On December 7, 2017, the FCC’s Media Bureau adopted a Memorandum Opinion & Order granting a joint petition filed by three small Kentucky cable operators seeking to modify a broadcast station’s local television market.  The Electric Plant Board of the City of Russellville, Duo County Telecom, and North Central Telephone Cooperative (collectively, the “Petitioners”) sought to modify the television market of WBKO, licensed to Bowling Green, Kentucky to include six communities assigned to the Nashville, Louisville and Lexington designated market areas (“DMAs”). 

In this instance, Petitioners had historically carried WBKO’s full signal until the end of 2014, when ABC – WBKO’s primary affiliation – refused to allow WBKO to continue to grant retransmission consent to the operators.  ABC took this position since the operators served areas outside of the Bowling Green DMA where WBKO is not significantly viewed.  Petitioners, however, viewed WBKO as an important local signal, and each took steps to ensure their customers could at least view WBKO’s local, non-network programming at select, pre-scheduled times.  The FCC’s Order will permit Petitioners to restore WBKO’s full signal to their customers.

Cinnamon Mueller represented the cable operators in this matter.

The Order is a reminder that a station’s local market for must-carry and retransmission consent purposes is not set in stone.  In particular, for MVPDs without access to an in-state station, a 2014 change in the law provides support for adding in-state stations for cable systems that are grouped into an out-of-state DMA.  Market modification cases, however, can be complex and require a fair amount of fact-gathering.  To make sure you are prepared, we cover in this update the procedures and required evidence to seek a market modification.

Background.  The Communications Act entitles commercial broadcast stations to assert mandatory carriage rights on cable systems located within their markets.  A station’s market for this purpose is its “designated market area,” or DMA, as defined by Nielsen Media Research.

The Communications Act and FCC regulations provide detailed procedures under which the FCC may include or exclude communities from a station’s local market in response to a petition by a broadcast station or cable system.  The procedure is called “market modification.”  The idea behind market modification is that a station’s DMA may not accurately reflect the area served by a station or the station’s actual economic market.

Factors considered.  The FCC is required to consider five statutory factors in determining whether to grant or deny a petition:

1. Historical cable carriage of the station;
2. Signal coverage;
3. Access to stations that originate in consumers’ State of residence;
4. Carriage of other must-carry stations serving local programming needs; and
5. Viewing patterns in cable and non-cable households in the community in question.

The Commission decides each petition on a case-by-case basis.  None of the five factors, considered individually, is dispositive.  The FCC is free to – and frequently does – disregard one or more of the elements and will consider additional factors.

Required evidence.  FCC regulations require that a petitioner include certain evidence.  The Commission will dismiss a petition that does not include any of the required items.  Required evidence includes:

• A map illustrating the relevant communities and other features.
• Maps of the station’s technical service area.
• Data on shopping and labor patterns in the local market.
• Station programming information.
• Cable system channel lineups or other exhibits establishing historic carriage.
• Published audience data.
• If applicable, a statement that the station is licensed to a community within the same state as the relevant community.

New law emphasizing access to in-state stations.  The Satellite Television Extension and Localism Act Reauthorization Act of 2014, or STELAR, added a fifth factor for the FCC to consider – whether modifying the market would promote consumers’ access to in-state broadcast signals.

Decision timing.  By statute, the FCC must decide a market modification petition within 120 days of filing.

The FCC has also published a Guide which provides an overview of the process for requesting modification of a station’s local market.

If you have further questions about market modifications or carriage of a broadcast station outside of its DMA, please contact Scott Friedman at sfriedman@cinnamonmueller.com or (312) 580-8557 or Bruce Beard at bbeard@cinnamonmueller.com or (314) 394-1535.

FINAL REMINDER: Signal Leakage Reports Due by December 31, 2017 

If your system uses aeronautical frequencies, you must conduct signal leakage measurements and file FCC Form 320 at least once each calendar year.  The form should be filed within 45 days of testing so that the most current CLI information is on record with the FCC.  In the past, the FCC has fined cable operators for violating the signal leakage rules, even when a third party caused the signal leakage. 

FCC Form 320 must be filed electronically through the FCC’s Cable Operations and Licensing System (COALS).  To access COALS, go to https://apps.fcc.gov/coals/.  

If you have questions about FCC Form 320, please contact Scott Friedman at (312) 580-8557 or sfriedman@cinnamonmueller.com.