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Commission Document Attachment

FCC-14-29A5

STATEMENT OF

COMMISSIONER AJIT PAI

Re:
Amendment of the Commission's Rules Related to Retransmission Consent, MB Docket No. 10-71
When it comes to retransmission consent negotiations, I take counsel from two wise
communications experts—Rob Base & DJ E-Z Rock—whose hit song reminds us, “It takes two to make a
thing go right.”1 After carefully reviewing the record and meeting with numerous parties to this
proceeding, I have concluded that good-faith retransmission-consent negotiations generally involve two
parties: one multichannel video programming distributor (MVPD) and one broadcast company. Adding a
third or fourth party to the mix raises troubling competitive concerns.
Accordingly, I am pleased to support today’s item. The order states that the joint negotiation of
retransmission consent agreements by separately-owned, top-four stations in the same market violates the
statutory duty to negotiate in good faith.
To be sure, such joint negotiations may bring some benefits. But given that retransmission
consent negotiations usually occur only once every three years, the cost savings are at best intermittent
and do not compare with the efficiencies produced by television stations sharing sales staff or other
backroom operations.
And in my judgment, the harms outweigh any such benefits. The record indicates that joint
negotiations may result in supra-competitive increases in retransmission-consent fees.2 This suggests that
such conduct is collusive and could be a “contract, combination . . . or conspiracy, in restraint of trade”
that is prohibited by the Sherman Act.3 The anti-competitive potential of joint negotiations here is only
amplified by the regulatory context for video carriage, including the compulsory copyright license,
network non-duplication rule, and syndicated exclusivity rule.
Also crucial to my vote is that the Commission today carefully remains within its limited
authority over retransmission consent. Section 325(b)(3)(C) of the Communications Act instructs the
FCC to enact regulations to prohibit a television broadcast station or MVPD from “failing to negotiate in
good faith.” This provision allows the Commission to proscribe certain negotiating tactics in order to
ensure good faith negotiations between broadcast stations and MVPDs, such as refusing to respond to a
retransmission consent proposal.4 But it does not give the Commission the power to mandate the
substantive outcome of retransmission consent negotiations. This will remain the case after today’s vote.
I appreciate my colleagues’ willingness to incorporate many of my suggestions into the item. In
particular, I am pleased that today we are not extending the so-called “sweeps prohibition” to direct
broadcast satellite providers. The record did not reveal a need for such regulation, and we should not
impose new regulatory mandates where there is not a concrete problem to solve.
Finally, I support the Commission’s decision to seek additional comment on whether we should
eliminate or modify our network non-duplication and syndicated exclusivity rules. In particular, I
encourage parties to focus their feedback on whether the interests these rules are designed to advance can

1 Rob Base & DJ E-Z Rock, It Takes Two (It Takes Two, 1988).
2 See Order at para. 16.
3 See 15 U.S.C. § 1.
4 See 47 C.F.R. § 76.65(b)(1)(v).

and should be protected through private contractual arrangements or whether the compulsory copyright
license would render such a scheme unworkable.
Many thanks to the Media Bureau for its efforts. It took more than two to make this item outta
sight, so I particularly want to recognize Raelynn Remy, Diana Sokolow, Kathy Berthot, Michelle Carey,
Nancy Murphy, Mary Beth Murphy, and Steven Broeckaert. For this recovering antitrust lawyer and
staffer on the 2007 MDU Order,5 the item truly was a pleasure to read.

5 Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate
Developments
, MB Docket No. 07-51, Report and Order and Further Notice of Proposed Rulemaking, 22 FCC Rcd
20235 (2007), aff’d, National Cable & Telecommunications Ass’n v. FCC, 567 F.3d 659 (D.C. Cir. 2009).

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