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113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     113-518

======================================================================



 
                   STELA REAUTHORIZATION ACT OF 2014

                                _______
                                

 July 11, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Upton, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4572]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4572) to amend the Communications Act of 1934 to 
extend expiring provisions relating to the retransmission of 
signals of television broadcast stations, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     3
Background and Need for Legislation..............................     4
Hearings.........................................................     7
Committee Consideration..........................................     8
Committee Votes..................................................     8
Committee Oversight Findings.....................................     8
Statement of General Performance Goals and Objectives............     8
New Budget Authority, Entitlement Authority, and Tax Expenditures     9
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......     9
Committee Cost Estimate..........................................     9
Congressional Budget Office Estimate.............................     9
Federal Mandates Statement.......................................    11
Duplication of Federal Programs..................................    11
Disclosure of Directed Rule Makings..............................    11
Advisory Committee Statement.....................................    11
Applicability to Legislative Branch..............................    11
Section-by-Section Analysis of the Legislation...................    11
Changes in Existing Law Made by the Bill, as Reported............    12

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``STELA Reauthorization Act of 2014''.

SEC. 2. EXTENSION OF AUTHORITY.

  Section 325(b) of the Communications Act of 1934 (47 U.S.C. 325(b)) 
is amended--
          (1) in paragraph (2)(C), by striking ``December 31, 2014'' 
        and inserting ``December 31, 2019''; and
          (2) in paragraph (3)(C), by striking ``January 1, 2015'' each 
        place it appears and inserting ``January 1, 2020''.

SEC. 3. RETRANSMISSION CONSENT NEGOTIATIONS.

  (a) In General.--Section 325(b)(3)(C) of the Communications Act of 
1934 (47 U.S.C. 325(b)(3)(C)) is amended--
          (1) in clause (ii), by striking ``and'' at the end;
          (2) in clause (iii), by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(iv) prohibit a television broadcast station from 
        coordinating negotiations or negotiating on a joint basis with 
        another television broadcast station in the same local market 
        (as defined in section 122(j) of title 17, United States Code) 
        to grant retransmission consent under this section to a 
        multichannel video programming distributor, unless such 
        stations are directly or indirectly under common de jure 
        control permitted under the regulations of the Commission.''.
  (b) Margin Correction.--Section 325(b)(3)(C) of the Communications 
Act of 1934 (47 U.S.C. 325(b)(3)(C)) is further amended by moving the 
margin of clause (iii) 4 ems to the left.
  (c) Deadline for Regulations.--Not later than 9 months after the date 
of the enactment of this Act, the Commission shall promulgate 
regulations to implement the amendments made by this section.

SEC. 4. DELAYED APPLICATION OF JSA ATTRIBUTION RULE IN CASE OF WAIVER 
                    PETITION.

  In the case of a party to a joint sales agreement (as defined in Note 
2(k) to section 73.3555 of title 47, Code of Federal Regulations) that 
is in effect on the effective date of the amendment to Note 2(k)(2) to 
such section made by the Further Notice of Proposed Rulemaking and 
Report and Order adopted by the Commission on March 31, 2014 (FCC 14-
28), and who, not later than 90 days after the date of the enactment of 
this Act, submits to the Commission a petition for a waiver of the 
application to such agreement of the rule in such Note 2(k)(2) (as so 
amended), such party shall not be considered to be in violation of the 
ownership limitations of such section by reason of the application of 
such rule to such agreement until the later of--
          (1) the date that is 18 months after the date on which the 
        Commission denies such petition; or
          (2) December 31, 2016.

SEC. 5. DELETION OR REPOSITIONING OF STATIONS DURING CERTAIN PERIODS.

  (a) In General.--Section 614(b)(9) of the Communications Act of 1934 
(47 U.S.C. 534(b)(9)) is amended by striking the second sentence.
  (b) Revision of Rules.--Not later than 90 days after the date of the 
enactment of this Act, the Commission shall revise section 76.1601 of 
its rules (47 CFR 76.1601) and any note to such section by removing the 
prohibition against deletion or repositioning of a local commercial 
television station during a period in which major television ratings 
services measure the size of audiences of local television stations.

