI system 
in that area fails to launch the service within six months of 
its notification of the former's desire to launch the service. 
Petitioners contend that "given the limited channel capac 
ity on most systems, subscriber notification requirements, 
benchmark recalculations, etc.", launching a channel with 
in six months may prove very difficult. Thus, petitioners 
argue where CVI has not launched Sci-Fi and faces com 
petition," CVI cannot lightly acquire exclusivity rights in 
the Sci-Fi service."33
11. Petitioners argue that denial of the petition will harm 
the development of new programming services34 because a 
programming service only can attract investors if it shows 
the ability to secure substantial carriage commitments from 
MSOs.35 Petitioners further contend that a significant factor 
in USA's decision to acquire Sci-Fi was the carriage com 
mitments, including those from CVI.36 Petitioners state that 
without the exclusivity provisions, CVI would not have 
committed to launch and continued to roll-out the service 
at a rate far greater than other cable operators.37 Petitioners 
state that if cable operators are not able to count on the 
contractual promises of exclusivity by a non-vertically-in 
tegrated programmer, new programming services networks 
will lose the ability to attract distributors.38 Moreover, ac 
cording to petitioners, cable operators like CVI, who are 
"unable to enforce the exclusivity provisions because of a 
change in ownership may themselves be unable to honor 
original subscriber commitments" or may need to curtail 
launch support and on-going marketing efforts.3<f Thus, 
Petitioners conclude that the elimination of a bargained-for 
consideration (i.e. exclusivity) will decrease new program 
mers' ability to attract capital.40
12. Petitioners also contend that granting their petition 
will have a positive effect on the availability of diverse 
programming in the multichannel video programming 
market. In contrast, petitioners state that if cable operators, 
who negotiate exclusivity in good faith, cannot rely on 
promises of exclusivity because of potential acquisitions or
mergers, they will be less willing to commit valuable chan 
nel space to innovative (and therefore risky) programming 
services.41 According to Petitioners, risk-averse cable oper 
ators mean reduced diversity.42 Petitioners argue that Sci-Fi 
can engage in a "host of dramatic and innovative new 
media activities"43 in + large part because of the 
commitment of operators like CVI to aggressive roll-out 
schedules.44 Petitioners contend that if the Commission 
denies this Petition, "substantial subscriber commitments to 
fledgling programmers (which, in CVI's case, are granted 
in exchange for exclusivity) may become a thing of the past.45
13. Finally, petitioners argue that their request for exclu 
sivity for a period of eight years is consistent with the term 
of exclusivity granted by the Commission in NECN.*6 Peti 
tioners concede that "Sci-Fi is a popular niche program 
mer," but contend that it still remains a "developing 
service."47 Petitioners further argue that CVI's commitment 
and aggressive roll-out schedule for Sci-Fi is based, in part, 
on an expectation that CVI would have exclusivity for the 
duration of the contract term.48 Thus, in the alternative, 
petitioners request that the Commission grant the petition 
until September 23, 1997, the remaining term on the con 
tract.
ANALYSIS
14. The program access provisions in the 1992 Cable Act 
were enacted to increase competition and diversity in the 
multichannel video programming distribution market.49 
When adopting the statute, Congress was concerned by its 
finding that the majority of cable operators enjoyed a 
monopoly in program distribution at the local level, and 
concluded that the use of exclusive contracts between verti 
cally integrated programming vendors and cable operators 
served to inhibit the development of competition among 
distributors.51 In addition, Congress found that increased 
horizontal concentration of cable operators togetherp 3with 
extensive vertical integration has created an imbalance of 
power between operators and unaffiliated programming 
vendors, and operators and their multichannel competitors, 
which also impedes the overall development of competi 
tion.52
15. Thus, in the 1992 Cable Act, Congress absolutely 
prohibited exclusive contracts between vertically integrated 
programming vendors and cable operators in areas 
unserved by cable, and prohibited such exclusive contracts
32 Id. at 8-9.
33 Id. at 10. The Petitioners do not indicate which systems 
listed in Exhibit A.I, or generally how many of its systems, 
have not yet launched the Sci-Fi service.34 Id.
35 Id. 3fi Id.
37 Id. at 10-11. Petitioners state that Sci-Fi is available on 70% 
of the CVI systems, compared to its overall availability to 27% 
of all cable households.
38 Id. at 11.
3<) Id. at 11 n.17.
