As the Commission begins its comprehensive assessment of the efficacy of its media ownership rules to achieve the core policy goals of competition, diversity and localism, it must take into account the impact of retransmission consent negotiations on local markets. The right to negotiate retransmission consent for local station signal carriage is not only a fundamental incident of local broadcast station ownership, but a rapidly increasing revenue source for station owners, particularly the top 4 stations in a market, which are typically local affiliates of the four national broadcast (“Big 4”) networks. Local broadcast station signals compete amongst themselves based on the quality and quantity of their programming to attract viewers, which in turn allows the stations to secure higher retransmission consent fees from multichannel video programming distributors (“MVPDs”). As such, any reduction in the level of competition in a local retransmission consent market through combined ownership or control of multiple broadcast stations would be harmful to the overall policy objectives of the Commission’s local television ownership rules.
Increasingly, either through the acquisition of a second television station in a local market, or other arrangements, broadcasters are jointly negotiating retransmission consent on behalf of other stations in the same market. These arrangements are often contained in sharing agreements, such as Shared Services Agreements (“SSAs”) and Local Marketing Agreements (“LMAs”). The level of local competition is particularly affected when these acquisitions and arrangements to jointly negotiate involve the top 4 stations in a market because these stations typically elect retransmission consent rather than must carry.
Available evidence further suggests that when one broadcast station negotiates retransmission consent on behalf of another station in the same market, the amount of leverage that local broadcast television stations exercise in carriage talks with cable operators and other multichannel video programming distributors increases, leading to higher fees for signal carriage. These retransmission consent fee hikes are passed along to consumers in the form of higher cable rates, which affects the affordability of accessing this programming for some consumers.
The Commission must evaluate the effects of local station consolidation on negotiations for retransmission consent when considering whether to retain, modify or eliminate its local television station ownership limits. ACA urges the Commission to refrain from further relaxation of its local television station ownership limits, particularly among the top four rated stations in markets with at least eight independently owned and operating stations, and to consider tightening the showing required to grant a waiver of these rules. Most importantly, the Commission should consider prohibiting the transfer of retransmission consent rights through sharing arrangements and other means so as to preclude joint negotiation of retransmission consent rights.