SEC. 6. REPEAL OF INTEGRATION BAN.

  (a) No Force or Effect.--The second sentence of section 76.1204(a)(1) 
of title 47, Code of Federal Regulations, shall have no force or effect 
after the date of the enactment of this Act.
  (b) Removal From Rules.--Not later than 180 days after the date of 
the enactment of this Act, the Commission shall complete all actions 
necessary to remove the sentence described in subsection (a) from its 
rules.

SEC. 7. REPORT ON COMMUNICATIONS IMPLICATIONS OF STATUTORY LICENSING 
                    MODIFICATIONS.

  (a) Study.--The Comptroller General of the United States shall 
conduct a study that analyzes and evaluates the changes to the carriage 
requirements currently imposed on multichannel video programming 
distributors under the Communications Act of 1934 (47 U.S.C. 151 et 
seq.) and the regulations promulgated by the Commission that would be 
required or beneficial to consumers, and such other matters as the 
Comptroller General considers appropriate, if Congress implemented a 
phase-out of the current statutory licensing requirements set forth 
under sections 111, 119, and 122 of title 17, United States Code. Among 
other things, the study shall consider the impact such a phase-out and 
related changes to carriage requirements would have on consumer prices 
and access to programming.
  (b) Report.--Not later than 18 months after the date of the enactment 
of this Act, the Comptroller General shall submit to the appropriate 
congressional committees a report on the results of the study conducted 
under subsection (a), including any recommendations for legislative or 
administrative actions. Such report shall also include a discussion of 
any differences between such results and the results of the study 
conducted under section 303 of the Satellite Television Extension and 
Localism Act of 2010 (124 Stat. 1255).

SEC. 8. LOCAL NETWORK CHANNEL BROADCAST REPORTS.

  (a) Requirement.--
          (1) In general.--On the 270th day after the date of the 
        enactment of this Act, and on each succeeding anniversary of 
        such 270th day, each satellite carrier shall submit an annual 
        report to the Commission setting forth--
                  (A) each local market in which it--
                          (i) retransmits signals of 1 or more 
                        television broadcast stations with a community 
                        of license in that market;
                          (ii) has commenced providing such signals in 
                        the preceding 1-year period; and
                          (iii) has ceased to provide such signals in 
                        the preceding 1-year period; and
                  (B) detailed information regarding the use and 
                potential use of satellite capacity for the 
                retransmission of local signals in each local market.
          (2) Termination.--The requirement under paragraph (1) shall 
        cease after each satellite carrier has submitted 5 reports 
        under such paragraph.
  (b) Definitions.--In this section--
          (1) the terms ``local market'' and ``satellite carrier'' have 
        the meaning given such terms in section 339(d) of the 
        Communications Act of 1934 (47 U.S.C. 339(d)); and
          (2) the term ``television broadcast station'' has the meaning 
        given such term in section 325(b)(7) of the Communications Act 
        of 1934 (47 U.S.C. 325(b)(7)).

SEC. 9. REPORT ON DESIGNATED MARKET AREAS.

  Not later than 18 months after the date of the enactment of this Act, 
the Commission shall submit to the appropriate congressional committees 
a report containing an analysis of--
          (1) the extent to which consumers in each local market (as 
        defined in section 122(j) of title 17, United States Code) have 
        access to broadcast programming from television broadcast 
        stations (as defined in section 325(b)(7) of the Communications 
        Act of 1934 (47 U.S.C. 325(b)(7))) located outside their local 
        market, including through carriage by cable operators and 
        satellite carriers of signals that are significantly viewed 
        (within the meaning of section 340 of such Act (47 U.S.C. 
        340)); and
          (2) whether there are technologically and economically 
        feasible alternatives to the use of designated market areas (as 
        defined in section 122(j) of title 17, United States Code) to 
        define markets that would provide consumers with more 
        programming options and the potential impact such alternatives 
        could have on localism and on broadcast television locally, 
        regionally, and nationally.

SEC. 10. DEFINITIONS.

