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12-10-2009, 01:56 PM
Time Warner Cable Claims Fox Hijacked Retrans Consent Process
FCC filing in Mediacom-Sinclair flap says Fox is controlling affils' negotiations
By Melissa Grego and John Eggerton -- Broadcasting & Cable, 12/9/2009 10:15:26 PM
In the latest twist in the retransmission consent saga, Time Warner Cable claims that Fox "has brazenly sought to hijack the retransmission consent process" by inserting itself into its affiliates' retrans negotiations, in a Dec. 8 FCC filing in support of Mediacom Communication's retrans consent complaint about Sinclair.
The filing comes as TWC, the nation's second-largest cable operator, is in the throes of a negotiation with News Corp. over carriage agreements for Fox-owned stations, cable networks and regional sports networks that expire Dec. 31. Fox is widely understood to be pursuing cash - a dollar per sub, according to a report in the Wall Street Journal -- as part of Time Warner Cable's compensation for Fox's O&Os.
TWC announced Dec. 7 that it had agreed to a one-year extension of its carriage agreement with Sinclair, which has several Fox affiliates among other affiliate stations in TWC markets. That deal also was up at the end of the year. TWC's filing essentially claims their deal with Sinclair was controlled by Fox, in violation of the FCC's good faith bargaining requirement in retrans negotiations. TWC's FCC filing reads, "To the extent that Sinclair has ceded its authority over retransmission consent negotiations to Fox Broadcasting, it more fundamentally has transferred control of its broadcast licenses and violated the Commission's rules."
The filing says Fox has hijacked retrans by "threatening to exercise veto power over any station's negotiation of a retransmission deal that does not extract a satisfactory kickback for the network."
It further says that Sinclair claims distributors must meet price demands or the network in question (Fox) "will use contractual mechanisms to preclude any retransmission agreement."
Time Warner's documents assert that Fox has been engaged in similar ways with other station owners' retrans deals.
Fox declined to comment on TWC's filing and Sinclair could not be reached for comment. A TWC spokeswoman said, "This issue affects all distributors - so customers can switch, but they can't hide. TV program providers demand outrageous price increases from DirecTV, Verizon FiOS, AT&T U-verse and Dish Network as well. DirecTV and Dish Network have had similar fights too, and the newer providers, AT&T U-verse and FiOS will encounter this more and more as they start to renew their agreements." Fox and other broadcast network executives have made clear during recent earnings calls and speaking engagements that they intend to pursue a share of the compensation their affiliates receive in retrans negotiations. News Corp.'s Chase Carey indicated at the UBS Media Conference this week that affiliates should be driving harder bargains in retrans negotiations, saying "They're selling it cheap, that's pretty clear. We believe that what we'll be asking is more than fair."
In a letter to Media Bureau Chief Bill Lake, Mediacom on Wednesday tried to buttress its case claiming Sinclair violates "good faith" retrans bargaining requirements by negotiating retransmission consent for both its owned stations and ones it has local marketing agreements with in the same markets.
Mediacom Counsel Seth Davidson submitted copies of a bunch of letters that had been sent to the commission from members of Congress, state legislators, city officials and one University president over the past five weeks supporting the complaint and Sinclair's interim request for carriage while the complaint is being considered.
"We believe that it is imperative that the FCC use its authority to prevent any interruption in broadcast service during this round of negotiations between the parties," a group of seven congressmen, senators and representatives, wrote to FCC Chairman Julius Genachowski on Nov. 23, according to a copy of one of the letters.
He also complained about procedural objections Sinclair has filed "with respect to virtually every pleading submitted in these matters."
Cable operators argue that stations negotiating for their LMA partners are violating at least the spirit of FCC duopoly rules, and the FCC's retrans rule requiring good faith bargaining, a point echoed in Time Warner's filing. Matt Polka, president of the American Cable Association, of which Mediacom is a member, interviewed last week about the growing retrans debate, said that networks negotiating for stations may violate the FCC rules that stations must exercise independent authority over their operations.
Broadcasters counter that the practice is widespread and that the Justice Department has not found LMA's to be noncompetitive. One veteran broadcast attorney who spoke on background points out that networks handling retrans negotiations for their affiliates is not a new phenomenon. He says Fox, for example, negotiated for affiliates in the first round of negotiations in the early 1990's though in that case the compensation was not cash but carriage of the fledgling FX.
When asked if ACA had any problem with a network negotiating for their affiliates, Polka said: "There is currently a fire dance between networks and affiliates as networks look at the whole retrans marketplace and say, ˜Hey, why aren't we getting our own cut? Particularly that stations have talked about real money for retrans to the tune of five or six dollars a month per sub on the wholesales level when you add up all the stations in a market. Yes, that is a concern as we see the networks trying to hone in on the marketplace as well."
A veteran cable attorney says if the FCC gets involved, "it would react to problems that one or the other side has. The affiliates may not like it. If the affiliates suggest it is usurping their rights, the FCC might not like it for that reason. But the FCC has been pretty slow about getting into network-affiliate relationship problems."
