[Federal Register Volume 59, Number 214 (Monday, November 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27425]
[[Page Unknown]]
[Federal Register: November 7, 1994]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 94-123; FCC 94-266]
Radio Broadcast Services; Television Program Practices
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission invites comments on its initiation of a
rulemaking proceeding to assess the legal and policy justifications, in
light of current economic and technological conditions, for the Prime
Time Access Rule, and to consider the continued need for the rule in
its current form.
DATES: Comments are due on or before January 6, 1995, and reply
comments are due on or before February 6, 1995.
ADDRESSES: Federal Communications Commission, Washington, D.C. 20554.
FOR FURTHER INFORMATION CONTACT:
David E. Horowitz and Alan E. Aronowitz, Mass Media Bureau, Policy and
Rules Division, (202) 632-7792.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rule Making, MM Docket No. 94-123, adopted October
20, 1994, and released October 25, 1994. The complete text of this
document is available for inspection and copying during normal business
hours in the FCC Reference Center (Room 239), 1919 M Street NW.,
Washington, D.C. 20554, and may be purchased from the Commission's copy
contractor, International Transcription Service, (202) 857-3800, 2100 M
Street NW., Washington, D.C. 20037.
Synopsis of the Notice of Proposed Rule Making
1. The Commission initiated a rulemaking proceeding to assess, in
light of current economic and technological conditions, the legal and
policy justifications for the Prime Time Access Rule (``PTAR''),
Section 73.658(k) of the Commission's Rules, and to consider the
continued need for the rule in its current form. The rule generally
prohibits network-affiliated stations in the top 50 television markets
from broadcasting more than three hours of network or former network
(``off-network'') programs during the four prime time viewing hours
(i.e., 7 to 11 p.m. Eastern and Pacific times; 6 to 11 p.m. Central and
Mountain times). The rule also contains exemptions for certain types of
programming (e.g., special news, documentary, children's and sports
programming).
2. PTAR was initially promulgated in 1970 in response to the
concern that the three major television networks--ABC, CBS and NBC--
dominated the program production market, controlled much of the video
fare presented to the public, and inhibited the development of
competing program sources. The Commission believed that PTAR would
increase the level of competition in the independent production of
programs, reduce the networks' control over their affiliates'
programming decisions, and increase the diversity of programs available
to the public.
3. The Commission believes that as the video marketplace has
developed and the major networks' power has declined in the years since
PTAR was established, an overall review of the rule is now appropriate.
In this regard, on April 12, 1994, the Commission issued a Public
Notice soliciting public comment on various filings seeking
modification or elimination of PTAR. Parties filing comments thus far,
however, have failed to present a rigorous economic framework for
analysis, supported by adequate data, that will enable the Commission
to assess the competitive effects of the rule and its efficacy in
achieving both competition and non-competition-based public interest
goals. Therefore, this Notice of Proposed Rule Making proposes a
framework to evaluate the continued efficacy of the rule.
4. The analytical framework set forth by the Commission recognizes
that in 1970, there was a strong cast for taking government action to
correct the effects of a competitively unbalanced market. Accordingly,
the FCC established PTAR. However, with the development of alternative
forms of video distribution, the growth of the broadcast industry
(including increased competition among networks for affiliates), and
the increase in the number and types of entities creating nationally
distributed video programming, the case for PTAR must be revisited. The
analytical framework proposed in this Notice provides a means for
evaluating the factual and economic assumptions underlying PTAR, to
ascertain whether the rule operates to achieve its intended effects,
and what unintended effects it may also cause. In addition, the
Commission will use the framework to evaluate whether the intended and
unintended effects further the attainment of legitimate goals in
today's world. The ultimate decision to retain, modify or eliminate the
rule will turn on a weighing of its costs against its benefits.
5. More specifically, the analytical framework seeks comment on the
validity of the following three basic ways PTAR is said to alter the
competitive opportunities in the relevant markets for the public good.
