Washington Post 2008 Annual Report Download - page 31

Under the FCC’s rules, only stations that broadcast in a DTV-only mode and elect must-carry are entitled to mandatory
carriage of their DTV signals. For stations that are entitled to mandatory carriage, only a single stream of video (that is, a
single channel of programming), rather than a television broadcast station’s entire DTV signal, is eligible for mandatory
carriage by a cable television operator. Thus, a television station currently can obtain carriage of both its analog and
digital signals or of a digital multicast stream only through retransmission consent agreements.
The Satellite Home Viewer Improvement Act of 1999 gave commercial television stations the right to elect either must-
carry or retransmission consent with respect to the carriage of their analog signals on direct broadcast satellite (“DBS”)
systems that choose to provide “local-into-local” service (i.e., to distribute the signals of local television stations to viewers
in the local market area). In addition, the Satellite Home Viewer Extension and Reauthorization Act of 2004 gave DBS
operators the option to offer FCC-determined “significantly viewed” signals of out-of-market (or “distant”) broadcast stations
to subscribers in local markets. Stations made their first DBS carriage election in July 2001, with subsequent elections
occurring at three-year intervals beginning in October 2005. The analog signal of each of the Company’s television
stations (and the digital signal of most of the Company’s television stations) is being carried by DBS providers EchoStar
and DirecTV on a local-into-local basis pursuant to retransmission consent agreements. In a pending proceeding, the FCC
has sought comment on how it should apply digital signal carriage rules to DBS providers. The two major DBS operators
in the United States are DirecTV and DISH Network.
On or prior to October 1, 2008, the Company elected retransmission consent status for its stations with respect to major
cable operators and the two DBS operators. These elections apply to the three-year period from January 1, 2009 through
December 31, 2011. Of those agreements that expired at or about December 31, 2008, nearly all (including those
with the major cable system in each relevant market) have been renegotiated and provide for continued coverage of the
Company’s television stations pursuant to specific terms of the new agreements.
Ownership Limits. The FCC maintains rules to limit the number and type of media outlets in which a single person or
entity may have an attributable interest. The Communications Act requires the FCC to review these ownership rules
periodically and to repeal or modify any rule that it determines is no longer in the public interest. Pursuant to such a
review, in June 2003, the FCC relaxed several of its local media ownership rules. The FCC’s decision to modify its
ownership rules was appealed to the U.S. Court of Appeals for the Third Circuit, which stayed the effectiveness of the
new rules, pending the outcome of the appeal. In June 2004, the Third Circuit held that the FCC had not adequately
justified its revised rules and remanded the case to the FCC for further proceedings. The Third Circuit’s stay of the new
rules remains in effect pending these further proceedings.
In July 2006, the FCC initiated a broad remand proceeding to reconsider the revised rules. In an order released in
February 2008, the FCC liberalized its daily newspaper cross-ownership rule. Under the modified rule, the Commission
will assess proposed newspaper/broadcast combinations on a case-by-case basis, but in limited circumstances will
presumptively approve the common ownership of attributable interests in a newspaper and one television station or one
radio station in the 20 largest markets, and will presumptively not approve such interests outside the 20 largest markets.
The FCC stated that it would consider permitting newspaper/broadcast cross-ownership in smaller markets if it can be
shown either (i) that the broadcast property is “failed” or “failing” or (ii) that the transaction will result in a new source of
news in the market, that is, at least seven new hours of local news per week on a broadcast station that previously has
not aired local news. Because the U.S. Court of Appeals for the Third Circuit stayed the effectiveness of any modifications
to the ownership rules until it reviews the FCC’s compliance with its June 2004 order, the modified daily newspaper
cross-ownership rule will not go into effect until the court has completed its review.
In its 2008 order, the FCC declined to modify its other ownership rules, including the local television multiple ownership
rule, which generally permits one company to own two television stations in the same market if there are at least eight
independently owned full-power television stations in that market (including non-commercial stations and counting the
co-owned stations as one), and if at least one of the commonly-owned stations is not among the top-four -ranked television
stations in that market. A number of media companies and public interest groups have challenged the FCC’s modification
of the daily newspaper cross-ownership rule and its retention of the other ownership rules. These challenges are pending
before the U.S. Court of Appeals for the Third Circuit. Several public interest groups also have asked the FCC to
reconsider its 2008 order; this request is pending.
By law, a single person or entity may have an attributable interest in an unlimited number of television stations
nationwide, as long as the aggregate audience reach of such stations does not exceed 39% of nationwide television
households, and as long as the interest complies with the FCC’s other ownership restrictions.
Political Advertising. The Bipartisan Campaign Reform Act of 2002, among other things, imposed restrictions on
certain broadcast, cable television and DBS advertisements that refer to a candidate for federal office. Those restrictions
may adversely affect the advertising revenues of the Company’s television stations during campaigns for federal office.
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