*Pages 1--2 from  Microsoft Word - 18558.doc*
 NEWS  Federal  Communications  Commission  445  12  th  Street,  S.  W.  Washington,  D.  C.  20554  This  is  an  unofficial  announcement  of  Commission  action.  Release  of  the  full  text  of  a  Commission  order  constitutes  official  action.  See  MCI  v.  FCC.  515  F  2d  385  (D.  C.  Circ  1974).  News  Media  Information  202  /  418-  0500  Internet:  http://  www.  fcc.  gov  TTY:  1-  888-  835-  5322 
 FOR  IMMEDIATE  RELEASE  NEWS  MEDIA  CONTACT:  June  13,  2002  Margo  Davenport  202-  418-  2949 
 FCC  EXTENDS  PROGRAM  ACCESS  EXCLUSIVITY  RULES 
 Washington,  D.  C.  –  The  Federal  Communications  Commission  today  issued  a  Report  and  Order  extending  for  five  years  the  statutory  prohibition  on  exclusive  contracts  for  satellite-  delivered 
 cable  or  satellite-  delivered  broadcast  programming  between  cable  operators  and  their  affiliated  programmers.  The  current  prohibition  on  exclusive  contracts  will  expire  on  October  5,  2002, 
 unless  the  Commission  affirmatively  determines  that  the  prohibition  “continues  to  be  necessary  to  preserve  and  protect  competition  and  diversity  in  the  distribution  of  video  programming.” 


 The  prohibition  was  enacted  as  part  of  the  Cable  Television  Consumer  Protection  and  Competition  Act  of  1992.  At  that  time,  Congress  found  that  cable  operators  dominated  the 
 market  for  the  distribution  of  multichannel  video  programming,  and  concluded  that  the  use  of  exclusive  contracts  between  cable  operators  and  their  affiliated  programmers  inhibited  the 
 development  of  competition  to  cable.  The  exclusive  contract  prohibition  was  adopted  to  address  this  concern.  The  Commission  was  instructed  by  the  statute  to  re-  examine  the  continuing  need 
 for  the  general  prohibition  after  it  had  been  in  effect  for  ten  years. 
 In  extending  the  prohibition  for  five  years,  the  Commission  found  that  without  the  prohibition  on  exclusivity,  programmers  that  are  affiliated  with  cable  operators  would  have  the  incentive  and 
 ability  to  favor  their  cable  affiliates  over  other  cable  operators  and  other  competitive  MVPDs,  and  this  favoritism  would  result  in  the  failure  to  protect  competition  and  diversity.  The 
 Commission  found  that  the  prohibition  continues  to  be  necessary  to  preserve  and  protect  competition  and  diversity  in  the  distribution  of  video  programming. 


 The  Commission  reviewed  the  changes  in  the  market  that  had  taken  place  during  the  last  ten  years  and  concluded  that,  although  there  has  been  a  significant  increase  in  competition  from 
 direct  broadcast  satellite  service  (DBS),  few  of  the  other  terrestrial  competitors  to  incumbent  cable  operators  had  developed  to  the  extent  anticipated  when  the  1992  Cable  Act  was  adopted. 
 The  Commission  found  that  programming  affiliated  with  cable  operators  remains  some  of  the  most  popular  programming,  and  that  the  loss  of  even  a  small  amount  thereof  would  harm  a  cable 
 competitor’s  ability  to  compete  for  subscribers.  The  Commission  noted  that  regional  programming,  particularly  regional  sports  programming,  was  an  important  component  of  any 
 competitive  service  offering  and  that  the  regional  clustering  of  cable  systems  that  had  taken  place  over  the  last  ten  years  increased  the  likelihood  that  cable  affiliated  programmers  would  withhold 
 programming  from  competitors. 
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 The  Commission  further  concluded  that  a  partial  sunset  of  the  exclusivity  prohibition  affecting  only  DBS  service  providers  is  not  warranted  at  this  time.  The  Commission  also  found  that  the 
 scope  of  the  exclusivity  prohibition  should  not  be  narrowed  to  apply  to  particular  types  of  programming  or  specified  geographic  areas.  The  Commission  determined  that  it  does  not  have 
 the  discretion  to  expand  the  prohibition  to  terrestrially  delivered  programming  or  non-  vertically  integrated  programming. 


 Consistent  with  Congress’s  recognition  that  exclusivity  could  be  a  legitimate  business  practice  in  a  competitive  environment,  the  Commission  will  continue  to  review,  on  a  case-  by-  case  basis, 
 petitions  for  waiver  of  the  prohibition  to  determine  whether  a  particular  exclusive  agreement  serves  the  public  interest. 


 Action  by  the  Commission  June  13,  2002,  by  Report  and  Order  (FCC  02-  176).  Chairman  Powell  and  Commissioner  Copps,  with  Commissioner  Abernathy  dissenting  and  issuing  a  statement, 
 Commissioner  Martin  approving  in  part,  concurring  in  part  and  issuing  a  statement,  and  Commissioner  Copps  issuing  a  separate  statement. 


 CS  Docket  No.  01-  290 


 -  FCC  - 
 Media  Bureau  contacts:  Karen  Kosar  and  Sonia  Greenaway  202-  418-  7200. 
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