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ACA Praises FCC Chairman Wheeler On His Plan To Stop TV Station Retransmission Consent Collusion

ACA Urges The Other FCC Commissioners To Address Key Problem In Badly Broken Retrans Market

PITTSBURGH, March 6, 2014 - The American Cable Association commended Federal Communications Commission Chairman Tom Wheeler for circulating an order that takes a decisive stand against collusive retransmission consent negotiations by separately owned TV stations and calls upon the full Commission to adopt the proposals so that multichannel video programming distributors (MVPDs), including independent cable operators, are spared from this practice in upcoming negotiations.

"FCC Chairman Wheeler deserves high praise for addressing the broken retransmission consent market and moving to correct one of its most serious flaws - the collusion practiced by dozens of TV stations owners, who are supposed to be competing with one another.  Adoption of Chairman Wheeler's proposed order would represent a victory not only for fair competition, but also for millions of consumers who are being victimized by TV station conglomerates, which have the perverse idea that collusion is somehow consistent with their legal charter to bargain in good faith," ACA President and CEO Matthew M. Polka said.

In government filings, economic reports, and statements, the independent cable community spent nearly four years drawing attention to the widespread and increasing practice of TV station collusion, a scheme designed to drive up the fees paid by cable TV providers for retransmission consent rights and in the process, injure millions of consumers served by ACA Member companies and others.

These concerns were recently buttressed by the U.S. Department of Justice in a filing with the FCC in which the anti-trust agency gave its expert opinion that the joint sale of retransmission consent would be per se illegal unless it's reasonably necessary for some other efficiency-enhancing combination of the stations' operations.  In the same filing, the DOJ doubted such efficiencies could ever possibly exist.

Concern about broadcaster collusion includes not only the FCC Chairman, a Democrat, but also Republican leaders of the House Communications and Technology Subcommittee of the Energy & Commerce Committee. These leaders are moving forward with legislation that would crack down on coordinated retransmission consent negotiations as part of the reauthorization the Satellite Television Extension and Localism Act of 2010 (STELA), which is considered "must pass" legislation in 2014.

For more than a decade, ACA has been at the forefront of the effort to reform retransmission consent, but the broadcasters' response was always the same:  "Hell, no!"  And past FCC Chairmen have shunned the issue.

"But Chairman Wheeler has boldly decided to address immediately one of broadcasters' most blatant assaults on communications and competition law.  We are pleased the FCC will leave the retransmission consent rulemaking open to consider other necessary reforms at a later date." Polka said.

ACA urges the other FCC Commissioners, both Democrats and Republicans, to vote for Chairman Wheeler's proposed order, and elucidate for broadcasters that coordinating retransmission consent negotiations is inconsistent with competitive marketplace considerations.

ACA believes that today's action is long overdue.  Small cable operators and their customers have been suffering at the hands of broadcast station groups like Sinclair and Nexstar, who have been so flagrantly evading FCC duopoly ownership restrictions, often through so-called sidecar deals.

"Today, the FCC is standing up for competition and consumers and saying to broadcasting's bad actors, ‘No more,'" Polka said.

FCC action in support of the proposed order will vindicate those cable operators that spoke out, notwithstanding the real possibility of broadcaster retribution at the next retransmission consent negotiation cycle.  In a February 2013 letter to the FCC, more than two dozen executives from ACA member companies called on the agency to take action against colluding broadcasters, stressing that these TV stations were engaging in anti-competitive coordination designed to extract excessive retransmission consent compensation from cable TV providers as compared to other broadcasters that negotiated individually.

The letter explained that in dozens of second- and third-tier markets around the country, separately owned, same-market Big 4 TV stations coordinated their retransmission consent negotiations by relying on a single representative or a third party retained by both stations to present a united front at the bargaining table with ACA Members.

In 2010, ACA began to document the scope of the harm.  In a 2012 survey of ACA Members, ACA found 48 instances in 43 different markets of Big 4 broadcasters coordinating their retransmission consent negotiations.  However, the number of instances has grown since that time.  Available evidence also demonstrated anti-competitive moves drove up the cost of retransmission consent by at least 18% above what each station would have received on its own.

By engaging in collusion, TV stations - especially the affiliates the ABC, CBS, NBC, and FOX networks - attain increased financial leverage over independent cable operators by doubling the impact of local market signal blackouts, which TV stations typically time to occur before big sporting games, like the NFL playoffs, or major cultural events, like the Oscars, to stoke subscribers' alienation from their cable TV provider.

About the American Cable Association

Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 850 smaller and medium-sized, independent cable companies who provide broadband services for more than 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 http://www.americancable.org/

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