On December 19, 2014, the Federal Communications Commission (“FCC”) released a Notice of Proposed Rulemaking (“NPRM”) proposing to give over-the-top (“OTT”) video programming providers certain legacy negotiating and carriage rights with respect to both cable programming (i.e. program access rights) and broadcast television programming (i.e. retransmission consent rights). As we previously reported, the FCC proposes doing so to facilitate the availability of cable and broadcast television programming to OTT providers and enhance consumer choice and competition in the video market. Entities providing OTT programming or considering doing so (as well as their competitors) should evaluate carefully the impact of the proposed rules on their businesses and consider submitting comments to help guide the FCC in its efforts to establish rules. Comments are due March 3, 2015, and Reply Comments are due March 18, 2015.
The NPRM proposes granting program access and retransmission consent rights to OTT providers of linear video programming (i.e. scheduled programs, like those carried on cable channels or aired by broadcast television stations) by expanding the FCC’s definition of “multichannel video programming distributors” or MVPDs, which are entitled to such rights under the FCC’s existing rules. Under the NPRM, OTT providers of non-linear video programming (i.e. non-scheduled or on-demand programs, like those currently offered by Amazon Prime, Google Play or Netflix) would not have such rights.
The NPRM identifies a number of issues associated with the proposal, including whether good faith negotiation obligations applicable to MVPDs would require OTT providers to negotiate carriage with local television broadcast stations, even if such OTT providers did not want to retransmit local broadcast signals, and how to treat OTT providers that have no physical presence in the United States. The NPRM also highlights some potential factors that OTT providers should consider in evaluating the benefits and burdens of being classified as an MVPD, such as whether an OTT provider presently has exclusive rights of carriage with a programming vendor or has different video programming distribution agreements that are based on vendor affiliation – both of which could be impermissible under the FCC’s rules for MVPDs. Further, the NPRM invites comments on which FCC rules (e.g., the competitive availability of navigation devices, accessibility requirements, and/or the Equal Employment Opportunities requirements) should apply to OTT providers classified as MVPDs and whether an OTT provider could elect to be classified as an MVPD.
The NPRM also acknowledges a critical piece of the FCC’s proposal that is beyond its control. Namely, providers seeking to take advantage of any new retransmission consent rights created by the FCC will still need a compulsory copyright license from the U.S. Copyright Office, which already has denied copyright license eligibility to a number of OTT video providers, including Aereo, Inc. The U.S. Copyright Office has indicated it would consider changing its position on these issues in light of an FCC decision to define OTT providers as MVPDs.