Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) CABLEVISION SYSTEMS CORPORATIONCSR-4666-M) ) Petition for Reconsideration ) MEMORANDUM OPINION AND ORDER Adopted: December 19, 1996Released: December 20, 1996 By the Deputy Chief, Cable Services Bureau: INTRODUCTION 1.Cablevision Systems Corporation ("Cablevision"), an operator of cable television systems serving various Michigan communities, has filed a petition for partial reconsideration of the Bureau's decision in Cablevision Systems Corporation, et al. ("Cablevision I"), released on November 21, 1996. By that decision, the Bureau held that Cablevision's contention that Station WOOD-TV (NBC, Channel 8), Grand Rapids, Michigan had made inconsistent signal carriage elections in Kalamazoo, Michigan was moot, and that Cablevision's similar contention, raised in a supplement filed eleven months after Cablevision's initial petition, that WOOD-TV had made inconsistent signal carriage elections in Comstock Township, Michigan, was not conclusively demonstrated. Cablevision argues that these two holdings are in error, and seeks reconsideration. WOOD-TV and Station WAVY-TV (NBC, Channel 10), Portsmouth, Virginia have opposed Cablevision's petition, and Cablevision has replied. BACKGROUND 2.This case arises from carriage disputes between Cablevision and WOOD-TV. Although WOOD-TV had been carried on Cablevision's systems pursuant to retransmission consent agreements, these agreements expired on January 15, 1996, and Cablevision ceased carriage of WOOD-TV. On January 24, 1996, however, Cablevision resumed carriage of WOOD-TV. Cablevision filed a petition for declaratory ruling the next day, seeking Commission agreement with Cablevision's claim that, for various reasons, the retransmission consent elections of WOOD-TV were invalid, and that the station has therefore defaulted to must-carry status with respect to Cablevision's systems. 3.Pursuant to 325 of the Communications Act and implementing rules adopted by the Commission in its Report and Order in MM Docket 92-259, no commercial television broadcast signal may be retransmitted without the express authority of the originating station. This authority may be expressed by a station's election of mandatory carriage rights pursuant to 614 of the Act, or by negotiating with a cable television system the right to retransmit the station's signal. The choice between retransmission consent and must-carry rights was initially made by commercial stations by June 17, 1993, to be effective October 6, 1993 through December 31, 1996. Subsequent elections were to have been made by October 1, 1996, to take effect January 1, 1997; and will be made every three years thereafter. Television stations having must-carry rights who fail to make an election by the specified deadline are deemed to have elected must-carry status for the subject three- year period. 4.Cablevision argued in its petition that WOOD-TV had made inconsistent carriage elections in Kalamazoo, because WOOD-TV elected carriage by retransmission consent on Cablevision's Kalamazoo system, but also elected to be carried as a must-carry signal on the cable system serving the campus of Western Michigan University ("WMU"), a state university located in Kalamazoo. Cablevision therefore argued that, with respect to these systems, WOOD-TV had acquired must-carry status by default. WOOD-TV responded that WMU is a separate franchise area from Kalamazoo, citing a letter from Don M. Schmidt, City Attorney for Kalamazoo. WOOD-TV subsequently noted in a letter dated October 10, 1996 that it elected carriage by retransmission consent on both systems for the period January 1, 1997 through December 31, 1999. On November 6, 1996, Cablevision filed an additional pleading arguing that in September 1996 WOOD-TV made inconsistent carriage elections in Comstock Township, electing retransmission consent with respect to Cablevision's Kalamazoo system which serves Comstock Township, but electing must-carry status on another system serving Comstock Township operated by Adelphia Cablevision Associates, L.P. (Adelphia). In Cablevision I, the Bureau found Cablevision's claim with respect to Kalamazoo to be moot. The Bureau also noted that the letter from Don M. Schmidt, City Attorney for Kalamazoo, stated that no franchise is needed from Kalamazoo for the WMU system because the system crosses no right-of-way. Pursuant to the 1996 Act, "the term 'cable system' . . . does not include . . . a facility that serves subscribers without using any public right-of-way . . . ." 47 U.S.C. 522(7). The Bureau stated that it is questionable whether the school facility is in fact a cable system with respect to which a common election is required. With respect to Comstock Township, the Bureau noted that the copy of the Comstock franchise for Adelphia submitted by Cablevision states that the franchise area for Adelphia was only "the portion of [Comstock] Township not serviced by . . . Cablevision . . . ," and further stated that it could not find that Cablevision has demonstrated that WOOD-TV has made inconsistent elections for overlapping franchise areas on the evidence presented. 