  In this Act:
          (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means the Committee on 
        Energy and Commerce and the Committee on the Judiciary of the 
        House of Representatives and the Committee on Commerce, 
        Science, and Transportation and the Committee on the Judiciary 
        of the Senate.
          (2) Commission.--The term ``Commission'' means the Federal 
        Communications Commission.

                          Purpose and Summary

    H.R. 4572, the ``STEAL Reauthorization Act of 2014,'' 
(``STELAR'') amends the Communications Act of 1934 to extend 
the expiring provisions relating to the retransmission of 
signals of television broadcast stations and to effect certain 
reforms to video distribution laws and regulations. The 
legislation extends for five years the exemption for satellite 
providers from the requirement to obtain retransmission consent 
for distant signals. The legislation also prohibits broadcast 
stations that are not commonly owned from jointly negotiating 
retransmission consent agreements in the same local market; 
extends the deadline required for unwinding joint sales 
agreements that are not granted a waiver from the Federal 
Communications Commission's (``FCC'' or ``Commission'') local 
television ownership rule and related attribution rules; 
eliminates the prohibition on changing a broadcaster's signal 
on multi-channel video programming distributor (``MVPD'') 
systems during quarterly Nielsen network ratings periods, also 
known as ``sweeps''; and repeals the FCC's integration ban for 
operator-leased cable set-top boxes. The legislation also 
requires a report from the Comptroller General to Congress on 
the implications to the Communications Act should Congress 
phase out the current statutory copyright licensing 
requirements; a report from the satellite carriers to the FCC 
on the availability of local signals in local markets; and a 
report from the FCC examining consumer access to broadcast 
signals outside of the local market and whether there are 
technologically feasible alternatives to the use of the Nielsen 
Designated Market Areas to define broadcast media markets that 
would provide consumers with more programming options.

