NEWSReport No. DC-2694     ACTION IN DOCKET CASE          December 15, 1994


          COMMISSION AFFIRMS PROGRAM ACCESS RULE ON EXCLUSIVE 
                   CONTRACTS FOR SATELLITE PROGRAMMING
                           (MM DOCKET 92-265)

     The Commission has affirmed its program access rule on
exclusive contracts between direct broadcast satellite ("DBS")
distributors and satellite cable programming vendors.  The
National Rural Telecommunications Cooperative ("NRTC") filed a
petition for reconsideration of the First Report and Order in
this Docket which, in part, implemented Section 628(c)(2)(C) of
the program access provisions of the 1992 Cable Act.  That
Section of the Act prohibits exclusive contracts between cable
operators and satellite cable programming vendors affiliated with
cable operators in areas not served by a cable operator.  To
implement Section 628(c)(2)(C), the Commission in its First
Report and Order adopted Section 76.1002(c)(1) of its rules. The
Commission denied NRTC's petition.  

     NRTC asked the Commission to amend Section 76.1002(c)(1) to
create a per se prohibition on exclusive contracts for the
distribution of programming between DBS distributors and
vertically integrated satellite cable programming vendors for
areas unserved by cable.  United States Satellite Broadcasting,
Time Warner Entertainment Company, L.P., Viacom International,
Inc., Discovery Communications, Inc., and Liberty Media
Corporation opposed this petition.  NRTC and DirectTV, Inc. filed
replies.

     In today's action, the Commission denied NRTC's petition for
reconsideration and declined to amend Section 76.1002(c)(1).  The
Commission concluded that its current interpretation of Section
628(c)(2)(C) is the most reasonable one, is supported by the
findings and policies set forth in the 1992 Cable Act, and best
fulfills one of the underlying purposes of the Act -- to foster
competition to traditional cable systems.  The Commission found
that Congress was concerned with the market power abuses
exercised by cable operators that denied non-cable technologies
access to programming and stifled competition.  Congress did not
specifically express any similar concerns with respect to non-
cable technologies, such as DBS.

                                  (over)

                                    -2-

     The Commission concluded that an outright ban on non-cable
distributors' exclusive contracts in areas not served by cable,
without any determination of the effect of such exclusivity on
competition, could defeat one of the purposes of the 1992 Cable
Act, which was to foster competition from other technologies. 
There is no evidence at this time that exclusive contracts are
harmful to the development of competition in the DBS market or
the market for multichannel video programming generally, or have
negative effects on consumers.  To the contrary, the evidence
presented suggests that a DBS distributor's exclusive contract
for programming covering one orbital location may foster DBS as a
significant competitor to cable and eventually lead to more
diversity in programming for the consumer.  Moreover, the
evidence presented suggests that all DBS subscribers will have
access to the programming that is the subject of the exclusive
contracts.

     Additionally, the Commission concluded that the complaint
process under Section 628(b) of the Cable Act and Section 76.1001
of the Commission's rules regarding unfair practices is adequate
to redress any legitimate grievance caused as a result of
exclusive contracts between DBS distributors and vertically
integrated satellite cable programming vendors.  Any such
complaint must include a showing that a programming vendor's
practice caused harm to the complainant.

     Action by the Commission December 15, 1994, by Memorandum
Opinion and Order on Reconsideration of the First Report and
Order (FCC 94-326).  Commissioners Quello, Barrett, Ness and
Chong, with Chairman Hundt not participating.

                                  - FCC -

     News Media contact: Morgan Broman (202) 416-0852; Cable
     Service Bureau contacts: Maura Cantrill and Nancy
     Markowitz at (202) 416-0800.