40 Id. at 11.
41 Id. at 12.42 Id.
43 Id. at 12. These activities include delivering a computer 
on-line service to the public, publishing Sci-fi Magazine, and
providing an interactive, phone-in, program guide for its view 
ers through which subscribers can identify specific genre pro 
gramming and receive advance scheduling information.
44 Id. at 13.45 Id.
46 Id.
47 Id. at 14.48 Id.
49 See Communications Act § 628(a), 47 U.S.C. § 548(a).
50 1992 Cable Act, § 2(a)(4); House Comm. on Energy and 
Commerce, House Rep. No. 102-268, 102d Cong., 2d Sess. (1992) 
at 42.
51 1992 Cable Act, § 2(a)(5); Senate Comm. on Commerce, 
Science, and Transportation, S. Rep. No. 102-92, 102d Cong., 1st 
Sess. (1991) at 25-26.
52 See First Report and Order, 8 FCC Red at 3366.
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10 FCC Red No. 19 Federal Communications Commission Record DA 95-1895
within areas served by cable absent a specific public inter 
est showing, for a period of ten years.53 Congress, however, 
recognized that in areas served by cable, some exclusive 
contracts between vertically integrated programming ven 
dors and cable operators may provide countervailing bene 
fits to the programming market or to the development of 
competition among distributors.54 Congress provided that 
where such an exclusive contract is demonstrated to be in 
the public interest, it should be allowed. The public inter 
est criteria set forth in the 1992 Cable Act reflect the 
benefits to the programming market that exclusivity in 
areas that are served by cable may provide in a particular 
case, ultimately which can rebut the presumption inherent 
in the statute's program access provisions that the use of 
exclusivity between vertically integrated programming ven 
dors and cable operators frustrates the development of 
competition.
16. Any agreement between a vertically integrated pro 
gramming vendor and a cable operator that grants a cable 
operator the exclusive right to distribute programming 
within its franchise area must be approved by the Commis 
sion before it may be enforced.55 When engaging in this 
type of examination, we will examine the effect of a par 
ticular exclusive contract on each of the public interest 
factors listed in Section 76.1002(c)(3) of our rules. We have 
determined that any party seeking a determination that 
such an agreement meets the statutory public interest stan 
dard bears the burden of demonstrating that the proposed 
exclusivity provides sufficient public interest benefits to 
outweigh the presumptively anticompetitive effect on com 
peting distributors. The Commission has determined that it 
will examine petitions for exclusivity on a case-by-case basis.56
Effects of Exclusivity on the Development of Competition 
in the Distribution Market
17. The public interest factors set forth in the rules 
require us to consider the effect of the exclusivity provision 
at issue on two aspects of the development of competition 
to incumbent cable operators. One statutory factor requires 
the Commission to consider the effect on the development 
of competition in local and national programming distribu 
tion markets; another statutory factor requires the Commis 
sion to consider the effect on competition from MVPD 
technologies other than cable.57 As we stated in Time 
Warner and NECN, "|i|n conjunction with this examina 
tion, we believe it is appropriate to evaluate the geographic 
extent of the proposed exclusivity to identify the relevant 
markets within which the proposal may affect the develop 
ment of competing distributors."58 We have determined 
that a petitioner may rebut the presumption that exclusive
contracts act as a barrier to entry into the MVPD market 
with a showing that competitive entry is not affected, or 
that any effects are minimal compared to countervailing 
public interest benefits to the programming market.59
18. To evaluate the effect of the exclusivity at issue on 
the development of competition in the local distribution 
markets,60 we must ascertain the local markets affected. 
Petitioners submit a list of seventy-eight systems or com 
munities in seventeen states, in which they seek to enforce 
their exclusive distribution contract. Petitioners argue that 
the reach of the exclusivity is not as widespread as that 
allowed by the Commission in NECN. However, the geo 
graphic scope of exclusivity granted to NECN was limited 
to six states.61 We find that seventy-eight communities is 
not an insubstantial number of markets affected. While the 
record does not reflect how many of those communities 
have existing or potential competitors, petitioners do state 
that in at least one community, there is a competitor of 
CVI desiring access to Sci-Fi.62 Unlike the situation in 
NECN, we cannot conclude that granting the petition "will 
not result in denial of access to its programming by com 
peting MVPDs in the relevant local markets."63
19. Where a cable operator seeks exclusivity that would 
deny its competitors access to popular programming, there 
likely is a limiting effect on the development of competi 
tion in that market.64 Petitioners concede that Sci-Fi is a 
popular niche programming service with 16.3 million sub 
scribers.65 Thus, we find that limiting access to this popu 
lar, established service likely will have a limiting effect on 
the development of competition in local markets.