                  Background and Need for Legislation

    Direct broadcast satellite (``DBS'') operators are 
significant facilities-based competitors in the market for 
delivering multi-channel video programming. With approximately 
33.6 percent of the pay-TV market, DirecTV and DISH Network 
(the two largest DBS operators) compete directly with cable 
operators, who represent 55.7 percent of the market, and 
traditional telephone companies, who recently have entered the 
video programming distribution market and represent 8.4 percent 
of the market as of the end of 2011. See in re Annual 
Assessment of the Status of Competition in the Market for the 
Delivery of Video Programming, MB Docket No. 12-203, Fifteenth 
Annual Report, 28 FCC Rcd 10496, at para.para. 26-30, Table 7 
(2013).
    Like other MVPDs, DBS operators retransmit local broadcast 
programming as part of tiered content packages offered to 
consumers. Because some consumers have trouble receiving over-
the-air television signals due to intervening terrain or 
distance from the broadcast station, Congress passed the 
Satellite Home Viewer Act of 1988 (``SHVA''), amending the 
Communications Act to authorize satellite operators to deliver 
out-of-market broadcast signals to consumers ``unserved'' by 
over-the-air broadcasting. See 47 U.S.C. Sec. 339. The 
compulsory copyright license retransmission consent exemption 
in SHVA was authorized for six years, with the expectation that 
the DBS market would grow and competitive forces would 
eliminate the need for government intervention. See House Rpt. 
100-87, Pt. 2. Later, in 1999, Congress exempted satellite 
operators from the obligation to secure retransmission consent 
to retransmit the distant stations' signals. See 47 U.S.C. 
Sec. 325(b). Together, the exemptions from the obligation to 
obtain retransmission consent and copyright license for distant 
signals have been renewed by Congress multiple times. The STELA 
Reauthorization Act of 2014 (``STELAR'') once more renews the 
law that provides DBS operators with the legal basis on which 
they currently offer distant signals to more than 1.5 million 
subscribers.
    Throughout the process of developing SHVA and its 
successors, Congress sought to achieve the twin goals of 
providing unserved areas with access to broadcast signals 
without undermining the localism regime by which television 
networks and stations serve individual communities with news, 
weather, and information. Broadcast localism is based on the 
exclusive territorial rights granted to local affiliate 
stations by programming networks, which are reinforced by 
regulatory requirements established by the FCC. As Congress has 
continued to renew the satellite law it also has encouraged DBS 
providers to increase the availability of local signals. By 
November 2013, DirecTV was providing local broadcast 
programming in 197 markets, and DISH Network was serving all 
210 local markets in the United States with local programming.
    This legislation continues the work of past Congresses to 
ensure the availability of distant signals to those that rely 
on them while protecting local broadcasters' and content 
providers' rights. As with its predecessors, the provisions of 
STELAR will expire in five years, at which time Congress can 
evaluate the effectiveness and continuing need for the 
exemption from retransmission consent obligations and the 
compulsory copyright license and determine whether to extend 
the provisions or let them lapse.
    Advocates for retransmission consent reform have argued 
that programming costs have increased unsustainably because the 
increase in competition among MVPDs allows content providers to 
extract higher retransmission consent fees from MVPDs. The 
Committee discussed the increased number of ``blackouts''--
periods during which retransmission consent expires and a 
broadcast station is not carried on an MVPD service--as 
evidence of the need to reform the retransmission consent 
regime. Advocates of reform have argued that preventing 
broadcasters and programming networks from enforcing 
territorially exclusive rights to programming might ameliorate 
the market, e.g., effectively allowing MVPDs to select to offer 
programming from out-of-market networks in order to ``shop'' 
for lower retransmission consent fees.
    Given the extensive changes in the marketplace, competition 
between MVPDs (all households in the United States at this 
point have access to at least two pay-TV providers, and most--
over 98 percent--have access to three pay-TV providers. See in 
re Annual Assessment of the Status of Competition in the Market 
for the Delivery of Video Programming, MB Docket No. 12-203, 
Fifteenth Annual Report, 28 FCC Rcd 10496, at para.para. 36, 
Table 2 (2013)) and the advent of online video distributors, 
some suggested that this legislation would be the appropriate 
vehicle for retransmission consent reform.
    Ultimately, however, the legislation makes targeted changes 
to the laws governing video distribution and defers wholesale 
reform for later consideration. Consistent with the history of 
localism, this legislation includes certain changes to the 
retransmission consent regime that governs carriage 
negotiations between local broadcasters and MVPDs. 
Specifically, STELAR modifies Section 325 of the Communications 
Act to prohibit the practice of independently owned 
broadcasters jointly negotiating with a single MVPD. Critics 
argue that such arrangements could give broadcasters an unfair 
advantage in negotiations, because a negotiating impasse would 
result in the loss of two local programming streams rather than 
one and may give the broadcaster the ability to demand 
retransmission fees above the market value each broadcaster 
could command alone. The legislation also addresses joint sales 
agreements (``JSAs''), which are arrangements between 
broadcasters in a single market that allow broadcasters to 
broker advertising time for a second station in the market. The 
bill ensures that broadcasters have sufficient time to seek a 
waiver of the FCC's recent order on JSAs and to unwind 
arrangements the FCC deems ineligible for a waiver. See in re 
2014 Quadrennial Regulatory Review--Review of the Commission's 
Broadcast Ownership Rules and Other Rules Adopted Pursuant to 
Section 202 of the Telecommunications Act of 1996, MB Docket 
No. 14-50, Report & Order, Notice of Proposed Rulemaking, and 
Order, 79 Fed. Reg. 28995 (2014) at para.para. 340, 366, 367. 
Specifically, STELAR ensures that broadcasters with JSAs, who 
unsuccessfully sought a waiver and must unwind non-compliant 
JSAs, will have 18 months from the date that the FCC disposes 
of its waiver application or until the end of 2016, whichever 
is later.
    STELAR also eliminates the ``sweeps'' week prohibition in 
Section 614 of the Communications Act. Under current law, cable 
operators are not permitted to drop broadcast signals during 
the weeks when Nielsen Media Research does its major audience 
measurements (so called ``sweeps'' weeks). This ensures 
broadcasters' carriage on cable systems during the time when 
Nielsen measures audiences, ensuring that a retransmission 
consent dispute does not impact Nielsen ratings and thus 
advertising rates. However, stations that have elected to seek 
retransmission consent have foregone mandatory carriage in 
favor of retransmission consent fees. Inconsistently, the 
sweeps week rule allows retransmission consent broadcasters to 
take advantage of must-carry rules selectively during a sweeps 
week carriage dispute. Since cable providers do not have a 
corresponding right to demand access to programming during a 
retransmission consent dispute and because satellite providers 
are not subject to the rule, this deregulatory action will 
provide greater parity between cable and satellite operators.
    This legislation also repeals the integration ban as 
adopted by the FCC to implement Section 629 of the 
Communications Act. The Commission requires that the portion of 
the cable set-top box that decrypts the cable signal physically 
be separated from the other functions of the box (``the 
separable security requirement''). The consumer electronics 
(``CE'') and cable industries developed the CableCARD, a module 
that could be deployed in third-party electronics--televisions 
or retail set-top boxes--to decrypt the cable signal for 
viewing via a third-party set-top box. To incentivize cable 
companies to facilitate the CableCARD regime, the FCC required 
common reliance on CableCARDs by both third-party boxes and 
those leased from a cable provider. As a result, cable 
operators were required to deploy CableCARDS, i.e., separable 
security, in their own set top boxes in addition to supporting 
third party use of CableCARDs (``the integration ban''). The 
cable industry estimates that it has spent as much as $1 
billion on CableCARDs in leased boxes since the integration ban 
went into effect in 2007. There is also significant energy 
usage associated with the CableCARD slot, which the cable 
industry and energy experts assert has hindered the development 
of more energy efficient set top boxes. Advocates of the 
integration ban were also concerned that the legislation, as 
originally drafted, could negatively impact the FCC's efforts 
to promote competition and innovation in the set-top box 
market. This legislation relieves the cable industry of 
regulation that has failed to generate the market it was 
intended to foster, but preserves the FCC's authority to assure 
the commercial availability of converter boxes and other 
customer premises equipment used to access MVPD services.
    The legislation also requires three reports. The first 
requires the Comptroller General to evaluate a transition away 
from compulsory licensing schemes to a market-based mechanism 
and to discuss the impact on the carriage requirements 
currently imposed on MVPDs. The second report requires DBS 
operators to report annually to the FCC on the availability of 
local signals in local markets. The third report requires the 
FCC to review the availability of out-of-market signals to 
consumers and to explore alternatives to the use of the Nielsen 
Designated Market Area (``DMA'') system and the impact of such 
alternatives on localism.

