Following the passage by Congress earlier this year of the Satellite Television Extension and Localism Act (STELA, for short), the FCC adopted new rules to provide satellite subscribers with greater flexibility to receive certain television stations from other markets.

The FCC revised its rules to make it easier for satellite subscribers to receive a significantly viewed (SV) out-of-market station. Previously, satellite subscribers could receive an out-of-market SV station with the same network affiliation as the local in-market station only if the satellite subscribers received the local in-market network station. Now satellite subscribers need only receive the satellite carrier’s local-into-local service package.

These changes may tilt retransmission consent negotiations in favor of the satellite carriers, who could favor an out-of-market SV station to the in-market station based on the amount of retransmission consent fees that are negotiated. Many broadcasters have entered into agreements that provide for little or no compensation for out-of-market subscribers.

The FCC reasons that subscribers would prefer receiving the in-market station to the out-of-market SV station, that satellite carriers will negotiate in good faith with in-market stations, and that SV stations usually are available only in a portion of the market. Time will tell, but there is good reason to be skeptical. Satellite carriers will inevitably use SV stations as a substitute, instead of a supplement, to an in-market station if any disputes arise about compensation for retransmission consent. If this happens, broadcast localism goals of the FCC will be undermined and Congress may be called back to the table to clean up the mess.

The FCC must deliver to Congress a report on in-state broadcast programming by August 27, 2011. The FCC seeks comment and data from the public in preparing this report.