20. We reject petitioners claim that the contractual limi 
tations on CVI's exclusivity serve as a safeguard that com 
petition will not be harmed by granting the petition. 
Petitioners indicate that the exclusivity in some of the 
seventy-eight communities may be limited due to CVI's 
contractual obligation to launch the Sci-Fi service within 
six months or forfeit its exclusive distribution rights, and 
that only competitors operating in areas of a CVI system 
are affected.6" While those provisions may reduce the uni 
verse of emerging competitors affected by the exclusivity, it 
is unclear, and petitioners do not indicate, how many 
communities or competitors may have access to the service 
because of these contractual limitations. We find that the 
petitioners have not demonstrated that the exclusive provi 
sions of their contract will not adversely affect the develop 
ment of competition in local distribution markets or that 
there is anything unique with respect to Sci-Fi that would 
render the general policy regarding exclusivity inapplicable 
to it.
53 See Communications Act §§ 628(c)(2)(D), (4), and (5), 47 
U.S.C. §§ 548(c)(2)(D), (4), and (5).
54 See Communications Act §§ 628(c)(2)(D). (4), 47 U.S.C. §§ 
548(c)(2)(D), (4).
55 See First Report and Order, 8 FCC Red at 3386. See also 
NECN, 9 FCC Red at 3234; Time Warner Cable, Memorandum 
Opinion and Order, ("Time Warner"), 9 FCC Red 3221, 3225 
(1994).
56 See First Report and Order, 8 FCC Red at 3385.
57 Communications Act, §§ 628(c)(4)(A)-(B), 47 U.S.C. §§ 
548(c)(4)(A)-(B).
58 NECN, 9 FCC Red at 3235; Time Warner, 9 FCC Red at
3225.
59 Time Warner, 9 FCC Red at 3226.
60 With respect to the effect of CVI's exclusivity on the devel 
opment of competition in the national distribution markets, we 
note that the exclusivity does not extend to distributors in the 
national market. e.g., DBS or TVRO distributors. Thus, we will 
focus on the effects on competition in the local MVPD markets.
61 NECN, 9 FCC Red at 3238.
62 Petition at 9 n.13.
63 NECN, 9 FCC Red at 3235.
64 See Time Warner, 9 FCC Red at 3227.
65 Petition at 14. More recent information indicates that Sci-Fi 
has continued to grow in circulation. For example. Broadcasting 
and Cable for July 10, 1995 (p. 17) reports a Sci-Fi circulation 
of 23,000,000 subscribers.
66 Id. at 10.
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DA 95-1895 Federal Communications Commission Record 10 FCC Red No. 19
21. With respect to the effect of exclusivity on competi 
tion from non-cable MVPDs, petitioners rely on the fact 
that the exclusivity they are seeking does not extend to 
TVRO and DBS distributors. Petitioners further argue that 
to date no MMDS or SMATV operator has complained. As 
we stated in Time Warner, "the statutory public interest test 
requires us to consider the effect of exclusivity on all 
alternate technology competitors, not just DBS."67 Thus, 
allowing distribution to DBS or TVRO, while seeking to 
enforce exclusivity against SMATV and MMDS operators 
may reduce the effect on non-cable competitors, it does not 
eliminate such a limiting effect altogether. Moreover, the 
fact that no MMDS or SMATV operator has complained is 
not dispositive of whether there is an effect on the develop 
ment of competition.
22. We determine that continued enforcement of the 
proposed exclusivity will deny a popular programming ser 
vice to actual or potential competitors in seventy-eight 
communities nationwide. Accordingly, we conclude that 
the effects of the exclusivity at issue both on (1) the devel 
opment of competition in local distribution markets and 
(2) competition from alternate technology competing distri 
butors, weigh against finding the continued enforcement of 
CVI's exclusive contract with Sci-Fi is in the public inter 
est.