                                Hearings

    The Communications and Technology Subcommittee held four 
hearings to consider issues at stake in the reauthorization of 
the satellite video legislation.
    The Subcommittee on Communications and Technology held a 
hearing on February 13, 2013, entitled ``Satellite Video 101.'' 
The Subcommittee received testimony from Eloise Gore, Associate 
Bureau Chief, Enforcement Bureau, Federal Communications 
Commission; R. Stanton Dodge, Executive Vice President and 
General Counsel, DISH Network, LLC; Jane Mago, Executive Vice 
President and General Counsel, Legal and Regulatory Affairs, 
National Association of Broadcasters; Lonna Thompson, Executive 
Vice President, Chief Operating Officer and General Counsel, 
Association of Public Television Stations; and Michael O'Leary, 
Senior Executive Vice President, Global Policy and External 
Affairs, Motion Picture Association of America.
    The Subcommittee on Communications and Technology held a 
hearing on June 12, 2013, entitled ``The Satellite Television 
Law: Repeal, Reauthorize, or Revise.'' The Subcommittee 
received testimony from Marci Burdick, Senior Vice President of 
Broadcasting, Schurz Communications, Inc.; Geoffrey Manne, 
Senior Fellow, TechFreedom; Mike Palkovic, Executive Vice 
President, Services and Operations, DirecTV; Ben Pyne, 
President, Global Distribution, Disney Media Networks; Hal 
Singer, Managing Director, Navigant Economics; and Amy Tykeson, 
CEO, Bend Broadband.
    The Subcommittee on Communications and Technology held a 
hearing on September 11, 2013, entitled ``Innovation Versus 
Regulation in the Video Marketplace.'' The Subcommittee 
received testimony from R. Stanton Dodge, Executive Vice 
President and General Counsel, DISH Network, LLC; Edward L. 
Munson, Jr., Vice President and General Manager, KPHO-TV; David 
Rozzelle, Executive Vice President, Suddenlink Communications; 
James Campbell, Vice President of Regulatory and Legislative 
Affairs, Midwest Region, CenturyLink, Inc.; Sandra Aistars, 
Executive Director, Copyright Alliance; and John Bergmayer, 
Senior Staff Attorney, Public Knowledge.
    The Subcommittee on Communications and Technology held a 
legislative hearing on March 12, 2014 to review a discussion 
draft of the legislation. The hearing was entitled 
``Reauthorization of the Satellite Television Extension and 
Localism Act.'' The Subcommittee received testimony from Mike 
Palkovic, Executive Vice President, Services and Operations, 
DirecTV; Marci Burdick, Senior Vice President of Broadcasting, 
Schurz Communications, Inc.; Michael Powell, President and CEO, 
National Cable and Telecommunications Association; Matt Zinn, 
Senior Vice President, General Counsel and Chief Privacy 
Officer, TiVo; and Matt Wood, Policy Director, Free Press.

