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American Cable Association: FCC Must Stop Sinclair's TV Station Collusion

The American Cable Association called on the Federal Communications Commission to block Sinclair Television Group, Inc. from creating so-called virtual TV duopolies in two Florida markets where they plan on coordinating their retransmission consent negotiations as part of the broadcaster's transaction to acquire eight TV stations in all from New Age Media.

"Sinclair bears the burden of proving this deal will yield public interest benefits in both the Tallahassee and Gainesville television markets.  It obviously can't do so because Sinclair plans to rely on shell companies to take effective control of two Big Four stations in each market and coordinate their retransmission consent negotiations," ACA President and CEO Matthew M. Polka said. "Failure to restrain Sinclair's plans to collude in the sale of retransmission consent will hammer consumers with more disruptive TV station blackouts and even higher retransmission consent fees in their cable bills."

In September, Sinclair announced the station sales with Wilkes Barre, Pa.-based New Age Media.  As part of the deal, Sinclair will own the NBC station in Tallahassee and the CBS station in Gainesville while selling its FOX affiliate in Tallahassee and its NBC affiliate in Gainesville to a firm called Cunningham Broadcasting Corp., a so-called sidecar company with which Sinclair has close and established ties. Tallahassee's Designated Market Area (DMA) includes the Thomasville, Ga. market.

To protect competition and consumers, the FCC's duopoly rules prohibit common ownership of more than one of the mostly highly rated TV stations in a local market.

Under the coordination agreements with Cunningham filed with the FCC, Sinclair will be establishing "virtual duopolies" in Tallahassee and Gainesville, consistent with the corporate shell games Sinclair has played with Cunningham and its other sidecars partners in prior transactions.  Most importantly, the coordination agreements (also known as Joint Sales Agreements (JSAs) and Shared Services Agreements (SSAs) that are part of the application allow Sinclair to negotiate retransmission consent for both the NBC and FOX stations in Tallahassee and both the CBS and NBC stations in Gainesville.  The JSAs plainly state that Cunningham must "consult and cooperate" with Sinclair in the negotiation of retransmission consent agreements, and may even direct Sinclair to act as its agent in such negotiations.

The coordination of retransmission consent negotiations of two top-four rated Big Four network affiliates in the same market will serve to eliminate the competition that now exists between these stations for retransmission consent fees from Multichannel Video Programming Distributors (MVPDs), leading to higher prices for retransmission consent and higher rates for consumers. In both of these markets, the proposed transaction would increase the disruption caused by actual blackouts because Sinclair will be able to pull two highly rated stations at the same time.

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