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Agency Authority Challenged

Indie Programmers Cheer FCC Focus on MFNs and ADMs; MVPDs Urge Assessing Forced Bundles

The FCC's proposed crackdown on video carriage agreements' most-favored nation (MFN) and alternative distribution method (ADM) provisions is being met with huzzahs from independent programmers and allies. But docket 24-115 comments last week saw multichannel video programming distributors (MVPD) argue that the more-pressing problem is big programmers forcing contractual terms. The agency's commissioners in April approved 3-2 an indie-programmer NPRM that proposed restrictions on carriage agreement terms and sought comment on bundling practices broadly (see 2404190063).

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MFN and ADM clauses "stifle innovation, inhibit the formation and growth of diverse and independent programmers, and create economic disincentives to providing video content to underserved audiences," American Independent Media said. It said MFNs are "a one-way street" that hurt indie programmers. In addition, it pushed back against the commission's definition of "independent media" as wrongly excluding even programmers affiliated with small TV broadcasters that have no market power in the pay-TV industry, and wrongly including programming conglomerates that have strong bargaining influence. Also questioning the proposed independent programmer definition was Qurate Retail Group, parent of home shopping programmers QVC and HSN.

The FCC has "ample authority" to ban MFNs and ADMs, programmers Aspire Channel, Up Entertainment and Ovation said. They said that even though the video marketplace has changed substantially since the agency last visited the indie programmer issue in 2017 -- with traditional MVPD viewership down substantially and virtual MVPDs growing -- indie programmers still rely on traditional MVPD distribution. They said MFN terms remain a mainstay of carriage agreements with large MVPDs.

Public Knowledge said it was "increasingly obvious that incumbent MVPDs hold back tomorrow’s competition through economic coercion, forcing programmers to agree to limit who they sell to and how they sell it." It said that while MVPDs putting contractual prohibitions on over-the-top carriage is largely a thing of the past, ADM provisions regarding online video are still "an area of concern." MFNs cause clear harm and should be eliminated entirely, it added.

Increased competition in the video marketplace since the FCC last examined MFNs and ADMs shows they haven't stifled the growth of competition to traditional MVPDs, NCTA said. The cable group also questioned FCC authority, arguing that the Communications Act's Section 616, covering carriage agreement regulation, "is not a catch-all grant of jurisdiction to regulate the marketplace dealings of MVPDs and programming networks in any way the Commission chooses." Similarly, Verizon challenged the FCC's legal authority and the proceeding's policy rationale, with MVPDs losing subscribers to streaming.

Banning ADM and MFN terms would put MVPDs at a competitive disadvantage compared with online video distributors, making them less able to compete and thus less able to carry indie programming, DirecTV said.

Also urging against FCC action on MFNs and ADMs was indie programmer V-Me Media, the parent of and It said its biggest challenge is breaking into new platforms that don't have a history of distributing content and often prefer free or user-generated content. It said MFNs aren't a barrier but instead "bring a measure of stability and predictability to our negotiated distribution relationships."

MVPD interests urged that the FCC focus more on contractual terms forced by big programmers. Dish Network parent EchoStar said those programmers use their market power to require carriage of expensive bundles, and those practices "are the biggest obstacle to its ability to offer more independent programming." The American TV Alliance also struck out at forced bundling, tiering and penetration requirements that it said are big limits to indie programmers reaching MVPD customers. ATVA said focus on support for indie programmers should center on those issues.

Small and mid-sized cable operators share many of the headaches of indie programmers, said ACA Connects. The FCC should focus on forced bundling and other practices of large programmers, as those mean less channel lineup space that could go to indie programmers, it said. Moreover, the FCC should exclude small cable distributors from any restrictions on MFNs and ADMs because they lack the incentive and ability to use them in ways that hurt indie programmers.

NTCA backed elimination of MFNs and ADMs but also urged action on "equally pernicious programmer practices" of forced bundling and forced program tiering. "Addressing MFNs and AMDs would be a half measure, at best," it said. NTCA said a survey of its membership indicated that 18% likely will discontinue video service, while another 11% definitely will end video service due to programming costs -- a problem it said is exacerbated by practices the FCC is examining.