First, by carving out a portion of prime time to be used for non-
network use, the rule made it easier for independent producers to sell
their programming to the more successful stations in the top markets
(i.e., affiliates of the three major networks). Among the intended
effects was the goal of strengthening existing independent producers
and encouraging entry of new ones. From an economic perspective, the
Commission had anticipated that the decrease in supply of programming
available to affiliates (caused by PTAR's ban on network and off-
network programming) would increase prices paid for independently
produced programming, thus acting as a spur for greater production and
new entry. Thus, the Commission had predicted that the rule would
increase the net amount of diverse programming available to the viewing
public and create new competitors to the existing three networks. The
Notice asks commenters to assess this dynamic, raising such questions
as: (1) Whether this enhanced opportunity increases the net amount of
independently produced programs available to the public; (2) whether
this opportunity increases the net number of independent program
producers serving the market; and (3) whether the limit placed by this
opportunity on an affiliate's ability to carry network or off-network
programming during the access period reduces the economic value of
network programming aired during the other parts of prime time, by
limiting the potential buyers for these programs after the network run
is complete, thereby depressing the total return on these programs.
6. Second, the rule sought to reduce the networks' role in
dictating their affiliates' programming choices, by forbidding the
affiliates in the top 50 markets from running more than three hours of
network or off-network programming during the four-hour prime time
period. Thus, the rule was viewed as a way to increase affiliate
autonomy and reduce network dominance. The immediate effect was to
ensure that not all of an affiliate's prime time programming came
through the same network filter. The Notice asks commenters to provide
evidence regarding the bargaining positions of affiliates vis-a-vis
their networks. For example, during hours other than the PTAR access
period, do affiliates in the top 50 markets carry programs other than
network programs? To what extent does the market dynamic in the top 50
markets dictate performance in the less populated markets? Are the
recent affiliation switches indicative of a change in the relative
bargaining power of the networks and their affiliates, or are these
switches due to other factors? To the extent that the behavior of
affiliates might change in some way if PTAR were modified or repealed,
how would that affect the programs ultimately available to viewers? The
Notice solicits comment on these and other related issues.
7. Third, the rule has come to be viewed as a mechanism for
strengthening independent stations, with the result of increasing the
strength and number of the primary buyers of independently produced
programming. The argument is that, with this increase, not only are the
number of independent program producers increasing, but the opportunity
for new networks to emerge and compete with the existing networks is
enhanced (by the presence of a healthy pool of independent stations).
Thus, by strengthening independent stations overall, the rule has been
considered to further both diversity and competition goals. Moreover,
the independent stations themselves produce some degree of original
programming, which contributes to the overall levels of diverse
programming available in the market. The Notice thus invites comment on
whether, given the current level of program diversity, the competitive
alteration that PTAR causes with respect to a segment of the market is
warranted. Similarly, the Notice asks commenters to address the degree
to which, from economic and public interest perspectives, PTAR leads to
misallocated resources, limits viewers' programming choices, and alters
the optimal prices paid. The Notice seeks comment on its analysis of
this issue in general, and in particular raises questions such as: (1)
whether regulatory measures designed to encourage the introduction into
the broadcast industry of increased competition in the form of new
networks remain necessary when the established networks and their
affiliates are also competing against nonbroadcast video services; and
(2) whether any inefficiencies of encouraging entry of new networks by
placing limits on incumbents are outweighed by real benefits, and if
so, what types and what number of inefficiencies and benefits.
8. In addition to seeking comment on the above-described ways in
which PTAR alters the competitive opportunities in the relevant
markets, the Commission framed certain overarching issues going to the
public interest basis for PTAR, including, but not limited to, whether
non-broadcast media should be considered in assessing the rule, whether
PTAR is the appropriate mechanism to ensure diversity for those who do
not avail themselves of technological alternatives to broadcast
television, and whether other regulatory responses other than PTAR
would be more effective or efficient to achieve the stated goals of the
rule.
9. To the extent that the record to be developed might support
retaining PTAR in whole or part, the Commission seeks public comment on
the incidental elements of the rule--the definition of a ``network''
for purposes of the rule, and the various program categories that are
exempted from application of PTAR. Moreover, although the policy
examinations to be undertaken in this proceeding may make it
unnecessary to address specific constitutional questions raised by the
rule, if the rule is to be retained in some form, the Commission seeks
comment on various constitutional implications of the rule and any
proposed alternatives.
