§  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, 2012, 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;  72 FR 56661 , Oct. 4, 2007]