MVPDs’ Retrans Quest Finds Next Exhibit, But Quick FCC Action May Not Occur

The suit shines a light on the industrywide practice of TV stations striking deals with other outlets in the same market to jointly negotiate retrans with MVPDs, agreed communications lawyers who represent broadcasters and cable operators. Nexstar’s decision to respond at the commission to an American Cable Association news release might not have been the best idea, some said. The filing gave MVPDs a way to also file in docket 10-71 on retrans. ACA (CD Aug 4 p12) and now Time Warner Cable have done so. The American TV Alliance, whose members include most major cable, DBS and telco-TV providers, raised similar concerns.

The suit doesn’t talk about retrans, only the effect on Nexstar of Granite snagging as of Aug. 1 a Fox affiliation the plaintiff lost in the Fort Wayne, Ind., market. It says NBC and MyNetworkTV affiliate WISE, now airing Fox on a multicast channel, is owned by Granite. It has a pact to strike retrans deals with the owner of ABC affiliate WPTA, which also carries CW programming, the suit said. That leaves CBS affiliate WANE the lone outlet of any national network in the market, not part of a retrans negotiating pact. “Granite has achieved the power to raise the price of vital local advertising,” Nexstar said in the July 25 suit in U.S. District Court in Fort Wayne. That violates the Clayton and Sherman Acts and Indiana antitrust law, it said. Nexstar gave the FCC a copy (http://xrl.us/bk44qv). Nexstar said the FCC should reject the ACA’s request to consider the suit as part of retrans, a notion the association rejected. Executives of Granite and Nexstar had no comment.

The commission doesn’t seem poised to act any more quickly on retrans because of the suit, said lawyers who've represent both sides on the issue. But they said the suit was poorly timed from a broadcaster perspective because it coincides with the retrans proceeding, and raises the issue of multiple stations in a market acting in concert, something ACA and MVPDs want the FCC to bar in the context of retrans talks. The bureau doesn’t seem poised to wrap up its work on retrans soon, said commission and industry officials. A bureau spokeswoman declined to comment.

Granite “has retrans muscle on steroids” in Fort Wayne through controlling affiliates of five of six national networks, said an ATA spokesman. “Viewers in Fort Wayne could face a nearly total network blackout if Granite pulls the plug as a negotiating tactic. This is one of the best examples yet of why the FCC and Congress must reform outdated retrans rules to protect consumers.” Time Warner Cable noted Nexstar has defended joint retrans talks. “But when confronted with a massive aggregation of broadcaster market power that harms its own ability to compete, Nexstar now joins with a broad chorus of stakeholders in arguing that such arrangements are anticompetitive, harmful to consumers, and unlawful,” the cable operator said in an FCC filing Wednesday. It’s a member of ATA, as is ACA.

ACA’s point is to show that the economic case against the type of agreements among broadcasters in the same market that Nexstar alleges hurt its ad sales also hurts MVPDs on retrans, Vice President Ross Lieberman said. “It seems ill-advised to file a suit claiming the harms that they're claiming at the same time MVPDs like ACA are arguing for a prohibition on joint retransmission consent negotiations and the matter is before the commission,” he added. Nexstar’s suit “points out to the commission the problems of duopolies and triopolies and the harms that they cause to consumers,” he said.

Nexstar might have been well advised not to have filed the suit, if it didn’t want to add fuel to the retrans debate for MVPDs, said broadcast lawyers. The company’s FCC filing “opened the door for ACA and Time Warner Cable to file” in the retrans docket, said a longtime industry lawyer: But “I don’t think this will get the FCC to act more quickly than it would have in any case."

"I always say to broadcast clients: We live in glass houses. We shouldn’t throw stones against other broadcasters,” said another veteran industry lawyer: But “if you have enough confidence that what you're doing is legal -- and of course it’s legal and the FCC has said time and time it’s legal -- there’s nothing wrong with going after” a rival on antitrust grounds if that competitor may be acting illegally. Nexstar shares services with broadcasters in other markets, just not to the same extent it alleges Granite does in Fort Wayne, the lawyer noted.

ACA might have more success at the FCC on the Granite issue than it had with opposing the sale of KTKA Topeka, Kan., approved by the bureau last month, said a communications lawyer who has represented cable operators on retrans. “If the commission is going to change a policy ... the way it ought to be done is through regulation, and not a condition attached to a single transaction,” said Garvey Schubert’s Bruce Beckner. “That the commission declined to do that with respect to a particular transaction doesn’t necessarily seem inconsistent with the idea that they might do something similar in a rulemaking with general applicability.”