ACA Opposition to Station’s Sale Brings Retrans Policy Showdown

The Media Bureau is unlikely to grant ACA the conditions it seeks, because it raises issues directly related to a rulemaking notice and because the bureau in the past hasn’t generally placed such conditions on station sales, said broadcast and cable lawyers. These lawyers aren’t part of the proceeding on KTKA, but at our request they reviewed documents from the ACA and PBC filed with the FCC. Time Warner Cable was one of the first operators to raise the issue of retrans, in seeking to block LIN Media from buying WFWC Suring, Wis., from Acme. That deal remains pending at the commission, and broadcast and cable lawyers think it too will eventually be OK'd. A bureau spokeswoman declined to comment.

The cable petitions against KTKA and WFWC will slow down bureau processing of those stations’ license transfer applications, which adds some risk to those transactions, broadcast and cable lawyers said. They noted that Free State Communications gave PBC 18 months to complete the deal, longer than the typical one year in similar deals. Free State’s parent used to own a cable operator that was a member of ACA, and used the same law firm for the KTKA deal as the association often uses: Cinnamon Mueller. That meant ACA had to use another law firm, K&L Gates, to contest the sale.

The petition from ACA hits on topics also in the retrans rulemaking, said broadcast and cable lawyers. For that reason alone, they predicted the bureau will approve KTKA’s sale, though the order approving the deal may note that the issues raised relate to the retrans rulemaking and may be dealt with there. “PBC has a track record, through shared services of similar arrangements, of ceding operation of its Big 4 stations,” the ACA said. It said the company’s only stations -- WYTV Youngstown, Ohio, and WTGS Savannah, Ga. -- have deals with New Vision in which the two coordinate retrans negotiations with cable operators. PBC’s owner Todd Parkin and its lawyer, Howard Liberman of Drinker Biddle, had no comment beyond a filing that said the association’s request should be denied. New Vision owns the NBC and low-power Fox affiliates in Topeka, KSNT and KTMJ.

The ACA filing is “generally an expression of how things are heating up, between the broadcasting and cable industries” on retrans, said a lawyer with pay TV clients. “They hit a lot of hot topics” that “are very sensitive ones to broadcasters,” the attorney said. “It would be unlikely” that the bureau would approve a petition “that tips their hand” on how the commission might proceed on the retrans rulemaking, he said. “On the other hand, they're not going to want to let these petitions sit forever.” A hold-up in eventual commission approval of the KTKA sale is the most likely outcome of the cable association’s request, said a lawyer with other TV station clients.

An alliance of pay-TV providers panned the KTKA deal as possibly putting retrans negotiating power in the hands of owners of multiple stations in the same market. “In Topeka, broadcasters could potentially have the unprecedented power to pull the plug on not one, but three of the Big Four networks’ stations at the same time,” said a spokesman for the American TV Alliance. “The FCC should definitely consider that outcome and its impact on consumers as it reviews the proposed transaction.” Alliance members include Time Warner Cable, both major DBS and both telco-TV providers and the ACA.

ACA is seeking to bootstrap a policy question onto a transaction, so the commission should deny the request, PBC said in a filing last week. “Commission policy dictates that the Commission will not base a decision in an adjudicatory matter on the possible outcome of a pending rulemaking proceeding,” said the broadcaster, asking the association’s request be denied. The petition seeks to block “a private, contractual arrangement” with another TV station owner, PBC said: But “ACA, by its own admission has demonstrated that the forum for resolving the issues raised in its Petition is in the pending rulemaking."

The cable association hasn’t asked the Justice Department to block KTKA’s sale or otherwise intervene, said ACA Vice President Ross Lieberman. In 1996, the department settled with three of the four Big Four affiliates in Corpus Christi, Texas, over allegations they illegally conspired to raise retrans fees by jointly negotiating for them. “The Antitrust Division raised a big eyebrow about that,” coming after the 1992 Cable Act allowed broadcasters to charge cable operators to carry their stations, said a cable lawyer not part of the KTKA proceeding.

"ACA has presented uncontroverted evidence demonstrating that retransmission consent fees would rise at least 22 percent for numerous cable operators” in the Topeka market with retrans contracts up at year’s end, Lieberman said. “Whether or not a matter at issue in this license transfer is being considered by the commission does not alleviate PBC from the burden of demonstrating to the commission that their purchase of KTKA, on balance, will serve the public interest,” he said: That’s “an obligation that PBC has failed to meet.”