Owning 124 Stations In 92 Markets Will Give Gray More Bargaining Leverage Over MVPDs In Retrans Talks
For Immediate Release
Contact: Ted Hearn
PITTSBURGH, August 29, 2018 – Gray Television Inc. will own 124 stations in 92 markets if the $3.65 billion merger with Raycom Media Inc. closes, requiring the Federal Communications Commission, as part of its merger review, to account for the harm of higher retransmission consent fees certain to result from the creation of one of the largest TV station ownership groups in the country, according to the American Cable Association.
ACA told the FCC it can’t ignore key merger-related harms in a filing submitted on Monday as part of the agency’s legal obligation to ensure that any TV station license transfer will serve “the public interest, convenience, and necessity.” ACA stressed that although Gray-Raycom has vowed to sell nine stations to terminate same-market duopolies, the FCC needs to grapple with the fact that recent economic studies presented to the agency are unmistakably clear that larger TV station groups have market leverage to charge higher retransmission consent fees than smaller TV groups.
Since at least some of these fees will get passed on to consumers served by multichannel video programming distributors (MVPDs), the merger will inflict harm on consumers in the form of higher monthly pay-TV bills, ACA said, adding that consumer price increases and related harms rank among the foremost public interest harms of concern to the FCC.
“The FCC has not hesitated to reject or place conditions on transactions where retransmission consent-related harms outweighed claimed benefits. Thus, the FCC must weigh the likelihood that Gray’s acquisition of Raycom’s stations will lead to increased retail rates against the asserted benefits of the transaction,” ACA President and CEO Matthew M. Polka said.
ACA also requested that the FCC should prevent Gray from triggering any after-acquired station clauses in its retransmission consent agreements with MVPDs for acquired stations it commits to divest. ACA is concerned that if Gray can assert that it owned the Raycom stations to be divested for even a minute, such a scenario could trigger what are called “after-acquired clauses,” which are contract provisions that could automatically escalate retransmission consent payments for certain stations and with certain MVPDs.
Because Gray is selling the nine stations, it would not benefit from any retransmission consent fee hikes. But if Gray had the ability to trigger after-acquired clauses where it raises fees for MVPDs, it could offer the new owner better returns for the station due to the higher frees. This would allow Gray to sell the station at a higher price than if the retransmission consent revenue generated by the station were less.
About the American Cable Association: Based in Pittsburgh, the American Cable Association is a trade organization representing about 800 smaller and medium-sized, independent companies that provide broadband, phone and video services to nearly 8 million customers 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/