Malcolm Forbes once said that diversity is "the art of thinking independently together." In our quest to promote a more vibrant media landscape, we can never forget that the fabric of our democracy is bred from the diversity of our voices.
Tomorrow (September 29th), the Federal Communications Commission (FCC) is set to vote on a proposed rule-making designed to "give voice" to these voices. My hope on this Thursday is for the agency to propose rules that seek to promote diversity and level the playing field for independent video programmers who often find it difficult to near impossible to gain carriage on the channel lineup of major pay-TV providers.
Seven months ago, the FCC embarked on a fact-finding mission aimed at better understanding the challenges independent programmers face. What we learned from this exercise was highly instructive. In their public filings, independent programmers from all ends of the ideological spectrum bravely described how in negotiating for carriage with a pay-TV provider, they are often forced to accept clauses that restrict competition and inhibit their ability to grow. Known as most favored nation (MFN) and alternative distribution method (ADM) clauses, these contract provisions at times curtail new service offerings and even restrict the ability to expand viewership to online platforms.
What was made clear during our proceeding is that the initial exercise or NOI (Notice of Inquiry) was not just about taking up the plight of independent programmers. Ultimately, as it turns out, it is about the consumer. Have you ever flipped through hundreds of channel options, only to conclude there is nothing on that you care to watch? Similarly, how did you feel when one of your favorite niche networks was suddenly dropped from the pay-TV channel lineup? If these are relatable scenarios, then the FCC's proposed rules are something you should care about.
By one estimate, today nine of the largest programmers control more than 100 different networks or channels that are carried by your pay-TV provider. So for an independent programmer who is not affiliated with a pay-TV provider or a large programming network, it is easy to understand why they would be viewed as 'low priority,' even when they can demonstrate strong ratings and high consumer interest.
When it comes to negotiations between a small independent video programmer and a major pay-TV provider, the latter holds the key to the ignition. With limited bargaining power, MFNs and ADMs are real barriers. What do I mean? With an "unconditional" MFN, a pay-TV provider can pick and choose among the best terms and conditions from a previously agreed-to carriage agreement. In practice, this might mean an independent programmer would be forced to accept inferior channel placement for the same price as the provider agreed in a previous, totally unrelated deal that did not include them.
With an increasing number of consumers "cutting the cord," online video platforms would seem like the perfect way for independent programmers to get around the roadblocks set by many traditional pay-TV providers. Problem solved, right? But ADMs, according to small and independent programmers, play pass interference and often foreclose them from entering distribution deals over these new, broadband-enabled platforms. Though the terms are not always absolute, an "unreasonable" ADM might outright restrict an independent programmer from licensing their content to an online video distributor, even after the program has completed its airing cycle over their pay-TV platform.
So where does this leave consumers? Frustrated that despite a rapidly changing video marketplace, that the practices of the largest pay-TV providers in more than a few instances, are curtailing consumer choice and the growth of independent and diverse programmers.
Small, independent, diverse programmers already lack negotiating power and while troubling to me personally, that is not the issue I seek to address here. But the use of unconditional MFNs and unreasonable ADMs have enabled unfair barriers to entry, so now is the time to move forward and enact rules that prohibit these practices. The lifeblood of a free-enterprise and a truly democratic society will only be realized if there is a level playing field for all stakeholders. Should the proposed rules be adopted on Thursday by the full Commission, the FCC will have taken another step to enable diverse and independent voices to stake their rightful place on the stage of our rich media landscape.