                        Committee Consideration

    On March 25, 2014, the Subcommittee on Communications and 
Technology met in open markup session. Representative Greg 
Walden and Rep. Anna Eshoo offered an amendment to the 
discussion draft that was accepted by voice vote. The 
discussion draft, as amended, a bill to amend the 
Communications Act of 1934 to extend expiring provisions 
relating to the retransmission of signals of television 
broadcast stations, and for other purposes, was forwarded to 
the full Committee by voice vote.
    Representative Greg Walden, together with Rep. Fred Upton, 
Rep. Henry Waxman, and Rep. Anna Eshoo, introduced H.R. 4572 on 
May 6, 2014.
    On May 8, 2014, the Committee on Energy and Commerce met in 
open markup session, to consider H.R. 4572. An amendment was 
offered by Rep. Ben Ray Lujan and Rep. Cory Gardner and was 
agreed to by voice vote. H.R. 4572 was ordered favorably 
reported to the House, as amended, by voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 4572 reported. A motion by Mr. Upton to order H.R. 4572 
reported to the House, with amendment, was agreed to by a voice 
vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held hearings and made 
findings that are reflected in this report.

         Statement of General Performance Goals and Objectives

    The goal and objective of H.R. 4572, the ``STELA 
Reauthorization Act,'' is to extend the expiring provisions in 
the Communications Act relating to the retransmission of 
signals of television broadcast stations and to effect certain 
reforms to the video distribution regime. The legislation does 
this by extending for five years the exemption from the 
requirement to seek retransmission consent for distant signals. 
Reforms to the video distribution regime in the legislation are 
as follows: a prohibition on joint retransmission consent 
negotiation by two or more independently owned broadcasters; 
elimination of the prohibition against changing broadcast 
signals during the quarterly Nielsen ratings period 
(``sweeps''); extension of the deadline to unwind joint sales 
agreements for which broadcasters seek a waiver and are found 
non-compliant under the FCC's attribution rules adopted on 
March 31, 2014; and repeal of the FCC's integration ban for 
cable set-top boxes.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4572 would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

       Earmark, Limited Tax Benefits, and Limited Tariff Benefits

    In compliance with clause 9(e), 9(f), and 9(g) of rule XXI 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 4572 contains no earmarks, limited tax 
benefits, or limited tariff benefits.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 3, 2014.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4572, the STELA 
Reauthorization Act of 2014.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 4572--STELA Reauthorization Act of 2014