5.Cablevision also stated that on June 17, 1993, WOOD-TV elected carriage by retransmission consent on Cablevision's systems serving Cooper Township, Kalamazoo, Oshtemo Township, and Parchment, but made no carriage elections on Cablevision's Comstock Township, Kalamazoo Township, Pavilion Township, and Portage cable systems. Cablevision claimed that WOOD-TV had also acquired must-carry status by default with respect to the latter four systems. In Cablevision I, the Bureau denied Cablevision's claim, noting that the Commission stated in its Report and Order in MM Docket 92-259, "television broadcasters on a system-by-system basis must make a choice once every three years whether to proceed under the mandatory carriage rules or to govern their relationship with cable operators by the retransmission consent requirement." In addition, the Bureau noted that 76.64(g) of the Commission's Rules refers to "one or more franchise areas served by a cable system," demonstrating an understanding in this context that a cable system -- to which notification of a carriage election is to be directed -- may serve more than one franchise area. Accordingly, the Bureau found that WOOD-TV was not required to serve individual notices of carriage election on each community unit served by Cablevision's systems. The Bureau also stated that it was not unsympathetic with WOOD-TV's concern that Cablevision did not raise any question concerning the validity of the carriage elections until over two and a half years after the fact, but declined to find Cablevision estopped from raising its questions. Cablevision has not sought stay or reconsideration of these portions of the Bureau's decision. ARGUMENTS OF THE PARTIES 6.Cablevision argues in support of its petition for reconsideration that the Bureau misread the relevant portions of Adelphia's Comstock Township franchise, citing only language from the franchise's preamble, which referred to the prior franchise. Cablevision states that the current franchise in fact grants Adelphia the right to provide cable service throughout Comstock Township. Cablevision notes that the franchise is non-exclusive, that it grants Adelphia the right to provide cable service "within the Township," and that the franchise contemplates Adelphia "extend[ing] its service into an area of the Township being serviced by another cable television operator . . . ." Cablevision urges the Commission to determine: (1) that overlapping franchise areas exist in Comstock Township, and (2) that WOOD-TV has made inconsistent carriage elections in Comstock Township. Cablevision argues that unless the Bureau's decision is withdrawn or corrected, 54,000 cable subscribers could lose NBC programming on January 1, 1997, because Cablevision anticipates that WOOD-TV will keep its programming off of Cablevision's system as of that date. 7.With respect to Kalamazoo Township, Cablevision argues that the question of whether WMU's system overlaps with Cablevision's Kalamazoo system is not moot, because WOOD-TV has threatened Cablevision with copyright infringement litigation for improper carriage of WOOD-TV's signal in 1996. Cablevision contends that the Commission has primary (if not exclusive) jurisdiction on the question of whether WMU's system is a cable system within the meaning of the Communications Act, and should not delegate this determination to the courts. Cablevision contends that WMU's system is a cable system, because: (1) WMU classifies itself as a cable system and meets Commission filing requirements for a cable system; (2) WOOD-TV exercises signal carriage and network program nonduplication rights on WMU's system; (3) Kalamazoo admits that WMU operates a cable system that crosses public rights-of-way; and (4) WOOD-TV never challenged Cablevision's assertion that WMU's system crosses public rights-of- way. Cablevision notes that the letter from Don M. Schmidt, City Attorney for Kalamazoo, states that WMU is required to "obtain encroachment agreements where its lines will cross the public right- of-way," and that WMU does not operate its system "within the public right-of-way for profit or other customers," and argues because the letter does not state that WMU does not operate its system within a public right-of-way at all, that WMU's system is in fact a cable system. Cablevision urges the Commission to determine: (1) that WMU's system meets the definition of a cable system contained in the Communications Act, and (2) that WOOD-TV made inconsistent carriage elections for the 1993-1996 election period in Kalamazoo. 