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ACA Stresses Need For Government Probe Of Local TV Price Fixing

With evidence of market failure continuing to pile up, the American Cable Association called on the Federal Communications Commission to probe ACA members' allegations that operational control of two or more Big Four (ABC, CBS, NBC and FOX) stations is driving up the price of retransmission consent and harming consumers forced to pay higher bills as a result of discriminatory conduct by broadcasters with excessive economic power.

The FCC is reviewing retransmission consent policies in response to a petition filed in March by a large, diverse coalition that included ACA, other cable and satellite pay-TV providers as well as public interest groups. The FCC is seeking public comment on the petition before deciding whether to proceed with a rulemaking.

"The broadcasters' responses to our FCC Petition for Rulemaking on retransmission consent reform are as predictable as they are unpersuasive. They have not filed any credible evidence rebutting the concerns of ACA and its members about broadcaster collusion in the retransmission consent market," ACA President and CEO Matthew M. Polka said.

Polka added that the broadcasters' refusals to acknowledge that retransmission consent is fundamentally flawed was a clear signal that "the FCC needs to conduct a serious investigation into the impact of sharing agreements, duopolies, and joint negotiations on pay television providers and their customers, and where better to do so than in a retransmission consent rulemaking and as part of the 2010 quadrennial review of the media ownership rules."

In recent weeks, ACA member companies have made several filings at the FCC documenting the power of TV stations to extract discriminatory fees from small cable operators when at least two Big Four stations in the same local market negotiate retransmission consent agreement in a joint manner.

In a May 28 letter, Cable America Missouri LLC asserted that it pays 161% more on average when two or more Big Four network affiliates in a market are jointly represented than when it bargains with individually controlled Big Four affiliates. USA Companies said it pays 133% more and Pioneer Long Distance said it pays 30% more in similar circumstances.

FCC rules generally ban the common ownership of two Big Four network stations in the same market, but many broadcasters have avoided scrutiny by forging alliances not normally reviewable by the FCC, such as local marketing and shared services agreements.

ACA has identified at least 93 sharing agreements or duopolies in 78 television markets, affecting more than 37% of the 210 DMAs and with the heaviest concentration found in smaller markets served by ACA members.

ACA is urging the FCC to crack down on local broadcasters that have joined forces to negotiate retransmission consent deals in an effort to put more pressure on small cable operators into overpaying for retransmission consent.

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