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ACA Seeks Retransmission Consent Condition On TV Sale In Topeka, Kansas

In an effort to stem media consolidation from forcing television viewers to pay outrageous retransmission consent fees, the American Cable Association is urging the Federal Communications Commission to condition or block the sale of the ABC affiliate in Topeka, Kansas, to a company with a track record of creating local market TV station duopolies for the purpose of gaining undue bargaining leverage over cable and satellite TV operators.

"If this very troubling transaction is allowed to go through unchanged, Topeka's pay television viewers will suffer irreparable economic harm either by paying higher subscription rates or losing total access to as many as three of Topeka's Big Four stations at the same time," ACA President and CEO Matthew M. Polka said.

In a March 16 filing, ACA called on the FCC, the reviewing body, either to block the TV station sale or adopt a narrowly-tailored, transaction-specific condition that would prevent the newly acquired ABC station from jointly bargaining retransmission consent with another major TV station in the Topeka designated market area (DMA). The FCC will typically approve a transaction after imposing, where necessary, conditions designed to eliminate a deal's public interest harms.

"ACA is drawing the line in the Topeka market because based on empirical data from many local TV markets, we know that TV stations that jointly negotiate retransmission consent deals (especially the affiliates of ABC, CBS, NBC, and FOX) charge pay television providers higher fees than stations that bargain on their own," Polka added. "Consumers in Topeka will be injured by this deal. If the limited condition sought by ACA proves unacceptable to the applicants, then the FCC shouldn't think twice about designating the TV station license transfer for hearing."

At issue is the sale of ABC affiliate KTKA-TV, Topeka's ABC affiliate owned by Free State Communications, to PBC Broadcasting. Topeka's NBC affiliate and FOX affiliate (which is a Class A licensee of the FCC) are owned by New Vision Television, which has created virtual duopolies pursuant to shared services agreements (SSAs) with PBC Broadcasting in Youngstown, Ohio, and Savannah, Georgia.

In addition to forming these agreements, these PBC-New Vision stations also jointly negotiate retransmission consent. Following completion of the KTKA transaction, ACA is confident that PBC and New Vision intend to create a virtual triopoly in Topeka and coordinate their retransmission consent negotiations, potentially leaving just the CBS affiliate as the only Big Four station that will negotiate retransmission consent as a separate actor.

Free State Communications and PBC Broadcasting bear the legal burden of showing the FCC that the TV station transfer will serve the public interest in the nation's 137th largest television market with nearly 180,000 television homes. A total of 13 cable operators serve the Topeka market in addition to two satellite TV providers. Meanwhile, ACA has 10 member companies serving about 30,000 households in the 17-county Topeka DMA. Five small cable providers operating in the Topeka DMA filed declarations with the FCC in support of ACA's petition. All five operators have a retransmission consent agreement with KTKA that expires on Dec. 31, 2011.

ACA has been flagging the nexus between media consolidation and rising retransmission consent fees for many years, calling on regulators to examine the price-gouging efforts of TV station duopolists that rely on LMAs and SSAs to evade the FCC's local TV station ownership caps.

ACA cited evidence provided by cable operator Suddenlink Communications showing that these broadcaster negotiating alliances drive up the cost of retransmission consent by about 21%. In 2010, ACA members CableAmerica, USA Companies and Pioneer Telephone Cooperative also documented in FCC filings that TV station duopolies charge 30%, 133% and 161% more for retransmission consent, respectively, than TV stations they bargain with on a one-on-one basis.

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