By: David Oxenford, Wilkinson Barker Knauer LLP
With the October 1 deadline coming up for retransmission consent/must carry elections, and the likely commencement of many retransmission consent negotiations throughout the country, the FCC last week issued a decision that emphasizes the importance of “good faith” retransmission consent negotiations. In this action, the full Commission denied an Application for Review that sought to reverse the Media Bureau’s ruling that eighteen stations had failed to negotiate in good faith with an MVPD for retransmission consent. The Commission’s decision also included a Notice of Apparent Liability announcing that each station faces a $512,228 penalty for these violations of the requirements for good faith negotiation.
In May, we wrote about the earlier stages of this case where another licensee agreed to a consent decree based on essentially the same allegations addressed in last week’s decision. The consent decree was based on violations described in a decision of the FCC’s Media Bureau released last November (here) finding that 18 television station licensees, operating stations in separate markets, had failed to negotiate retransmission consent in good faith. Given the size of the proposed fines on the stations named in last week’s Notices of Apparent Liability, it is worth reviewing the basis of this decision. Even though many of the details are redacted to protect proprietary information, the basis for the decision can still be gleaned from this series of decisions.
The Commission upheld the decision of the Media Bureau which found that all of the named companies had used a single negotiating agent who the Bureau found failed to comply with three of the Commission’s nine “per se” good faith negotiating standards set out in Section 76.65(b)(1) of the Commission’s rules. Specifically, the Bureau found that the stations had not operated in good faith based on these perceived violations: (1) refusal to negotiate retransmission consent agreements; (2) refusal to meet and negotiate retransmission consent at reasonable times and locations, or acting in a manner that unreasonably delays retransmission consent negotiations; and (3) failure to respond to a retransmission consent proposal of the other party, including the reasons for the rejection of any such proposal.
In reaching this conclusion, the Bureau pointed to instances where the negotiating agent did not respond to offers for the carriage of single stations in the negotiating group, did not put forward proposals for the carriage of such stations and was slow in responding to proposals put forth by the MVPD and did not respond in detail to those proposals or make meaningful counterproposals. The Bureau, at the time, ordered the stations to negotiate in good faith and reserved questions of liability, indicating that those could be taken up in the future. That reservation of a decision on the question of liability is the basis for the Notices of Apparent Liability released last week.
Takeaways for TV stations? While the FCC will not get into the substance of retransmission consent negotiations (for example, it will not question the economics proposed by either side – see this article from over a dozen years ago where the FCC made that clear), it does require that the parties seriously negotiate over the terms of such carriage. Parties cannot simply say no and not advance proposals as to what they would accept to resolve the negotiations. Parties cannot unilaterally cut off negotiations. And the obligation is one that is unique to each station – so unrelated stations cannot join together and refuse to even consider deals offered for any particular station. This decision shows that there are real teeth in these regulations – and substantial penalties may follow for violation of the Commission’s standards.
David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access).
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