    Under current law, satellite carriers pay royalty fees for 
the right to transmit certain television signals to their 
subscribers without obtaining permission from copyright 
holders. H.R. 4572 would extend provisions of current law that 
allow satellite carriers to transmit copyrighted material but 
would not extend the license that allows transmission without 
specific permission from the copyright holders. That license 
will expire on December 31, 2014. The bill also would direct 
the Federal Communications Commission (FCC) to delay or amend 
certain regulations affecting television stations and cable 
carriers. Finally, H.R. 4572 would require the Government 
Accountability Office and the FCC to prepare several reports 
for the Congress concerning copyright issues and access to non-
local programming.
    Based on information from the FCC, CBO estimates that 
implementing H.R. 4572 would cost about $1 million over the 
2015-2019 period, assuming the availability of appropriated 
funds, for the required reports and regulatory actions. Pay-as-
you-go procedures do not apply to this legislation because it 
would not affect direct spending or revenues.
    H.R. 4572 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    H.R. 4572 contains private-sector mandates, as defined in 
UMRA, on television broadcasters and satellite carriers. It 
would extend two mandates on television broadcasters that are 
set to expire under current law and impose new mandates on 
television broadcasters and satellite carriers. Based on 
information from the FCC and industry sources, CBO estimates 
that the aggregate cost of complying with the mandates in the 
bill would fall below the annual threshold established in UMRA 
for private-sector mandates ($152 million in 2014, adjusted 
annually for inflation).
    The bill would extend for five years two existing mandates 
regarding the retransmission of broadcast programs by 
distributors of video programming services (pay television 
providers such as cable and satellite carriers). It would 
extend the mandate on television broadcasters that prohibits 
them from entering certain exclusive contracts with 
distributors of video programming services for the rights to 
carry (retransmit) their broadcast programs. That is, broadcast 
television stations must provide an opportunity to all 
distributors of video programming in the same market to 
negotiate an agreement to retransmit their broadcast programs. 
Second, it would extend the mandate on television broadcasters 
that prohibits them from receiving compensation from satellite 
carriers for retransmitting distant (non-local) broadcast 
programs to subscribers who live in areas that do not receive 
those broadcast signals. The cost of those mandates for 
broadcasters would be the net income forgone as a result of 
compliance with the prohibitions. Based on information from 
industry sources, CBO expects that the cost of extending those 
mandates would be small.
    The bill also would prohibit television broadcasters from 
negotiating agreements on a joint basis with another television 
broadcaster in the same local market for re-transmission of 
their broadcast programs by distributors of video programming 
services. The prohibition would not apply to broadcast stations 
in the same market under common control. The cost of the 
mandate for broadcasters would be the loss of income as a 
result of the ban on joint negotiations. Under current law, a 
FCC rule that is scheduled to be in effect in June would ban 
such negotiations for the top four broadcast stations in a 
local market. The bill would broaden the ban to cover all 
television broadcasters in a local market. According to 
available studies, such joint negotiations are mostly done by 
the top broadcast stations. Therefore, CBO expects that the 
incremental cost to television broadcasters of the broader ban 
in the bill would not be large.
    Lastly, the bill would impose a mandate on satellite 
carriers by requiring them to submit a report to the FCC 
containing certain information about the markets in which they 
provide local service. According to industry sources, satellite 
carriers already keep track of the information required to 
compile the report. Therefore, CBO estimates that the cost of 
preparing the data for the report would be minimal.
    The CBO staff contacts for this estimate are Susan Willie 
(for federal costs) and Marin Burnett (for private-sector 
mandates). The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                    Duplication of Federal Programs

    No provision of H.R. 4572 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting H.R. 4572 
specifically directs to be completed 3 rule makings within the 
meaning of 5 U.S.C. 551.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 2. Section 2 extends the exemption from 
retransmission consent for distant signals, the prohibition on 
exclusive retransmission consent deals, and the requirement for 
good faith retransmission consent negotiations.
    Section 3. Section 3 prohibits multiple broadcast stations 
from negotiating retransmission consent jointly unless the 
stations are directly or indirectly under common de jure 
control approved by the Commission.
    Section 4. Section 4 permits broadcasters seeking a waiver 
of the FCC's rules on attribution or local ownership of 
television JSAs adopted on March 31, 2014 at least 18 months to 
unwind such non-compliant arrangements. Should the FCC deny an 
applicant's waiver, the broadcaster has 18 months or until 
December 31, 2016 to unwind the agreement, whichever is later.
    Section 5. Section 5 eliminates the ``sweeps week'' 
provision that prohibits cable operators from dropping 
broadcast signals during the weeks when Nielsen Media Research 
does its major audience measurements.
    Section 6. Section 6 eliminates the FCC's integration ban 
for cable set-top boxes.
    Section 7. Section 7 requires the Government Accountability 
Office to conduct a study and issue a report on necessary 
changes to the Code of Federal Regulations and the impact on 
consumers should Congress repeal the statutory compulsory 
copyright regime that governs broadcast content.
    Section 8. Section 8 requires each satellite direct 
broadcast service provider to report the local signals that it 
provides for each market in which it broadcasts such services 
and also report on the potential use of its technology for the 
retransmission of local signals in each market.
    Section 9. Section 9 requires the FCC to conduct a study 
and issue a report on the extent to which consumers can access 
broadcast signals originating outside of the consumers' local 
markets and on feasible alternatives to the use of designated 
market areas to define markets in a manner that would allow 
more programming options.
    Section 10. Section 10 defines the terms ``appropriate 
congressional committees'' and ``Commission.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