Public Interest Benefits of Exclusivity on the Program 
ming Market
Attraction of Capital Investments in Production and 
Distribution of Programming
23. Both Congress and the Commission recognized that 
in some circumstances exclusivity can serve as an invest 
ment incentive for cable operators to finance, promote and 
carry a new service.68 All new programming services face 
difficulties in launching a service and attracting financial 
backing. These difficulties may be ameliorated by the abil 
ity of the programming vendor to offer exclusive distribu 
tion. Congress has placed specific limits on exclusivity 
arrangements for vertically integrated programming ven 
dors. However, where a vertically integrated programming 
vendor demonstrates that it faces unique obstacles or limi 
tations in attracting investments and securing carriage 
agreements for a new programming service such that its 
viability requires the ability to offer the additional incen 
tive of exclusivity, exclusive distribution may be in the 
public interest.69
24. Petitioners contend that CVI provided Sci-Fi with 
substantial carriage commitments based upon Sci-Fi's 
promise of exclusivity.  Significantly, however, petitioners 
do not contend that exclusivity is required for continued 
survival of Sci-Fi.' 1 Rather, petitioners argue that denial of
the petition will have some future impact on the ability of 
programmers to attract capital, contending that "the Com 
mission will significantly impair the ability of new services 
to raise capital for the production and distribution of new 
programming services if cable operators know that they 
cannot count on the exclusivity provisions of their agree 
ments with these programmers."72
25. We disagree with petitioners' claim that our denial of 
exclusivity in this case will limit a new programming ven 
dor's ability to attract financial backing. Under the Com 
mission rules, all exclusive contracts between a vertically 
integrated programming vendor and a cable operator in an 
area served by a cable operator must be approved by the 
Commission to retain enforceability of the exclusivity. The 
Commission previously stated that whether an exclusive 
agreement is in the public interest and permitted will be 
evaluated on a case-by-case basis, using all five statutory 
public interest factors. Our conclusion here that petition 
ers have failed to present facts demonstrating that exclusiv 
ity is vital for the continued viability of Sci-Fi, does not 
establish a uniform determination that all exclusive con 
tracts between programming vendors, recently acquired by 
a cable operator and cable operators are not in the public 
interest. As new petitions for exclusivity are filed, the 
Commission will make a determination, based on the par 
ticular facts of each case, whether the continued enforce 
ment is in the public interest.
26. We recognize that our decision here denies 
petitioners the benefit of an exclusivity based on a change 
of ownership beyond their control, and that petitioners 
may not benefit as they hoped from their financial com 
mitment to Sci-Fi. However, as we noted in Time Warner:
Congress made a policy choice to disfavor such ex 
clusive contracts. In reaching a determination 
concerning the public benefits of exclusivity, the 
Commission must balance on a case-by-case basis the 
public interest supporting a programming vendor's 
need for investment incentives against the public's 
interest in access to programming by competing dis 
tributors. The private benefits of exclusivity . . . are 
not at issue.74
Likewise, the private benefits of exclusivity to petitioners is 
not at issue. In addition, petitioners have not shown that 
exclusivity is necessary for continued investment in and 
development of Sci-Fi.
67 Time Warner, 9 FCC Red at 3228.
68 Communications Act § 628(c)(4)(C), 47 U.S.C. § 
548(c)(4)(C); NECN, 9 FCC Red at 3236; Time Warner. 9 FCC 
Red at 3228.
1)9 See, e.g., NECN, 9 FCC Red at 3236. In that case the 
distribution potential for the programming service was limited 
by the regional focus of the programming, thereby constraining 
its revenue potential. This limitation distinguished the service 
from other new launches and justified NECN's use of exclusiv 
ity as a tool to attract financial investments and carriage com 
mitments. 
70 Petition at 10.
71 However, Petitioners do advance a generalized prospective 
argument contending that "|c|able operators like CVI who find 
themselves unable to enforce exclusivity provisions because of a 
change in ownership may themselves be unable to honor their 
original subscriber commitments. Operators projecting certain 
revenue levels from the distribution of exclusive services may 
find their ability to roll out new programming compromised it 
such exclusivity evaporates." Id. at 11 n.17.
72 Id. at 11.
73 See Time Warner, 9 FCC Red at 3225, 3229; First Report and 
Order, 8 FCC Red at 3385.
74 Time Warner, 9 FCC Red at 3229.
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10 FCC Red No. 19 Federal Communications Commission Record DA 95-1895
Diversity in Programming
27. The statute requires us to consider the effect of 
exclusivity on diversity in the programming market.75 Ex 
clusivity may promote diversity by providing incentives for 
cable operators to promote and carry a new and untested 
programming service. However, Sci-Fi is an existing and 
successful programming service. We conclude that petition 
ers have failed to demonstrate that continued exclusivity 
for Sci-Fi currently is needed to promote diversity in pro 
gramming.
