The National Affilated Stations Alliance and the four major networks – ABC, CBS, Fox and NBC – reached agreement on the rules of the road for affiliation contracts back in 2005. The issues revolved around pre-emption rights of affiliates. The FCC has issued a declaratory ruling on aspects of the agreement reaffirming the ultimate responsibility each licensee has for its own airspace. The licensee retains the right to reject any programming it feels unsuitable for its own local audience; and that the networks cannot demand carriage on grounds that the station carried similar programming in the past. The licensee may also preempt programming in order to run something of “greater local or national importance,” and underscores that such preemptions cannot be limited to breaking stories. On the network’s behalf, the FCC does say that licensees do not have “unfettered” ability to preempt network programming. Finally, licensees may schedule programming into time slots not utilized by the networks, and may not be forced to accept late additions to the network schedule during these time slots.
From the FCC:
A. Licensee Control
6. Section 310(d) of the Communications Act prohibits the direct or indirect transfer of control of any station license to another entity without a Commission finding that “the public interest, convenience, and necessity will be served thereby.” We affirm that the following principle identified in the Joint Request is consistent with the Act and the Commission’s rules:
* Affiliates, as the licensees of local television stations, must retain ultimate control over station programming, operations and other critical decisions with respect to their stations, and network affiliations must not undercut this basic control. Retention of this control by Commission licensees is required by Section 310(d) of the Communications Act and the Commission’s Rules.
B. Right-to-Reject Rule
7. To ensure that licensees retain sufficient control over programming to fulfill their obligation to operate in the public interest, the Commission’s right-to-reject rule prohibits a television broadcast station from entering into “any contract, arrangement, or understanding, express or implied, with a network organization” that prevents or hinders the station from “[r]ejecting or refusing network programs which the station reasonably believes to be unsatisfactory or unsuitable or contrary to the public interest” or from “[s]ubstituting a program which, in the station’s opinion, is of greater local or national importance.”
8. We affirm that the following principles relating to the right-to-reject rule identified in the Joint Request are consistent with the Act and the Commission’s rules:
* Pursuant to Section 73.658(e) of the Commission’s Rules, networks and their affiliates are prohibited from “having any contract . . . which, with respect to programs offered or already contracted for pursuant to an affiliation contract, prevents or hinders the station from: (1) Rejecting or refusing network programs which the station reasonably believes to be unsatisfactory or unsuitable or contrary to the public interest, or (2) Substituting a program which, in the station’s opinion, is of greater local or national importance.” This language does not give an affiliate the unfettered right to preempt network programs, but where a preemption is made pursuant to one of the two prongs of the right-to-reject rule, the economic consequence to the affiliate is irrelevant.
* Consistent with the Commission’s right-to-reject rule, affiliation agreements should not include provisions that limit right-to-reject preemptions for “greater local or national importance” to breaking news events or any other specific type of programming. Affiliation agreements should not include provisions that prevent affiliates from rejecting a program as “unsatisfactory or unsuitable or contrary to the public interest” because they have carried a similar network program in the past. Affiliation agreements should not include provisions that impose monetary or non-monetary penalties on affiliates based on preemptions protected by the right-to-reject rule. Affiliation agreements should not include provisions that subject right-to-reject preemptions to, or count them against, contractual preemption limits (or “baskets”) (though baskets are perfectly appropriate for preemptions not protected by the right-to-reject rule).
C. Option-Time Rule
9. The Commission’s option-time rule proscribes any clause in an affiliation agreement that “prevents or hinders the station from scheduling programs before the network agrees to utilize the time during which such programs are scheduled, or which requires the station to clear time already scheduled when the network organization seeks to utilize the time.” In its Petition, NASA argued that certain contract provisions, with respect to both analog and digital broadcasting, violated the option-time rule by allowing networks to reserve an option to use an affiliate’s broadcast time without committing to supply programming for the optioned time.16 To clarify the reciprocal obligations of networks and affiliates under the Commission’s option-time rule, we affirm that the following principles set forth in the Joint Request are consistent with the Act and our rules:
* Consistent with the option-time rule, affiliation agreements should not include provisions that result in the optioning of the station’s time to the network organization or that have the same restraining effect as time optioning. Network affiliation agreements may not, under the Commission’s option-time rule, obligate stations to carry a network’s programming or other content during certain time periods without reciprocally obligating the network to provide the content for those time periods. Similarly, network affiliation agreements may not require affiliates to carry, at some unspecified future date, unspecified digital content that the network may (or may not) choose to offer.