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ACA Urges FCC Review Of TV Station Duopolies

The American Cable Association is urging the Federal Communications Commission to examine as part of a pending review of retransmission consent rules the anti-competitive impact of retransmission consent price increases resulting from joint negotiations involving separately owned multiple "Big 4" (ABC, NBC, CBS, and FOX) broadcast affiliates in a single market.

In recent meetings with FCC officials, ACA also stressed the need to review retransmission consent price increases resulting from price discrimination practiced by cable and broadcast programming vendors in their dealings with small pay-TV providers.

"ACA maintains that all available evidence strongly suggests that joint control or ownership of multiple Big 4 affiliates in a single market results in significantly higher retransmission consent fees. As the FCC itself has found, consumers ultimately foot the bill in the form of higher cable rates," ACA President and CEO Matthew M. Polka said.

ACA officials held meetings with FCC staff on Feb. 15, Feb. 17-18, and Feb. 22, just days ahead of the agency's announced plan to consider a Notice of Proposed Rulemaking (NPRM) on retransmission consent at its March 3 public meeting.

The NPRM is viewed as the agency's response to wide-ranging concerns over TV stations' aggressive bargaining tactics, such as staging signals blackouts in millions of cable homes either just before or during marquee awards shows and professional sports games and championships.

ACA believes that the FCC needs to limit the unfair advantage that Big 4 network affiliates exert in jointly negotiating retransmission of TV programming on cable systems. Broadcasters have entered into price fixing agreements to gain bargaining leverage, forcing small cable operators to pay higher retransmission consent fees than they would if they had negotiated with each station separately.

In the FCC filing, ACA documented the scope of broadcasters' effort to combine Big Four stations in markets around the country. The trade group identified at least 93 instances of sharing agreements or duopolies in 78 television markets, affecting more than 37 percent of markets.

ACA cited a 2009 study by Suddenlink Communications that found joint negotiating hiked retransmission consent fees by 22 percent.

In a Feb. 16 filing at the FCC, ACA also stated that publicly available information, together with the experience of ACA members, suggests that smaller MVPDs pay nearly twice as much as larger MVPDs simply because they serve fewer subscribers.

ACA stressed that there is no underlying cost basis that would justify small cable operators' paying nearly double what larger cable companies do for retransmission consent.

"The upshot is that different groups of viewers are being charged different prices to view the same programming," Polka said. "Broadcasters are able to extract substantially higher fees from smaller distributors simply because they lack the ability to withstand such increases."

ACA is urging the FCC to solicit comment on carriage fee increases resulting from joint negotiations involving multiple Big 4 broadcast affiliates in a single market and price discrimination against smaller pay-TV distributors.  ACA also asked the agency to seek data from pay-TV providers and broadcasters to analyze these issues.

Under federal law, TV stations and cable operators are required to bargain for retransmission consent in good faith. The FCC's NPRM is expected to solicit comment on what changes to Commission's retransmission consent rules, particularly the good faith rules, would make the marketplace work better.

ACA suggested in the meetings with FCC staff that the agency should consider redefining the good faith negotiation standard to prohibit separately owned Big 4 broadcast stations in the same local market from jointly negotiating retransmission consent fees.

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