TV Station Deal Threatens Public With Higher Retrans Fees, Rampant Signal Blackouts
PITTSBURGH, March 22, 2016 – The American Cable Association is calling on the Federal Communications Commission to block Nexstar Broadcasting’s merger with Media General — or impose appropriate conditions — to protect consumers from paying vastly higher retransmission consent fees and enduring disruptive signal blackouts until their multichannel video programming distributors (MVPDs) relent to these broadcasters’ outrageous financial demands post-merger.
ACA specifically asked the FCC to combat the deleterious impact of “after-acquired” clauses favored by Nexstar. These clauses produce immediate increases in retransmission consent fees solely as the result of a change in ownership or control of a station and not the result of direct negotiations between the station’s new owner and an MVPD.
“The FCC should deny this TV station merger or at least impose conditions to safeguard the public interest,” ACA President and CEO Matthew M. Polka said. “Both Nexstar and Media General have a history of using consumers as pawns in retransmission consent negotiations with pay-TV operators and have repeatedly blacked out their programming during contractual disputes, to the detriment of the consumers they are supposed to serve.”
A combined Nexstar-Media General would own at least 115 affiliates of ABC, CBS, NBC, and Fox, eclipsing Sinclair Broadcast as the largest affiliate station owner. The merged entity’s footprint would cover almost half of all TV markets nationally, enjoying a dramatic rise in negotiating leverage over MVPDs based solely on its aggregation of market power.
ACA set forth its position in comments filed with the FCC on March 18 in cooperation with satellite TV provider Dish Network and The Independent Telephone & Telecommunications Alliance (ITTA), a trade group formed in 1993 by medium-size incumbent local telephone companies.
In the comments, ACA explained that the media consolidation threatened by this TV station transaction will provide Nexstar with the ability to hold a significant swath of the country’s pay-TV customers hostage in retransmission consent negotiations, leading to higher prices and increased blackouts.
ACA noted that the TV station duo will also be able to exploit “after-acquired” clauses in current retransmission consent contracts. These clauses typically entitle a broadcaster to roll into its existing retransmission consent agreement with an MVPD any other local broadcast stations it subsequently acquires, manages, or on whose behalf it otherwise gets the rights to negotiate retransmission consent. MVPDs forced to include these clauses find that their previous negotiations for acceptable prices, terms and conditions with a given local broadcast station can be upended when the station is bought, or when it enters into a management agreement.
“The rates that the MVPD pays are reset at the higher level of the acquiring/managing station, without any corresponding change in the value of the programming. It is unfair and destabilizing to operator finances to be faced with such sudden and unpredictable rate increases,” Polka said.
ACA Members believe “after-acquired” clauses could immediately increase their retransmission consent fee obligations to Nexstar from 11% to 125%.
If the FCC declines to block the merger, ACA urged the agency to allow MVPDs to pursue baseball-style arbitration to reach new retransmission consent agreements with Nexstar. During any arbitration, Nexstar should be prevented from blacking out its stations on the MVPD with which it is negotiating.
Lastly, ACA asked the FCC to require Nexstar to refrain from exercising its right to have retransmission consent rates under existing Media General agreements reset to Nexstar rates by virtue of its after-acquired station clauses.
“The FCC must react to the fact that Nexstar’s dramatically greater size after swallowing up Media General will give it the ability to bully MVPDs into paying outrageous retransmission fee increases, in some cases very suddenly,” 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/