Trade Group’s Focus Remains On Barring Broadcaster Practices That Drive Up Retrans Prices Artificially
PITTSBURGH, Aug. 3, 2011 – The American Cable Association asserted in a letter to the Federal Communications Commission that Nexstar Broadcasting Group’s antitrust suit against Granite Broadcasting Group rests on the same basic economic argument as ACA’s concerns about coordinated retransmission consent negotiations by separately owned stations in the same market.
“Whether it likes it or not, or even admits it, Nexstar has filed an antitrust suit against a competing broadcaster that illustrates the point that coordinated action by TV stations to monopolize the local advertising market can produce largely identical anti-consumer harms as coordinated action in connection with retransmission consent,” ACA President and CEO Matthew M. Polka said. “Although ACA has been making this point for some time, if it takes Nexstar’s antitrust suit to convince those who so far have declined to listen, so be it.”
ACA’s response to Nexstar came in a letter that the trade group filed with the FCC today amid growing signs that the badly flawed retransmission consent system could yield an unprecedented number of TV station blackouts toward the end of the calendar year when thousands of current carriage deals involving ACA members are set to expire.
In its own FCC letter, Nexstar lashed out reflexively after ACA said in a press release that it welcomed the broadcaster’s antitrust suit filed last week against Granite. The litigation alleged that Granite and Malara Broadcasting have taken local control of five national broadcast networks (including the ABC, NBC and FOX affiliates) in the Fort Wayne, Ind., market, creating a local TV advertising sales monopoly that will drive up consumer prices in Fort Wayne in violation of state and federal fair competition laws.
In embracing Nexstar’s suit, ACA pointed out that Granite-Malara’s attempt to monopolize the Fort Wayne advertising market raised precisely the same concerns that ACA raised within the context of retransmission consent, where TV stations in the same local market decide to coordinate retransmission consent negotiations for the purpose of extracting monopoly rents from small cable operators that do not have the market leverage to counter the heft of TV station duopolies and triopolies, virtual and otherwise.
In FCC filings, ACA has documented the many ways broadcasters attempt to gain insurmountable bargaining leverage over ACA members. After broadcasters claimed the FCC lacked evidence of occurrences of coordinated negotiation of retransmission consent, ACA confirmed and detailed 36 pairs of broadcasters involved in coordinated negotiations in 33 markets – providing the names of the broadcasters and the individual markets involved – that ACA members have experienced in the past three years. Nexstar itself has coordinated retransmission consent agreements with Mission Broadcasting in 13 markets across the country.
Cable companies also have documented for the FCC that they pay from 21% to 161% more for retransmission consent when they are required to negotiate with a single entity representing two network affiliated stations in the same market. The annual cost of retransmission consent is expected to double by 2017 to $3.6 billion, according to SNL Kagan. Customers of small and midsize cable companies will end up shouldering a disproportionate amount of these exploding costs owing to the anticompetitive practices documented by ACA over the years and most recently in Nexstar’s antitrust suit.
In its letter, ACA also asserted that Nexstar has misled the FCC by claiming that in connection with the effort to reform the broken retransmission consent regime, the independent cable community is waging an all-out assault on shared services agreements created by local TV stations operating in the same local market.
“In truth, ACA has told the FCC just the opposite. ACA’s carefully crafted position is that the agency should outlaw separately owned TV stations from coordinating retransmission consent, whether the stations involved do so pursuant to legally binding agreements or through less formal arrangements,” Polka said. “ACA does not believe that outside the realm of retransmission consent, all shared services agreements among broadcasters are inherently suspect.”
Consistent with previous statements, Polka explained that ACA’s positions relative to shared services agreements were clearly set forth in comments filed in the FCC’s retransmission consent reform docket (10-71) in May and June, following FCC adoption of a Notice of Proposed Rulemaking (NPRM) in March. ACA’s filings, Polka said, demonstrate in understandable terms that Nexstar’s allegations are false and should be disregarded.
About the American Cable Association
Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 900 smaller and medium-sized, independent cable companies who provide broadband services for more than 7.6 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/