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The Federal Communications Commission (FCC) has issued a Notice of Proposed Rulemaking aimed at fostering consumer choice and access to diverse programming on television. The proposed rules may prohibit the use of certain clauses in pay-TV programming distribution contracts that impede carriage of independent and diverse programming.
Specifically, the proposed rules would prevent pay-TV providers from including so-called ‘unconditional’ most favoured nation (MFN) and ‘unreasonable’ alternative distribution method (ADM) clauses in their contracts with independent programmers. An ‘unconditional’ MFN clause entitles a pay TV provider to receive favourable contract terms that a programmer has given to another programming distributor, without requiring the pay-TV provider to assume any corresponding obligations from the other distribution agreement. An ADM clause generally prohibits or limits a programmer from putting its programming on alternative video distribution platforms, such as online platforms. The FCC seeks comment on the specific kinds of ADM clauses that it should prohibit as unreasonable.
The proposed rules are a result of the input received from an inquiry the FCC opened earlier in 2106 into the state of diversity in the video programming market. The Commission held two workshops on the issue to examine the state of the video marketplace, challenges faced by distributors of video programming, and marketplace obstacles that affect the provision of independent and diverse programming to consumers.
According to the FCC, consumers ultimately feel the adverse effects of restrictive contract provisions. Because they limit the incentives and ability of independent programmers to experiment with innovative carriage terms and to license their content on alternative, innovative platforms, restrictive contract provisions deprive consumers of the benefits that otherwise would flow from enhanced competition in the video programming and distribution marketplace.
The FCC says the proposed rules would help to remove these barriers to competition, diversity, and innovation in the video marketplace, giving independent and niche programmers greater ability to reach their intended audiences. The proposed rules would also give consumers more choice in the sources and variety of their video programming, greater flexibility in how they access programme content, and lower prices for their video programming services.