FCC filing in Mediacom-Sinclair flap says Fox is controlling affils' negotiations
By Melissa Grego and John Eggerton -- Broadcasting & Cable, 12/9/2009 10:15:26 PM
In the latest twist in the retransmission consent saga, Time Warner Cable claims that Fox "has brazenly sought to hijack the retransmission consent process" by inserting itself into its affiliates' retrans negotiations, in a Dec. 8 FCC filing in support of Mediacom Communication's retrans consent complaint about Sinclair.
The filing comes as TWC, the nation's second-largest cable operator, is in the throes of a negotiation with News Corp. over carriage agreements for Fox-owned stations, cable networks and regional sports networks that expire Dec. 31. Fox is widely understood to be pursuing cash - a dollar per sub, according to a report in the Wall Street Journal -- as part of Time Warner Cable's compensation for Fox's O&Os.
TWC announced Dec. 7 that it had agreed to a one-year extension of its carriage agreement with Sinclair, which has several Fox affiliates among other affiliate stations in TWC markets. That deal also was up at the end of the year. TWC's filing essentially claims their deal with Sinclair was controlled by Fox, in violation of the FCC's good faith bargaining requirement in retrans negotiations. TWC's FCC filing reads, "To the extent that Sinclair has ceded its authority over retransmission consent negotiations to Fox Broadcasting, it more fundamentally has transferred control of its broadcast licenses and violated the Commission's rules."
The filing says Fox has hijacked retrans by "threatening to exercise veto power over any station's negotiation of a retransmission deal that does not extract a satisfactory kickback for the network."
It further says that Sinclair claims distributors must meet price demands or the network in question (Fox) "will use contractual mechanisms to preclude any retransmission agreement."
Time Warner's documents assert that Fox has been engaged in similar ways with other station owners' retrans deals.
Fox declined to comment on TWC's filing and Sinclair could not be reached for comment. A TWC spokeswoman said, "This issue affects all distributors - so customers can switch, but they can't hide. TV program providers demand outrageous price increases from DirecTV, Verizon FiOS, AT&T U-verse and Dish Network as well. DirecTV and Dish Network have had similar fights too, and the newer providers, AT&T U-verse and FiOS will encounter this more and more as they start to renew their agreements." Fox and other broadcast network executives have made clear during recent earnings calls and speaking engagements that they intend to pursue a share of the compensation their affiliates receive in retrans negotiations. News Corp.'s Chase Carey indicated at the UBS Media Conference this week that affiliates should be driving harder bargains in retrans negotiations, saying "They're selling it cheap, that's pretty clear. We believe that what we'll be asking is more than fair."
In a letter to Media Bureau Chief Bill Lake, Mediacom on Wednesday tried to buttress its case claiming Sinclair violates "good faith" retrans bargaining requirements by negotiating retransmission consent for both its owned stations and ones it has local marketing agreements with in the same markets.
Mediacom Counsel Seth Davidson submitted copies of a bunch of letters that had been sent to the commission from members of Congress, state legislators, city officials and one University president over the past five weeks supporting the complaint and Sinclair's interim request for carriage while the complaint is being considered.
"We believe that it is imperative that the FCC use its authority to prevent any interruption in broadcast service during this round of negotiations between the parties," a group of seven congressmen, senators and representatives, wrote to FCC Chairman Julius Genachowski on Nov. 23, according to a copy of one of the letters.
He also complained about procedural objections Sinclair has filed "with respect to virtually every pleading submitted in these matters."
Cable operators argue that stations negotiating for their LMA partners are violating at least the spirit of FCC duopoly rules, and the FCC's retrans rule requiring good faith bargaining, a point echoed in Time Warner's filing. Matt Polka, president of the American Cable Association, of which Mediacom is a member, interviewed last week about the growing retrans debate, said that networks negotiating for stations may violate the FCC rules that stations must exercise independent authority over their operations.
Broadcasters counter that the practice is widespread and that the Justice Department has not found LMA's to be noncompetitive. One veteran broadcast attorney who spoke on background points out that networks handling retrans negotiations for their affiliates is not a new phenomenon. He says Fox, for example, negotiated for affiliates in the first round of negotiations in the early 1990's though in that case the compensation was not cash but carriage of the fledgling FX.
When asked if ACA had any problem with a network negotiating for their affiliates, Polka said: "There is currently a fire dance between networks and affiliates as networks look at the whole retrans marketplace and say, ˜Hey, why aren't we getting our own cut? Particularly that stations have talked about real money for retrans to the tune of five or six dollars a month per sub on the wholesales level when you add up all the stations in a market. Yes, that is a concern as we see the networks trying to hone in on the marketplace as well."
A veteran cable attorney says if the FCC gets involved, "it would react to problems that one or the other side has. The affiliates may not like it. If the affiliates suggest it is usurping their rights, the FCC might not like it for that reason. But the FCC has been pretty slow about getting into network-affiliate relationship problems."