Broadcaster Not Entitled To Gouge Pay-TV Customers Under Pretence of Separate Ownership
PITTSBURGH, December 4, 2013 – The American Cable Association called on the Federal Communications Commission to prevent Sinclair Broadcasting from colluding in the negotiation of retransmission consent with a “sidecar” license holder that is separate from Sinclair in name only so that it can drive up prices to pay-TV providers seeking to distribute the companies’ local TV station signals to their customers.
With FCC approval, Sinclair will control the retransmission consent rights of the NBC and FOX affiliates in Tallahassee, Fl., while owning just the NBC station. Sinclair plans to sell the FOX station to its “sidecar” partner, Cunningham Broadcasting Corp., while retaining rights to negotiate retransmission consent for both the NBC and FOX stations as if they were commonly owned. Cunningham is a firm with close family and business ties to Sinclair’s Chief Executive Officer, according to the Wall Street Journal.
Significantly, to protect local TV competition, the FCC’s media ownership rules allow Sinclair to own only one of the four most highly rated stations in a market. In Tallahassee, Sinclair is using the Cunningham agreement to skirt the FCC’s one-to-a-market restriction by owning the NBC affiliate but controlling the retrans rights of the FOX affiliate in a sidecar deal with Cunningham. In Gainesville, Fl., Sinclair plans to bypass the FCC’s rule again by owning the CBS station outright but controlling the retrans rights of the NBC affiliate in a similar business sidecar deal with Cunningham. Sinclair’s Tallahassee and Gainesville transactions are awaiting FCC action.
“Sinclair’s disregard for pro-competitive ownership limits invites the conclusion that Sinclair views the FCC’s rulebook as nothing but an index of vague suggestions, a lump of clay to be shaped by private interests confident they can deflect anyone’s objections brought before the FCC,” ACA President and CEO Matthew M. Polka said.
More importantly, by colluding rather than competing for retransmission consent fees, the Sinclair and Cunningham stations will be able to extract fees from pay-TV providers and consumers far in excess of what each station could get on its own.
“The FCC cannot and should not stand idly by while Sinclair increases its already prodigious market power over retransmission consent in local TV markets through coordination agreements with stations owned separately in name only,” Polka added.
ACA’s latest objections to Sinclair’s Tallahassee and Gainesville transactions were set forth in comments filed Dec. 2 with the FCC. ACA continued to urge the FCC to consider these transactions as blatant evasions of FCC rules. Because these Sinclair deals raise novel and important questions of law, fact, and policy, ACA requested referral of the matter to the five FCC Commissioners for en banc disposition, instead of the Media Bureau’s acting upon the applications on delegated authority.
ACA has demonstrated that these transactions would violate the intent of the FCC’s local television ownership rule. Sinclair and Cunningham cynically designed the transactions to attempt to observe the letter of the FCC’s rule, while clearly skirting its purpose and intent by allowing two nominally separately owned highly-rated Big Four affiliates in each affected market to coordinate their retransmission consent negotiations as if under common ownership.
About the American Cable Association
Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 850 smaller and medium-sized, independent cable companies who provide broadband services for more than 7 million cable subscribers primarily located in rural and smaller suburban markets across America. Through active participation in the regulatory and legislative process in Washington, D.C., ACA’s members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business. For more information, visit https://acaconnects.org/