McCaskill pushes Pai on MFN and ADM cable deal clauses

Ajit Pai (FCC)
FCC Chairman Ajit Pai

Sen. Claire McCaskill, D-Mo., wants new FCC Chairman Ajit Pai to follow through on an agency proposal to investigate most favored nation (MFN) and alternative distribution method (ADM) contract clauses in pay-TV program licensing deals. 

“After reviewing confidential documents from many of the largest cable and satellite providers and conducting dozens of interviews with television distributors and networks alike, I found that unconditional most favored nation clauses and overly restrictive alternative distribution method clauses may be limiting the number of choices that consumers have for viewing and purchasing content,” said McCaskill, the ranking member of the Senate Permanent Subcommittee on Investigations and a longtime pay-TV industry critic, in a letter to Pai. 

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In September, the FCC under previous Chairman Tom Wheeler voted 3-2 across party lines to adopt a notice of proposed rulemaking (NPRM), looking at MFN and ADM clauses. Opponents of ADMs say the contract terms allow large pay-TV providers to limit where content can be distributed, thus harming consumer choice for online video. Opponents also say that MFN terms block access to MVPD systems for smaller programmers. 

Republican Pai, who was part of the minority vote, was not in favor of the NPRM. 

Nevertheless, McCaskill is persisting.

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“If adopted, the FCC’s proposed rule will prohibit certain types of MFN and ADM contract provisions as a means of removing ‘marketplace obstacles that may hinder independent programmers from reaching consumer.’ Based on the subcommittee’s investigation, I believe [the] rule will succeed in removing these obstacles and facilitate competition in an industry increasingly dominated by only a few large companies.”