Sec.  76.1002   Specific unfair practices prohibited.

   (a) Undue or improper influence. No cable operator that has an attributable
   interest in a satellite cable programming vendor or in a satellite broadcast
   programming vendor shall unduly or improperly influence the decision of such
   vendor to sell, or unduly or improperly influence such vendor's prices,
   terms and conditions for the sale of, satellite cable programming or
   satellite broadcast programming to any unaffiliated multichannel video
   programming distributor.

   (b) Discrimination in prices, terms or conditions. No satellite cable
   programming vendor in which a cable operator has an attributable interest,
   or satellite broadcast programming vendor, shall discriminate in the prices,
   terms, and conditions of sale or delivery of satellite cable programming or
   satellite broadcast programming among or between competing cable systems,
   competing cable operators, or any competing multichannel video programming
   distributors. Nothing in this subsection, however, shall preclude:

   (1) The imposition of reasonable requirements for creditworthiness, offering
   of service, and financial stability and standards regarding character and
   technical quality;

   Note 1: Vendors are permitted to create a distinct class or classes of
   service in pricing based on credit considerations or financial stability,
   although any such distinctions must be applied for reasons for other than a
   multichannel video programming distributor's technology. Vendors are not
   permitted to manifest factors such as creditworthiness or financial
   stability in price differentials if such factors are already taken into
   account through different terms or conditions such as special credit
   requirements or payment guarantees.

   Note 2: Vendors may establish price differentials based on factors related
   to offering of service, or difference related to the actual service
   exchanged between the vendor and the distributor, as manifested in
   standardly applied contract terms based on a distributor's particular
   characteristics or willingness to provide secondary services that are
   reflected as a discount or surcharge in the programming service's price.
   Such factors include, but are not limited to, penetration of programming to
   subscribers or to particular systems; retail price of programming to the
   consumer for pay services; amount and type of promotional or advertising
   services by a distributor; a distributor's purchase of programming in a
   package or a la carte; channel position; importance of location for
   non-volume reasons; prepayment discounts; contract duration; date of
   purchase, especially purchase of service at launch; meeting competition at
   the distributor level; and other legitimate factors as standardly applied in
   a technology neutral fashion.

   (2) The establishment of different prices, terms, and conditions to take
   into account actual and reasonable differences in the cost of creation,
   sale, delivery, or transmission of satellite cable programming or satellite
   broadcast programming;

   Note: Vendors may base price differentials, in whole or in part, on
   differences in the cost of delivering a programming service to particular
   distributors, such as differences in costs, or additional costs, incurred
   for advertising expenses, copyright fees, customer service, and signal
   security. Vendors may base price differentials on cost differences that
   occur within a given technology as well as between technologies. A price
   differential for a program service may not be based on a distributor's
   retail costs in delivering service to subscribers unless the program vendor
   can demonstrate that subscribers do not or will not benefit from the
   distributor's cost savings that result from a lower programming price.

   (3) The establishment of different prices, terms, and conditions which take
   into account economies of scale, cost savings, or other direct and
   legitimate economic benefits reasonably attributable to the number of
   subscribers served by the distributor; or

   Note: Vendors may use volume-related justifications to establish price
   differentials to the extent that such justifications are made available to
   similarly situated distributors on a technology-neutral basis. When relying
   upon standardized volume-related factors that are made available to all
   multichannel video programming distributors using all technologies, the
   vendor may be required to demonstrate that such volume discounts are
   reasonably related to direct and legitimate economic benefits reasonably
   attributable to the number of subscribers served by the distributor if
   questions arise about the application of that discount. In such
   demonstrations, vendors will not be required to provide a strict cost
   justification for the structure of such standard volume-related factors, but
   may also identify non-cost economic benefits related to increased
   viewership.

   (4) Entering into exclusive contracts in areas that are permitted under
   paragraphs (c)(2) and (c)(4) of this section.

   (c) Exclusive contracts and practices—(1) Unserved areas. No cable operator
   shall engage in any practice or activity or enter into any understanding or
   arrangement, including exclusive contracts, with a satellite cable
   programming vendor or satellite broadcast programming vendor for satellite
   cable programming or satellite broadcast programming that prevents a
   multichannel video programming distributor from obtaining such programming
   from any satellite cable programming vendor in which a cable operator has an
   attributable interest, or any satellite broadcast programming vendor in
   which a cable operator has an attributable interest for distribution to
   persons in areas not served by a cable operator as of October 5, 1992.

   (2) Served areas. No cable operator shall enter into any exclusive
   contracts, or engage in any practice, activity or arrangement tantamount to
   an exclusive contract, for satellite cable programming or satellite
   broadcast programming with a satellite cable programming vendor in which a
   cable operator has an attributable interest or a satellite broadcast
   programming vendor in which a cable operator has an attributable interest,
   with respect to areas served by a cable operator, unless the Commission
   determines in accordance with paragraph (c)(4) of this section that such
   contract, practice, activity or arrangement is in the public interest.

