The American Cable Association urged the Federal Communications Commission to prevent Nexstar Broadcasting Group from negotiating pay-TV carriage deals for three of the four Big Four TV stations in Binghamton, N.Y., in an effort to gain undue bargaining leverage over cable operators and push cable rates even higher for consumers.
"There is no legal or policy justification for permitting Nexstar to aggregate such extraordinary market power in a single market," ACA President and CEO Matthew M. Polka said on Nov. 26. "The FCC should not permit legally separate competitors to coordinate their retransmission consent negotiations. Such collusive behavior is blatantly anticompetitive and would result in significant harm to consumers."
Left unchecked, Nexstar's desire to amass vast economic leverage over independent cable providers would result in severe damage from TV signal blackouts as a result of the simultaneous loss of multiple Big Four TV stations, and lead to steep increases in the cost to distribute the key local TV stations in Binghamton. Economic studies demonstrate that the coordination of retransmission consent negotiations raises prices by at least 20%, and in one instance as much as 160%.
If the deal is approved, Nexstar plans to negotiate pay-TV carriage deals - also known as retransmission consent -- for Binghamton's ABC, NBC and FOX affiliates (while formally owning just the ABC station) as well as the market's MyNetworkTV affiliate. Nexstar's ABC station multicasts Binghamton's NBC signal on a digital subchannel.
Nexstar's plan relies on FCC approval of Mission Broadcasting's pending application to acquire Binghamton's FOX and MyNetworkTV affiliates from Stainless Broadcasting. Nexstar has a sharing agreement with Mission that would give it the right to negotiate retransmission consent for Mission's Binghamton TV station properties. Nexstar would thus be in position to negotiate retransmission consent for four of the six national broadcast network affiliates in that upstate New York market.
FCC rules allow ownership of only one of the four highest-rated TV stations in a single market.
"Because Nexstar cannot lawfully acquire Stainless' broadcast stations outright in Binghamton, given the FCC's local television ownership rule, Nexstar and Mission have decided to follow the playbook of an increasing number of station groups by entering into an agreement where one station manages nearly all of the functions of the other, including retransmission consent negotiations. It's a transparent end-run around the rules designed to increase market power," Polka said.
ACA, jointly with Time Warner Cable, filed on Nov. 21 a petition to deny (attached) the Mission-Stainless transaction or, in the alternative, condition approval on a requirement that Mission refrain from coordinating retransmission consent negotiations with any non-commonly owned broadcast affiliates in Binghamton, whether by engaging in joint carriage negotiations or through other means.
ACA and Time Warner Cable urged the FCC's Media Bureau to refer the Mission-Stainless applications to the five FCC Commissioners, rather than reviewing the transaction pursuant to delegated authority, so that the FCC Commissioners may address the novel issues raised in the joint petition.
In the petition, ACA and Time Warner Cable underscored that the reality of market power acquired through control of multiple Big Four stations in a single market is well-known to Nexstar. Specifically, in 2011 when Granite Broadcasting obtained effective control over three Big Four signals in the Fort Wayne, In. through similar sharing and multicasting arrangements (including by obtaining a Fox affiliation that had just been withdrawn from a Nexstar station), Nexstar responded by filing a federal antitrust lawsuit.
"The very same conduct that Nexstar characterized as violating the Sherman Act is now at the heart of its ‘sidecar' arrangement involving the two stations at issue in Mission-Stainless transaction in Binghamton," Polka said.
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