8.In opposition, WOOD-TV and WAVY-TV argue that Cablevision continues to attempt to avoid bargaining in good faith with WOOD-TV by filing frivolous petitions. The stations state that Adelphia and Cablevision do not have overlapping franchise areas in Comstock Township, because Section 1(D) of the Adelphia Consent Agreement is not self-effectuating, and any desire on Adelphia's part to enter Cablevision's franchise area would require a modification of the Consent Agreement to permit this. Moreover, WOOD-TV and WAVY-TV assert that the area of Comstock Township served by Adelphia is "separated geographically by a large band of uninhabited land from the portion of Comstock Township served by . . . Cablevision," and provide a map of Comstock Township to demonstrate this. The stations further state that the carriage election notice which WOOD-TV sent to Adelphia on September 23, 1996 electing must-carry status was sent in error, and that both WOOD-TV and Adelphia have recognized this, having entered into a retransmission consent agreement on November 15, 1993 that extends at least through December 31, 1997. With respect to Kalamazoo, WOOD-TV and WAVY-TV argue that WMU has the authority to operate an on-campus system without a franchise. The stations maintain that Cablevision has acknowledged this, having described WMU's termination of WMU's service rights to certain married students apartments in 1991 as "exercis[ing] rights similar to those of private landlords." WOOD-TV and WAVY-TV contend, therefore, that WMU has no "franchise area" to overlap with Cablevision's Kalamazoo franchise area. The stations maintain that Cablevision should compensate WOOD-TV for Cablevision's unlawful carriage of the station's signal since January 1996, but state that they are willing to submit to binding arbitration the questions of what compensation is due for the carriage of WOOD-TV in 1996 and for the carriage of WOOD-TV and WAVY-TV for the 1997-1999 period. WOOD-TV and WAVY-TV maintain that Cablevision has failed to prove that a station defaults to must-carry status should inconsistent carriage elections have been made, particularly in a situation in which a cable system fails to challenge the allegedly inconsistent elections for two years, nor has Cablevision provided any public interest justification for such a determination. Finally, WOOD-TV and WAVY-TV urge the Commission to impose appropriate sanctions upon Cablevision for failing to comply with Cablevision I by continuing to carry WOOD-TV without authorization. 9.In reply, Cablevision denies that it is being frivolous, and states that it is simply seeking resolution of issues which were not definitively resolved in Cablevision I. Cablevision contends that the Commission's rules contain no provisions to allow a station to change a carriage election by claiming an election was made in error, and that the stations' claim is not corroborated by Adelphia. Cablevision notes that Adelphia has a franchise agreement for the entirety of Comstock Township, and states that Adelphia would not need to modify its franchise should it desire to serve additional subscribers in the Township. Cablevision denies that its subscribers are separated from Adelphia's by "a large band of uninhabited land," and that in fact "Cablevision's and Adelphia's plant serve areas within yards of each other." Cablevision notes in any event that inconsistent elections are prohibited in overlapping franchise areas, and actual system overlap is not required. With respect to Kalamazoo, Cablevision argues that a formal franchise is not required to demonstrate the existence of overlapping franchise areas, and also states that Cablevision serves at least one WMU campus building. Cablevision maintains that the record demonstrates that WMU's system crosses public rights-of-way and thus is a cable system by law. DISCUSSION 10.We address first the issue relating to inconsistent signal carriage elections in Kalamazoo. In Cablevision I this matter, as we now recognize, was incorrectly passed over as moot. It was stated therein that "there is a question as to whether the [WMU] facility is in fact a cable system with respect to which a common election is required." We believe on further consideration that the relevant inquiry is whether the WMU facility was a cable system at the time of WOOD-TV's carriage elections in 1993. Although the Telecommunications Act of 1996 amended the definition of a cable system found in the Communications Act to state that "the term `cable system' . . . does not include . . . a facility that serves subscribers without using any public right-of-way . . . ," at the time of WOOD-TV's 1993 carriage elections, this exemption did not exist. Accordingly, at the time WOOD-TV made its 1993 carriage elections, the WMU facility met the definition of a cable system then applicable and was clearly recognized by WOOD-TV through the election process and in the exercise of nonduplication rights to be a cable system. We note as well that WMU is within the boundaries of Cablevision's Kalamazoo franchise area and that, at various times, Cablevision has served portions of the WMU campus. We therefore decline to accept WOOD-TV's contentions, raised in opposition to Cablevision's original petition, that Michigan law requires treatment