So-called ‘After-Acquired’ Clauses In Nexstar’s Existing Retrans Agreements To Trigger Big Fee Hikes
PITTSBURGH, May 6, 2016 – The American Cable Association called on the Federal Communications Commission to prevent Nexstar Broadcasting Group from relying on contract clauses permitting rates to reset automatically upon change of ownership that will result in large and financially disruptive increases in retransmission consent fees paid by smaller multichannel video programming distributors (MVPDs) if Nexstar is approved to acquire Media General’s TV stations.
A combined Nexstar-Media General would be a broadcasting colossus, owing at least 115 stations affiliated with ABC, CBS, NBC or FOX, overtaking Sinclair Broadcast Group as the largest Big 4 affiliate station owner. With a flip of a switch, Nexstar-Media General could black out millions of pay-TV customers located in the 110 TV markets (out of 210 total) where the broadcaster would own at least one Big Four station.
“If approved, this transaction would create a new broadcast ownership conglomerate of unprecedented size and scope, one which will control the highest number of the Big-4 broadcast stations in the country and have the power to threaten service blackouts to millions of consumers,” ACA President and CEO Matthew M. Polka said. “Accordingly, the FCC should prevent Nexstar from triggering so called ‘after-acquired’ station clauses in their contracts that produce an immediate and damaging spike in retransmission consent fees.”
ACA set forth its views in May 5 reply comments filed jointly with DISH Network and the Independent Telephone & Telecommunications Alliance (ITTA). In the comments, ACA drew the FCC’s attention to so-called “after-acquired station” clauses that Nexstar, using its enormous market power, has imposed on MVPDs, particularly smaller ones. These clauses operate by re-setting the rates charged by Media General to the levels Nexstar was able to obtain from the MVPD for its stations, which, in most cases, will result in rate adjustments to Nexstar’s higher rate levels until those Media General agreements run out.
Numerous ACA members have reported that, as a result of the merger, the retransmission consent fees they will be paying for former Media General stations will increase anywhere between 11% to 125% as the rates are reset to Nexstar’s higher levels.
“This will cause harm to subscribers of MVPDs that are forced to agree to after-acquired station clauses in the Nexstar retransmission consent agreements and that also have retransmission consent agreements with Media General stations. The effects of such clauses are profoundly destabilizing to operator finances and harmful to their customers,” ACA’s Polka said.
About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 750 smaller and medium-sized, independent cable companies who provide broadband services for nearly 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/