10. The Commission seeks comment on these issues, as well as
specific economic analysis and supporting data favoring either
retention, modification or repeal of the rule. If the Commission
chooses to modify or eliminate the rule, we must then determine when to
do so and whether to adopt transition measures. A modification to the
rule might be appropriately enacted immediately after such a decision
is made, or through a timetable that allows industry participants to
adjust to the changing economic conditions that might result from
modifications to PTAR. Elimination of the rule might be tied to
technological developments or the timing might be tied to regulatory
developments such as the scheduled expiration of the fyn/syn rules of
some time thereafter. Similarly, a transition mechanism could be based
on a variety of different considerations, focusing on defining the
stages of that transition if one is adopted. For example, one possible
transition would entail initial repeal of the off-network restriction
followed by later repeal of the remainder of the rule. The Notice
questions whether such a staggered repeal of the rule would further the
public interest by reducing marketplace disruption or would delay the
realization of benefits that could otherwise be realized from immediate
form. In summary, should the record support elimination or modification
of the rule, the Commission will require a record regarding the timing
of any action and whether specific transition measures are necessary or
appropriate.
11. Initial Regulatory Flexibility Analysis
Reason for the Action
This proceeding was initiated to review and update the provisions
of PTAR.
Objective of the Action
The actions proposed in this Notice are intended to reexamine and
perhaps modify or eliminate the prime time access rule, 47 C.F.R.
Sec. 73.658(k), in response to changes in the communications
marketplace, and to better adjust to the needs of the public.
Reporting, Record Keeping, and Other Compliance Requirements Inherent
in the Proposed Rule
None.
Federal Rules which Overlap, Duplicate, or Conflict with the Proposed
Rule
None.
Description of Potential Impact and Number of Small Entities Involved
Approximately 416 existing television broadcasters of all sizes may
be affected by the proposals contained in this Notice.
Any Significant Alternatives Minimizing the Impact on Small Entities
and Consistent with the Stated Objectives
The proposals contained in this Notice are meant to simplify and
ease the regulatory burden currently placed on network affiliates in
the top 50 markets.
12. As required by Sec. 603 of the Regulatory Flexibility Act, the
Commission has prepared this Initial Regulatory Flexibility Analysis
(``IRFA'') of the expected impact on small entities of the proposals
suggested in this Notice of Proposed Rule Making. Written public
comments are requested on the IRFA. These comments must be filed in
accordance with the same filing deadlines as comments on the rest of
the Notice, but they must have a separate and distinct heading
designating them as responses to the Regulatory Flexibility Analysis.
The Secretary shall send a copy of this Notice, including the IRFA, to
the Chief Counsel for Advocacy of Small Business Administration in
accordance with paragraph 603(a) of the Regulatory Flexibility Act
(Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C. Sec. 601 et seq. (1981)).
Ex Parte
13. This is a non-restricted notice and comment rulemaking
proceeding. Ex parte presentations are permitted, provided they are
disclosed as provided in the Commission's Rules.See generally 47 C.F.R.
Sections 1.1202, 1.1203 and 1.1206(a).
Comment Dates
14. Pursuant to applicable procedures set forth in Sections 1.415
and 1.419 of the Commission's Rules, interested parties may file
comments on or before January 6, 1995, and reply comments on or before
February 6, 1995. All relevant and timely comments will be considered
before final action is taken in this proceeding. To file formally in
this proceeding, participants must file an original and four copies of
all comment, reply comments, and supporting comments. If participants
want each Commissioner to receive a personal copy of their comments, an
original plus nine copies must be filed. Comments and reply comments
should be sent to the Office of the Secretary, Federal Communications
Commission, Washington, D.C. 20554. Comments and reply comments will be
available for public inspection during regular business hours in the
FCC Reference Center (Room 239) of the Federal Communications
Commission, 1919 M Street NW., Washington, D.C. 20554.
List of Subjects in 47 CFR Part 73
Television broadcasting.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 94-27425 Filed 11-4-94; 8:45 am]
BILLING CODE 6712-01-M
