Introduced Version






HOUSE BILL No. 1138

_____


DIGEST OF INTRODUCED BILL



Citations Affected: IC 8-1-37.

Synopsis: Cable programming arbitration. Provides that an independent cable programmer may request arbitration if it believes that a vertically integrated cable operator that owns a competing programming channel has discriminated against it. Specifies the remedies that the attorney general may seek against a vertically integrated cable operator that engages in a pattern of discrimination against independent cable programmers.

Effective: July 1, 2008.





Reske




    January 8, 2008, read first time and referred to Committee on Interstate and International Cooperation.







Introduced

Second Regular Session 115th General Assembly (2008)


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HOUSE BILL No. 1138



    A BILL FOR AN ACT to amend the Indiana Code concerning utilities and transportation.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 8-1-37; (08)IN1138.1.1. -->     SECTION 1. IC 8-1-37 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]:
     Chapter 37. Program Carriage Dispute Resolution
    Sec. 1. As used in this chapter, "affiliated" means any of the following:
        (1) Controlling, controlled by, or under common ownership or control with a cable operator.
        (2) Having an ownership interest in an entity held by a cable operator in a cable programming channel, including a debt or other instrument that is convertible to an ownership interest.
        (3) Having a financial interest that enables a cable operator to benefit from the financial performance of a cable programming channel.
    Sec. 2. As used in this chapter, "cable operator" has the meaning set forth in 47 U.S.C. 522(5). The term includes:
        (1) a multichannel video programming distributor (as defined

in 47 U.S.C. 522(13)); and
        (2) an affiliate or a subsidiary of the cable operator or multichannel video programming distributor.
    Sec. 3. As used in this chapter, "extended basic service" means a category of cable service provided by a cable operator that is immediately superior (in terms of price and number of channels) to basic cable service (as defined in 47 U.S.C. 522(3)).
    Sec. 4. As used in this chapter, "final offer" means an offer to contract for carriage of programming for a period of at least three (3) years.
    Sec. 5. As used in this chapter, "independent programmer" means a person that:
        (1) is engaged in the production, creation, or wholesale distribution of video programming that is not affiliated with a vertically integrated cable operator; and
        (2) offers a cable programming channel that competes in the same programming category as a cable programming channel operated by a vertically integrated cable operator.
    Sec. 6. As used in this chapter, "programming category" means programming that predominantly contains one (1) of the following types of information:
        (1) Sports.
        (2) News and public affairs.
        (3) Entertainment.
        (4) Any other category identified by the American Arbitration Association.
    Sec. 7. As used in this chapter, "programming channel" means a channel with programming generally considered comparable in terms of signal quality and other features to programming provided by a television broadcast station.
    Sec. 8. As used in this chapter, "vertically integrated cable operator" means a cable system franchisee:
        (1) to which more than fifty percent (50%) of the television households in its franchise area subscribe for video service; and
        (2) that, through a company affiliated with the cable system franchisee, acts as:
            (A) a distributor; and
            (B) a producer;
        of content for its own and other cable systems.
    Sec. 9. A vertically integrated cable operator that carries on its extended basic service a programming channel that it owns has a

duty to treat in a fair, reasonable, and nondiscriminatory manner an independent programmer concerning carriage of any cable programming channel owned by the independent programmer that competes in the same programming category with a programming channel that the vertically integrated cable operator owns.
    Sec. 10. (a) If an independent programmer believes that a vertically integrated cable operator has not treated it in a fair, reasonable, and nondiscriminatory manner concerning carriage of a competing programming channel, the independent programmer may request arbitration with the vertically integrated cable operator over the terms and conditions of carriage not more than ninety (90) days after:
        (1) a first time request for carriage of the competing programming channel; or
        (2) the renewal of a carriage agreement involving the competing programming channel.
    (b) If a dispute described in subsection (a) remains unresolved ten (10) days after submission of the request for arbitration, either the independent programmer or the vertically integrated cable operator may file with the American Arbitration Association a formal demand for arbitration. The formal demand must include a final offer. The American Arbitration Association shall notify the responding party of the demand for arbitration and provide a copy of the final offer. Not more than five (5) days after receiving the notice from the American Arbitration Association, the responding party shall submit its responses on price (but not terms and conditions) to the American Arbitration Association.
    Sec. 11. (a) The arbitration must be decided by a single arbitrator under the applicable expedited procedures of the commercial arbitration rules of the American Arbitration Association. The arbitrator shall use the:
        (1) cash price that most closely approximates the fair market value of the disputed programming carriage rights, whether submitted by the initiating or responding party; and
        (2) terms, conditions, and form of the contract submitted by the initiating party.
    (b) The arbitrator may consider any relevant evidence to determine the fair market value of the disputed programming carriage rights, including the following:
        (1) Current or previous contracts between the independent programmer and other cable operators, including offers made in negotiations relating to the contracts.


        (2) Current or previous contracts with other cable operators for the affiliated programming channel carried by the vertically integrated cable operator, including related and integrated carriage or other arrangements for the affiliated programming channel.
        (3) Price, terms, and conditions that the independent programmer has for programming carriage with other cable operators.
        (4) Evidence of the relative value of the independent programmer's competing programming channel compared to the affiliated programming channel being carried by the vertically integrated cable operator. For purposes of this subdivision, evidence includes ratings and advertising rates.
        (5) The extent of national carriage of the independent programmer's competing programming channel.
        (6) Other evidence of the value of the independent programmer's competing programming channel.
        (7) Whether the independent programmer and any company affiliated with the vertically integrated cable operator have, in the past five (5) years, pursued the same programming from third parties.
However, the arbitrator may not consider offers made by the independent programmer or the vertically integrated cable operator in the course of negotiations before the arbitration.
    (c) The arbitrator may require the parties to confidentially submit evidence that is in their possession or control.
    Sec. 12. A court may enter judgment upon an award by the arbitrator. If the arbitrator finds that a party's conduct during the course of the arbitration has been unreasonable, the arbitrator may assess all or a portion of the other party's costs and expenses, including attorney's fees, against the unreasonable party.
    Sec. 13. If a vertically integrated cable operator engages in a pattern of discrimination against an independent programmer that competes with programming channels owned or operated by the vertically integrated cable operator, the attorney general may seek any or all of the following:
        (1) Injunctive relief.
        (2) Restitution.
        (3) Monetary damages.
        (4) Civil penalties not to exceed one hundred thousand dollars ($100,000) per violation.
The attorney general may seek a remedy under this section in

addition to any other remedy provided under this chapter.