SB0879sam001 95TH GENERAL ASSEMBLY

Sen. James F. Clayborne Jr.

Filed: 4/9/2008

09500SB0879sam001 LRB095 05638 MJR 49092 a

AMENDMENT TO SENATE BILL 879

AMENDMENT NO. ______. Amend Senate Bill 879 by replacing everything after the enacting clause with the following:

"Section 5. The Public Utilities Act is amended by adding Section 21-1150 as follows:

(220 ILCS 5/21-1150 new)

Sec. 21-1150. Program carriage dispute resolution.

(a) For purposes of this Section:

"AAA" means the American Arbitration Association.

"Affiliated" with a cable operator means, with respect to a cable programming channel, that the channel is owned or operated by a person or entity (1) that is controlling, controlled by, or under common ownership or control with a cable operator, (2) in which any ownership interest, voting or non-voting, or any debt or other instrument that is convertible to an ownership interest, is held by a cable operator, or (3) in which any financial interest that enables a person or entity to benefit from the financial performance of the cable programming channel is held by a cable operator.

"Cable operator" includes (1) any multichannel video programming distributor, as that term is defined at 47 U.S.C. 522, and (2) any affiliate or subsidiary of the cable operator or multichannel video programming distributor.

"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 an offering of basic cable service, as that term is defined at 47 U.S.C. 522.

"Final offer" means a submission in the form of (1) a contract for carriage of the programming for a period of at least 3 years, which is certified by the party making such final offer to reflect terms and conditions, other than price and carriage tier, actually agreed to by an unaffiliated third party in a carriage contract covering at least 100,000 homes, and (2) a related price and distribution tier based on such certified form of contract.

"Independent programmer" means a person (1) that is engaged in the production, creation, or wholesale distribution of video programming, and (2) that is not affiliated with a vertically integrated cable operator and (3) that offers a cable programming channel that competes in the same programming genre, or targets the same demographic or advertiser base, or competes to acquire the same programming as a cable programming channel owned by a vertically integrated cable operator.

"Programming genre" means a channel whose programming principally consists of the following:

(i) sports;

(ii) news and public affairs;

(iii) entertainment; or

(iv) any additional or more specific genre that the arbitrator may identify.

"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 or a widely available cable programming service, including, but not limited to, ESPN, TBS, TruTV, and E! Entertainment Television.

"Vertically integrated cable operator" means a cable system franchisee (1) to which more than 50% of the television households in its franchise area subscribe for video service, and (2) that, through one or more companies controlling, controlled by, or under common control with the cable system franchisee, acts as both a distributor of content, as well as a producer of content for its own and other cable systems. For purposes of clarification but not limitation, in a vertically integrated cable operator there is common direct or indirect ownership between the cable system franchisee and certain cable networks that are carried by the cable system franchisee.

(b) 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 programming channel that competes in the same programming genre with the programming channel that the vertically integrated cable operator owns.

(c) If an independent programmer whose programming channel is available in at least 100,000 homes within the United States has reason to believe that it has not been treated in a fair, reasonable, and nondiscriminatory manner by a vertically integrated cable operator concerning carriage of a competing programming channel, then it may submit a request for commercial arbitration with the vertically integrated cable operator over the terms and conditions of carriage within 90 days after a first-time request for carriage or renewal of a carriage agreement. If the dispute remains unresolved 10 days after submission of the request for arbitration, then either party may file with the AAA a formal demand for arbitration and shall include a final offer with the AAA filing. The AAA shall notify the other party of the demand for arbitration. Within 15 business days after receipt of that notice from the AAA, the other party shall submit its final offer to the AAA. Immediately after receipt of the responding party's final offer, the AAA shall provide to each party the other party's final offer.

(d) Arbitration proceedings shall be conducted in the following manner:

(1) The arbitration shall be decided by a single arbitrator under the expedited procedures of the commercial arbitration rules of the AAA that are in effect at the time of arbitration. The arbitrator shall conduct a baseball-style arbitration, in which the arbitrator shall choose the final offer of the party that most closely approximates the fair market value of and market demand for the programming carriage rights at issue.

(2) In order to determine fair market value and market demand, the arbitrator may consider any relevant evidence and may require the parties to submit, on a confidential basis, such evidence to the extent that it is in their actual possession or control, including, but not limited to, the following:

(A) current or previous contracts between the independent programmer and other cable operators in which the vertically integrated cable operator does and does not have an interest, as well as offers made in such negotiations;

(B) current or previous contracts for the affiliated channel with other cable operators, including related and integrated carriage or other arrangements for the affiliated programming channel;

(C) price, terms, and conditions that the independent programmer has for carriage with other cable operators;

(D) evidence of the relative value, including without limitation ratings and advertising rates, of the independent programming compared to the affiliated programming channel being carried by the vertically integrated cable operator;

(E) the extent of national carriage of the independent programmer's competing cable programming;

(F) other evidence of the value of independent programming;

(G) whether the independent programmer and any company controlled by, controlling, or under common control by the vertically integrated cable operator have pursued the same programming from third parties in the past 5 years; and

The arbitrator may not consider offers prior to the arbitration made by the independent programmer or the vertically integrated cable operator in the course of their negotiations.

(e) A judgment upon an award by the arbitrator may be entered by any court having competent jurisdiction over the matter. If the arbitrator finds that one party's conduct during the course of the arbitration has been unreasonable, then the arbitrator may assess all or a portion of the other party's costs and expenses, including attorney fees, against the offending party.".