   (3) Specific arrangements: Subdistribution agreements—(i) Served areas. No
   cable operator shall enter into any subdistribution agreement or arrangement
   for satellite cable programming or satellite broadcast programming with a
   satellite cable programming vendor in which a cable operator has an
   attributable interest or a satellite broadcast programming vendor in which a
   cable operator has an attributable interest, with respect to areas served by
   a cable operator, unless such agreement or arrangement complies with the
   limitations set forth in paragraph (c)(3)(iii) of this section.

   (ii) Limitations on subdistribution agreements in served areas. No cable
   operator engaged in subdistribution of satellite cable programming or
   satellite broadcast programming may require a competing multichannel video
   programming distributor to

   (A) Purchase additional or unrelated programming as a condition of such
   subdistribution; or

   (B) Provide access to private property in exchange for access to
   programming. In addition, a subdistributor may not charge a competing
   multichannel video programming distributor more for said programming than
   the satellite cable programming vendor or satellite broadcast programming
   vendor itself would be permitted to charge. Any cable operator acting as a
   subdistributor of satellite cable programming or satellite broadcast
   programming must respond to a request for access to such programming by a
   competing multichannel video programming distributor within fifteen (15)
   days of the request. If the request is denied, the competing multichannel
   video programming distributor must be permitted to negotiate directly with
   the satellite cable programming vendor or satellite broadcast programming
   vendor.

   (4) Public interest determination. In determining whether an exclusive
   contract is in the public interest for purposes of paragraph (c)(2) of this
   section, the Commission will consider each of the following factors with
   respect to the effect of such contract on the distribution of video
   programming in areas that are served by a cable operator:

   (i) The effect of such exclusive contract on the development of competition
   in local and national multichannel video programming distribution markets;

   (ii) The effect of such exclusive contract on competition from multichannel
   video programming distribution technologies other than cable;

   (iii) The effect of such exclusive contract on the attraction of capital
   investment in the production and distribution of new satellite cable
   programming;

   (iv) The effect of such exclusive contract on diversity of programming in
   the multichannel video programming distribution market; and

   (v) The duration of the exclusive contract.

   (5) Prior Commission approval required. Any cable operator, satellite cable
   programming vendor in which a cable operator has an attributable interest,
   or satellite broadcast programming vendor in which a cable operator has an
   attributable interest seeking to enforce or enter into an exclusive contract
   in an area served by a cable operator must submit a “Petition for
   Exclusivity” to the Commission for approval.

   (i) The petition for exclusivity shall contain those portions of the
   contract relevant to exclusivity, including:

   (A) A description of the programming service;

   (B) The extent and duration of exclusivity proposed; and

   (C) Any other terms or provisions directly related to exclusivity or to any
   of the criteria set forth in paragraph (c)(4) of this section. The petition
   for exclusivity shall also include a statement setting forth the
   petitioner's reasons to support a finding that the contract is in the public
   interest, addressing each of the five factors set forth in paragraph (c)(4)
   of this section.

   (ii) Any competing multichannel video programming distributor affected by
   the proposed exclusivity may file an opposition to the petition for
   exclusivity within thirty (30) days of the date on which the petition is
   placed on public notice, setting forth its reasons to support a finding that
   the contract is not in the public interest under the criteria set forth in
   paragraph (c)(4) of this section. Any such formal opposition must be served
   on petitioner on the same day on which it is filed with the Commission.

   (iii) The petitioner may file a response within ten (10) days of receipt of
   any formal opposition. The Commission will then approve or deny the petition
   for exclusivity.

   (6) Sunset provision. The prohibition of exclusive contracts set forth in
   paragraph (c)(2) of this section shall cease to be effective on October 5,
   2007, unless the Commission finds, during a proceeding to be conducted
   during the year preceding such date, that said prohibition continues to be
   necessary to preserve and protect competition and diversity in the
   distribution of video programming.

   (d) Limitations—(1) Geographic limitations. Nothing in this section shall
   require any person who is engaged in the national or regional distribution
   of video programming to make such programming available in any geographic
   area beyond which such programming has been authorized or licensed for
   distribution.

   (2) Applicability to satellite retransmissions. Nothing in this section
   shall apply:

   (i) To the signal of any broadcast affiliate of a national television
   network or other television signal that is retransmitted by satellite but
   that is not satellite broadcast programming; or

   (ii) To any internal satellite communication of any broadcast network or
   cable network that is not satellite broadcast programming.

   (e) Exemptions for prior contracts.—(1) In general. Nothing in this section
   shall affect any contract that grants exclusive distribution rights to any
   person with respect to satellite cable programming and that was entered into
   or before June 1, 1990, except that the provisions of paragraph (c)(1) of
   this section shall apply for distribution to persons in areas not served by
   a cable operator.

   (2) Limitation on renewals. A contract that was entered into on or before
   June 1, 1990, but that was renewed or extended after October 5, 1992, shall
   not be exempt under paragraph (e)(1) of this section.

   (f) Application to existing contracts. All contracts, except those specified
   in paragraph (e) of this section, related to the provision of satellite
   cable programming or satellite broadcast programming to any multichannel
   video programming distributor must be brought into compliance with the
   requirements specified in this subpart no later than November 15, 1993.

   [ 58 FR 27671 , May 11, 1993, as amended at  59 FR 66259 , Dec. 23, 1994;  67 FR 42951 , July 30, 2002]