[Federal Register Volume 59, Number 214 (Monday, November 7, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27425]


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[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