Washington Post 2010 Annual Report Download - page 38

Regulation of Broadcasting and Related Matters
PNS’s television broadcasting operations are subject to the jurisdiction of the FCC under the Communications Act. The
FCC, among other things, assigns frequency bands for broadcast and other uses; manages broadcast licensing; regulates
equipment used by stations; and adopts and implements regulations and policies that directly or indirectly affect the
ownership, operations and profitability of broadcasting stations.
Each PNS television station holds an FCC license that is renewable upon application for an eight-year period.
Digital Television (“DTV”) and Spectrum Issues. Each PNS station (and each full-power television station nationwide)
now broadcasts only in digital format. The digital broadcast format allows transmission of high-definition television
(“HDTV”) programming, multiple channels of standard-definition television programming (“multicasting”), subchannels of
programming designed for reception by mobile devices (“mobile DTV”) and subscription video and data services known
as “ancillary and supplementary” services. PNS, along with other broadcasting companies, has been actively pursuing
the use of digital spectrum to provide mobile DTV to consumers, in partnership with consumer electronics manufacturers
and other partners.
Television stations may receive interference from a variety of sources, including interference from other broadcast stations,
that is below a threshold established by the FCC. That interference could limit viewers’ ability to receive television
stations’ signals. The amount of interference to stations may increase in the future because of the FCC’s decision to allow
electronic devices known as “white space” devices to operate in the television frequency band on an unlicensed basis.
In September 2010, the FCC finalized the rules for white space device operations, and in January 2011, the FCC
conditionally selected several entities to run a database with information about television station service areas that
will be used to avoid interference. (White space devices will not be permitted to operate until the database operator
appointments are finalized.) In addition, the September order is subject to several petitions for reconsideration, and an earlier
order in the white spaces proceeding, issued in 2008, is on appeal.
Pursuant to a statutory requirement, the FCC’s National Broadband Plan was submitted to Congress in March 2010. In
connection with the Plan, the FCC and Congress are considering reallocation of spectrum for use by wireless broadband
providers, including substantial amounts of spectrum currently in the television broadcast band. One of the proposals of
the Plan is that Congress authorize incentive auctions, whereby the government would auction spectrum relinquished by
broadcast television stations in exchange for a share of the auction revenues. This proposal would require legislative
action. The FCC commenced a rulemaking proceeding in November 2010 to consider, among other things, permitting
two or more stations to share a single television channel. Though not yet part of a rulemaking proceeding, the Plan also
proposed other steps that could materially affect PNS’s operations, including a “repacking,” whereby the FCC would
require certain stations to move to new channel allotments so as to free up a nationwide block of spectrum for wireless
broadband use. If the FCC moves forward with a repacking according to the blueprint set forth in the Plan, it could result
in PNS stations having smaller service areas and/or receiving more interference than they do today. Stations moving to
new channels also could incur significant expense. The Plan proposed that stations be compensated for such expenses
from spectrum auction proceeds. The Company cannot predict whether a repacking will occur or whether compensation
will be provided for expenses that the PNS stations may incur. The Plan also suggested the imposition of spectrum usage
fees, noting that legislative action may be required. The FCC has stated that dozens of rulemakings may be required to
implement the Plan.
Carriage of Local Broadcast Signals. The Communications Act and the FCC rules allow a commercial television
broadcast station, under certain circumstances, to insist on mandatory carriage of its signal on cable systems serving the
station’s market area (“must carry”). For stations that elect must carry, only a single stream of video (that is, a single
channel of programming), rather than a television broadcast station’s entire signal, is eligible for mandatory carriage by
a cable system operator. Thus, a television station currently can obtain carriage of one or more digital multicast streams
only through a retransmission consent agreement with a cable operator.
Alternatively, stations may elect, at three-year intervals, to forego must-carry rights and allow their signals to be carried
only pursuant to a “retransmission consent” agreement. Stations that elect retransmission consent may negotiate for
compensation from cable systems in exchange for the right to carry their signals, in the form of such things as mandatory
advertising purchases by the system operator, station promotional announcements on the system and cash payments to the
station. Each of PNS’s television stations is being carried on all of the major cable systems in each station’s respective
local market pursuant to retransmission consent agreements.
Commercial television stations also may elect either mandatory carriage or retransmission consent with respect to the
carriage of their signals on 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 2008, the FCC ruled that if a DBS operator carries the
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