28. Petitioners argue that the denial of their petition may 
limit the ability of innovative (and risky) services to secure 
carriage commitments. Petitioners argue that Sci-Fi's ability 
and willingness to engage in innovative and new activities 
is due in large part to the commitment of operators like to 
CVI to aggressively roll-out service. As discussed above, we 
find that petitioners' argument regarding the prospective 
impact of a denial of their petition on programming diver 
sity is without merit because exclusive arrangements will 
be evaluated on a case-by-case basis. This argument is 
essentially an argument against any limitation on exclusiv 
ity rather than a particularized argument relating to Sci-Fi.
29. In addition, we find that petitioners' claim that exclu 
sivity supports diversity by providing revenues to support 
innovative services is irrelevant to our consideration of the 
effect on diversity of programming. While we encourage 
Sci-Fi's new and innovative media ventures, the petition 
seeks exclusivity for the Sci-Fi programming service and 
not for its other ventures. We conclude that the continued 
exclusivity for Sci-Fi currently is not needed to promote 
diversity in programming because Sci-Fi is an existing and 
successful programming service.76
Duration of the Exclusive Agreement
30. The fifth public interest factor the statute requires us 
to consider is the duration of the contract.77 Where the 
duration of the exclusivity is tailored to the minimum 
period of time reasonably necessary to develop and firmly 
establish the programming service through assured financ 
ing, promotion and marketing, then such limited duration 
may weigh in favor of allowing exclusivity. We note that 
the full term of the exclusive contract runs for 8 years. As 
discussed above, we have determined that Sci-Fi already 
has attained a significant level of popular appeal to con 
sumers and, therefore, find that continued enforcement of 
exclusivity for any length of time in this case is not in the 
public interest.78
31. Finally, we note that petitioners reliance on NECN is 
misplaced. Petitioners petition differs in critical respects 
from the petition in NECN, where exclusivity for a period 
of seven years was approved. NECN was a new service 
struggling to secure carriage commitments; in contrast, Sci- 
Fi is an established programming service with in excess of 
16.3 million subscribers. Moreover, the record in NECN 
demonstrated minimal effects on competition in the rel 
evant distribution market which were offset by countervail 
ing public interest benefits to the programming market. In 
contrast, we have found no public interest benefits to con 
tinued exclusivity in this case.
CONCLUSION
32. Upon consideration of the five statutory public inter 
est factors, we find that petitioners have failed to 
demonstrate that continued enforcement of CVTs exclusive 
contract for Sci-Fi is in the public interest. The proposed 
exclusive agreement withholds a popular service from 
emerging competitors to cable, such as cable overbuilders, 
MMDS and SMATV operators, thereby directly constrain 
ing the development of competition in the local distribu 
tion markets at issue. We further find that no 
countervailing public benefits will be derived from allow 
ing continued enforcement of the incumbent cable oper 
ator's rights to exclusivity. The facts demonstrate that Sci-Fi 
is a viable, successful programming service with national 
reach. Exclusivity is not necessary for the survival of the 
service nor will exclusivity in this case promote diversity in 
programming.
ORDERING CLAUSE
33. Accordingly, IT IS ORDERED, that the petition for 
exclusivity filed by CVI and USA requesting a finding that 
their exclusive contract for the distribution of Sci-Fi is in 
the public interest IS DENIED.
34. This action is taken pursuant to authority delegated 
by Section 0.321 of the Commission's Rules.
FEDERAL COMMUNICATIONS COMMISSION
William H. Johnson
Acting Chief, Cable Services Bureau
75 Communications Act, § 628(c)(4)(D), 47 U.S.C. §
548(c)(4)(D).
16 Moreover, granting the petition would have the effect of
limiting the availability and diversity of the programming for
subscribers to CVI competitors.
77 Communications Act, § 628(c)(4)(E), 47 U.S.C. §
548(c)(4)(E).
' 8 Thus, we similarly reject Petitioners' proposed alternate 
duration of the exclusive distribution provisions of three years. 
Because Sci-Fi is a popular programming service currently in 
demand by at least one CVI competitor, to delay access for three 
more years adversely will affect the development of MVPD 
competition, without providing any countervailing benefits to 
the programming market.
9791