Washington Post 2010 Annual Report Download - page 39

signal of any television station in a market in HDTV, it will be required to carry all other local stations in HDTV (rather than
in a lower resolution format). Recognizing the capacity and technological constraints faced by DBS operators, the FCC
established a four-year phase-in period, starting in 2009, during which DBS systems must progressively transition their
local-into-local markets into compliance with this “HD carry-one, carry-all” requirement. By the end of 2010, DISH
Network (“DISH”) and DirecTV had commenced HDTV local station carriage in all of the PNS stations’ markets, and all
PNS stations are carried in HDTV by both of these DBS operators with the exception of WJXT, which is not carried in
HDTV on DISH’s system.
As with cable, stations make DBS carriage elections at three-year intervals. The signal of each of the Company’s
television stations is being carried by DISH and DirecTV (the two nationwide DBS operators in the United States) on a
local-into-local basis pursuant to retransmission consent agreements.
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, and the Company has negotiated retransmission consent agreements with the major cable
and DBS operators serving each of its stations’ markets. Broadcasters must make their elections for the next election cycle
by October 1, 2011, with the elections effective January 1, 2012, through December 31, 2014.
In March 2010, several cable and DBS operators and certain other parties filed a request for a rulemaking by the FCC
seeking certain changes to the FCC’s retransmission consent rules, such as authorization for “interim carriage” of a
broadcaster’s signal by cable and DBS operators after the broadcaster’s grant of retransmission consent has expired and
limitations on the positions that broadcasters may take during negotiations. Broadcasters opposed the rulemaking request,
asserting that it would be contrary to the Communications Act and the public interest. The FCC has announced that it will
initiate a rulemaking proceeding in 2011 with respect to its retransmission consent rules. Changes to the retransmission
consent rules could materially affect the PNS stations’ (and Cable ONE’s cable systems’) bargaining leverage in future
retransmission consent negotiations, and the Company cannot predict the net effect that such an order would have.
Congress may also pass legislation in 2011 that would affect the must-carry/retransmission consent regime.
In May 2010, Congress passed the Satellite Television Extension and Localism Act (“STELA”), which extends the statutory
copyright license for satellite carriage of distant broadcast television signals for another five years. In November 2010,
the FCC released four items implementing STELA. Among other things, these items eliminated the requirement that satellite
carriers carry a local network-affiliated station as a precondition to carrying a significantly viewed station affiliated with
the same network; amended the rules for predicting when a household will be “unserved” so that a satellite carrier may
import a distant network-affiliated signal; and sought comment on ways to enable greater access to in-state television
signals. These changes might result in increased DBS carriage of distant and significantly viewed signals in PNS stations’
markets, which could materially affect viewership of the PNS stations and the stations’ retransmission consent negotiations
with DBS operators. These changes also could expand the DBS carriage of PNS stations in other markets.
Ownership Limits. The Communications Act and the FCC’s rules limit the number and type of media outlets in which a
single person or entity may have an attributable interest. Among other restrictions, the FCC’s local television multiple
ownership rule generally permits one company to own two television stations in the same market only if there are at least
eight independently owned full-power television stations in that market (including noncommercial stations and counting
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. In addition, by statute, 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.
The FCC also restricts so-called “cross-ownership” of newspapers and broadcast stations within a market. In its 2008
ownership rules review order, the FCC liberalized its daily newspaper/broadcast cross-ownership rule to presumptively
allow newspaper/broadcast combinations in the 20 largest markets, subject to several fairly rigorous economic hardship
and public interest criteria. A number of media companies and public interest groups have challenged the FCC’s
modification of the daily newspaper/broadcast cross-ownership rule and its retention of the other ownership rules. These
challenges are pending judicial review. Several public interest groups also have asked the FCC to reconsider its 2008
ownership rules review order; this request is also pending.
The Communications Act requires the FCC to review its ownership rules periodically and to repeal or modify any rule that
it determines is no longer in the public interest. In May 2010, the FCC sought comment on whether its ownership rules
continue to foster competition, localism and diversity in the current media marketplace. The proceeding is pending and it
is not possible to predict its outcome, but changes to the FCC’s ownership rules could affect PNS’s operations.
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