COMMUNICATIONS ACT OF 1934

           *       *       *       *       *       *       *



            TITLE III--SPECIAL PROVISIONS RELATING TO RADIO

PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 325. FALSE DISTRESS SIGNALS; REBROADCASTING; STUDIOS OF FOREIGN 
                    STATIONS.

  (a) * * *
  (b)(1) * * *
  (2) This subsection shall not apply--
          (A) * * *

           *       *       *       *       *       *       *

          (C) until [December 31, 2014] December 31, 2019, to 
        retransmission of the signals of network stations 
        directly to a home satellite antenna, if the subscriber 
        receiving the signal--
                  (i) * * *

           *       *       *       *       *       *       *

  (3)(A) * * *

           *       *       *       *       *       *       *

  (C) The Commission shall commence a rulemaking proceeding to 
revise the regulations governing the exercise by television 
broadcast stations of the right to grant retransmission consent 
under this subsection, and such other regulations as are 
necessary to administer the limitations contained in paragraph 
(2). Such regulations shall--
          (i) * * *
          (ii) until [January 1, 2015] January 1, 2020, 
        prohibit a television broadcast station that provides 
        retransmission consent from engaging in exclusive 
        contracts for carriage or failing to negotiate in good 
        faith, and it shall not be a failure to negotiate in 
        good faith if the television broadcast station enters 
        into retransmission consent agreements containing 
        different terms and conditions, including price terms, 
        with different multichannel video programming 
        distributors if such different terms and conditions are 
        based on competitive marketplace considerations; [and]
          (iii) until [January 1, 2015] January 1, 2020, 
        prohibit a multichannel video programming distributor 
        from failing to negotiate in good faith for 
        retransmission consent under this section, and it shall 
        not be a failure to negotiate in good faith if the 
        distributor enters into retransmission consent 
        agreements containing different terms and conditions, 
        including price terms, with different broadcast 
        stations if such different terms and conditions are 
        based on competitive marketplace considerations[.]; and
          (iv) prohibit a television broadcast station from 
        coordinating negotiations or negotiating on a joint 
        basis with another television broadcast station in the 
        same local market (as defined in section 122(j) of 
        title 17, United States Code) to grant retransmission 
        consent under this section to a multichannel video 
        programming distributor, unless such stations are 
        directly or indirectly under common de jure control 
        permitted under the regulations of the Commission.

           *       *       *       *       *       *       *


TITLE VI--CABLE COMMUNICATIONS

           *       *       *       *       *       *       *


PART II--USE OF CABLE CHANNELS AND CABLE OWNERSHIP RESTRICTIONS

           *       *       *       *       *       *       *


SEC. 614. CARRIAGE OF LOCAL COMMERCIAL TELEVISION SIGNALS.

  (a) * * *
  (b) Signals Required.--
          (1) * * *

           *       *       *       *       *       *       *

          (9) Notification.--A cable operator shall provide 
        written notice to a local commercial television station 
        at least 30 days prior to either deleting from carriage 
        or repositioning that station. [No deletion or 
        repositioning of a local commercial television station 
        shall occur during a period in which major television 
        ratings services measure the size of audiences of local 
        television stations.] The notification provisions of 
        this paragraph shall not be used to undermine or evade 
        the channel positioning or carriage requirements 
        imposed upon cable operators under this section.

           *       *       *       *       *       *       *