of WMU as a separate franchise area from Kalamazoo. Section 325(B) of the Communications Act states, "If there is more than one cable system which services the same geographic area, a station's election shall apply to all such cable systems." By electing retransmission consent on Cablevision's system serving Kalamazoo, while at the same time electing mandatory carriage on WMU's system within Kalamazoo, WOOD-TV made inconsistent elections in contravention of the above cited statutory provision. On the facts presented here, we believe that by making inconsistent carriage elections in Kalamazoo in 1993 for the 1994-1996 period, WOOD-TV defaulted to must-carry status on Cablevision's system for that period. As our rules state, "Television stations that fail to make an election by the specified deadline will be deemed to have elected must carry status for the relevant three-year period." In order to give effect to the statutory uniform election requirement, we believe that the same result is appropriate when an inconsistent election has been made, for this is the equivalent of the failure to make a timely election. That is, a station making an inconsistent election should not subsequently be heard to insist on that portion of the election from which it will benefit most since that would eliminate the force of the Section 325(b) uniform election requirement. 11.With respect to Comstock Township, we stated in Cablevision I that on the evidence presented unilaterally by Cablevision -- an unauthenticated copy of the 1990 Adelphia franchise -- we could not find that Cablevision had demonstrated that WOOD-TV had made inconsistent carriage elections for overlapping franchise areas in Comstock Township. Now that this issue has been fully briefed by interested parties on reconsideration, it does in fact appear that the Adelphia franchise grants Adelphia the authority to operate a cable system throughout Comstock Township, thereby overlapping Cablevision's franchise area for Comstock Township. Nevertheless, our determination on this issue is not controlling, for WOOD-TV has provided information on its carriage elections that we find to be determinative. 12.WOOD-TV states that its letter of September 23, 1996 electing must-carry status on Adelphia's system was sent in error. In reply, Cablevision states that the September 23, 1996 letter must control, because the Commission's rules contain no provision for elections made in error, and that therefore WOOD-TV, by virtue of this inconsistent election, has defaulted to must-carry status in Comstock Township. Cablevision argues vigorously that permitting "mid-period" changes to correct "errors" would lead to administrative chaos and is inconsistent with the rules governing the election process. With this we are in general agreement. However, given the totality of the circumstances here we do not conclude that WOOD-TV should be found to have made an inconsistent retransmission consent/must-carry election within Comstock Township sufficient to reverse the election made with respect to Cablevision. Here it asserted by WOOD-TV, and not disputed by Adelphia, that administrative error rather than a change of intent was involved. Moreover, error was identified not in the middle of the three year retransmission consent/must-carry election cycle but before the period had even commenced. More importantly, however, WOOD-TV had already made a consistent carriage election and agreement with respect to Adelphia on November 15, 1993 for retransmission consent that extends into the 1997-1999 period. WOOD- TV's election of retransmission consent precludes the station from claiming must-carry status during the 1997-1999 period. Given these circumstances, including the prior agreement, the early discovery of the error, and the lack of dispute as to the intentions of the parties, we do not agree that a default must-carry election should be applied to Cablevision. Further, although Cablevision notes the failure of WOOD-TV to properly comply with the applicable public file requirements, we do not believe that should, by itself, be determinative of the election issue. Accordingly, we find that WOOD-TV has not made inconsistent carriage elections in Comstock Township. 13.In view of the foregoing, we grant of Cablevision's petition for partial reconsideration only to the extent that we find that WOOD-TV made inconsistent carriage elections in Kalamazoo in 1993 for the 1994-1996 period and find that WOOD-TV acquired must-carry status in Kalamazoo for that period. ORDERING CLAUSES 14.Accordingly, IT IS ORDERED, That the "Petition for Partial Reconsideration" filed November 25, 1996 by Cablevision Systems Corporation IS GRANTED to the extent indicated at paragraph 10, supra, and in all other respects IS DENIED. 15.IT IS FURTHER ORDERED, That the "Emergency Petition for Stay Pending Reconsideration" filed November 26, 1996 by Cablevision Systems Corporation IS DISMISSED as moot. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau