WASHINGTON—The FCC did not agree with Gray TV that Frontier Communications failed to negotiate in good faith, as well as meet other notification requirements, in the two sides’ recent retransmission dispute.

On Dec. 18, 2020, Frontier removed three Gray TV stations from its systems as the previous transmission consent agreement expired. A few days later on Dec. 22, Gray TV filed a good faith negotiation complaint against Frontier; it also claimed that Frontier violated customer notice requirements regarding service disruptions.

When it comes to good faith negotiations, the FCC specifically looks at whether a negotiating entity refused to negotiate regarding retransmission consent, but failure in itself is not an indicator of failing to negotiate in good faith. Also, a negotiating entity must designate a representative to have the authority to make binding representations on retransmission consent. In addition, proposals that are deemed “sufficiently outrageous” based on circumstances could point to a failure to negotiate in good faith.

In regards to customer notification, the FCC requires cable operators to notify subscribers of changes in service at least 30 days in advance of the change, “unless the change results from circumstances outside of the cable operator’s control,” which can include failed negotiations during the last 30 days of a contract.

Frontier filed a response with the FCC in January, saying that the two sides disagreed over the value of Gray’s stations. It also refuted claims by Gray that it had decided a month prior that it was going to drop the stations, evidenced by the removal of the stations from its channel lineup.

The FCC provided details in its decision that say Frontier and Gray did negotiate prior to the previous retransmission consent agreement expired, exchanging at least eight drafts of the renewal agreement. In regards to the channels being removed from the lineup, Frontier says that it did not remove them until it was clear the an agreement would not be reached, but in its haste to notify customers it failed to update the date on the channel lineup card.

Ultimately, the FCC sided with Frontier.

“[W]e agree with Frontier that it complied with the obligation to negotiate retransmission consent in good faith, including its per se obligation to negotiate retransmission consent, its per obligation to designate a representative with authority to make a binding representations on retransmission consent and compliance with the totality of the circumstances test. We also find that Frontier fulfilled its customer notice obligations,” the FCC said.

The full decision is available online. 

WASHINGTON—The group of broadcasters that were fined by the FCC for failure to negotiate retransmission consent in good faith—the first instance of a fine being levied on that basis—continue to fight the historic charge.

In September, the FCC voted to deny an appeal that eight station groups failed to negotiate in good faith on retransmission consent with AT&T. The fine covered 18 stations in total, with each charged more than $500,000, bringing the total fine to more than $10 million.

Now, the station groups have jointly filed a response to the FCC, claiming that the commission erred in its decision and cannot impose the fines.

The station groups consist of Deerfield Media, GoCom Media, Howard Stirk Holdings, HSH, Mercury Broadcasting, MPS Media, KMTR Television, Second Generation of Iowa and Watt Broadcasting. One of the groups’ main arguments is that AT&T attempted to make the process of joint negotiations with these stations, which they point out is allowed by the FCC, prohibitively difficult and that ultimately led to the crux of AT&T’s arguments for why the groups had failed to negotiate in good faith.

“AT&T has attempted for years to persuade the commission to prohibit joint negotiations, but those efforts have been unsuccessful,” the comments read. “So when defendants sought in 2019 to jointly negotiate renewals of the 2016 agreements, AT&T tried to stymie their efforts.”

For its part, AT&T pointed out in its original complaint that all the stations involved were "managed and controlled by Sinclair Broadcast Group through some type of shared services agreement." In December 2019, the FCC's Media Bureau found that the stations had failed to negotiate in good faith with DirecTV and U-Verse (AT&T). The FCC said in granting the complaint that the stations had unreasonably delayed negotiations, including by not responding to AT&T proposals.

The station groups’ joint comments also address the severity of the fines, saying that the more than $500,000 fine for each station is “grossly excessive” and should instead be reduced to $25,000 per station. In an individual filing, Mercury Broadcasting argued for this reduction since it only owns a single station involved in these negotiations and has “demonstrated inability to pay and history of past compliance.”

The FCC says that it originally fined the stations the $10 million total amount because of the harm that each station going dark had on viewers.

The maximum fines had bipartisan support among the FCC commissioners, with Michael O’Rielly and Geoffrey Starks both voicing their support.

WASHINGTON—The FCC has voted to deny an appeal of its decision that eight station groups failed to negotiate retransmission consent in good faith and has further decided to propose each of the 18 stations at issue over $500,000 apiece. It is the first time the FCC has ever issued a forfeiture order for a failure to negotiate retransmission consent in good faith, as its rules require.

The vote was unanimous, with one partial concurrence by commissioner Michael O'Rielly.

The complaint was filed by AT&T in June 2019 against Deerfield Media, GoCom Media, Howard Stirk Holdings, HSH, Mercury Broadcasting, MPS Media, KMTR Television, Second Generation of Iowa and Waitt Broadcasting, all of which the FCC says failed to meet its standard for good faith negotiation. All the groups were represented by Duane Lammers of Max Retrans. AT&T sued Lammers, though that suit was thrown out.

In December 2019, the FCC's Media Bureau found that the stations had failed to negotiate in good faith with DirecTV and U-Verse (AT&T). The FCC said in granting the complaint that the stations had unreasonably delayed negotiations, including by not responding to AT&T proposals.

AT&T pointed out in its complaint that all the stations involved were "managed and controlled by Sinclair Broadcast Group through some type of shared services agreement." AT&T asked the FCC to 1) find that each station had violated the good faith negotiation requirement, 2) compel the stations still not negotiating in good faith to do so, and fine them.

The FCC this week denied the station challenge and granted the AT&T complaint in full, which included the proposed fines of $512,228 apiece for each station, the "statutory maximum for a single act or failure to act."

"The Bureau made factual findings that Defendants failed to negotiate carriage, unreasonably delayed negotiations and refused to respond to proposals. Upon review of the record, we affirm these findings."

Rather than fine Lammers or the station groups, the FCC said it was appropriate to fine each station, saying " the harm to viewers is multiplied with each station that goes dark, regardless of the number of corporate parents involved in a carriage dispute, underscoring the importance of our focus on individual stations." 

Good faith negotiation complaints are not unusual, but the FCC granting them is. They are generally dismissed for lack of a showing that the negotiations were not in good faith, or dropped after the two sides reach an agreement.

Commissioner O'Rielly only concurred in the amount of the fine, which is short of outright approval, saying: "Even during better days, when our country is not facing the challenges of a global pandemic, imposing the statutory maximum on individual stations by way of a novel, first-time application of the rules could be disproportionately punitive and significantly threaten the operations of these stations."

Commissioner Geoffrey Starks said he fully supported the maximum fine, saying: "Going forward, Negotiating Entities should be on notice that similar instances of apparent failure to negotiate for retransmission in good faith, especially when resulting in blackouts and other harms to consumers, could result in similar proposed penalties."

“ATVA applauds the FCC’s recognition of the need for serious reform regarding the retransmission negotiations process," said the American Television Alliance, which comprises cable and satellite operators and others seeking retrans reform. "We are pleased to see retransmission consent taken seriously in this case,” said ATVA spokesperson Jessica Kendust. “The flagrant abuse and misconduct described in this order are not only typical, but unfortunately, increasingly common by broadcasters during retrans negotiations. Broadcasters’ weaponization of station blackouts during negotiations is costing consumers billions every year. We hope that this decision and these fines totaling more than $9 million represent the first step of a broader reexamination of the broken retransmission consent marketplace.”

"Retrans negotiations are a give-and-take proposition and have been that way for a long time," said Adonis Hoffman, CEO of The Advisory Council and former chief of staff to then FCC commissioners Mignon Clyburn. "The FCC's maximum fine in this instance seems heavy-handed, especially at a time when the media economy is in flux and the rules are not well-established."

WASHINGTON—The final days of STELAR are upon us, as Congress has included provisions into its Fiscal Year 2020 appropriations legislation that will allow for the Satellite Television Extension and Localism Act Reauthorization to expire.

The House on approved the bill on Tuesday. The Senate passed the bill on Thursday night, which means that STELAR will sunset when the new year begins.

The appropriations bill, includes what is labeled as Title X (Television Viewer Protection) and Title XI (Eligibility to Receive Signals Under a Distant-Signal Satellite License). These detail a pair of bills approved by both the House of Representatives and the Senate that will allow for the sunsetting of STELAR at the end of December, while also creating permanent distant-signal satellite license provisions for specific markets. It also would make permanent “good faith” negotiations requirements during retransmission negotiations.

The part of the bill that would create permanent distant-signal licenses covers RVs, truckers, tailgaters and “short markets” that do not have a full complement of local ABC, CBS, NBC and Fox-affiliated TV stations. However, for satellite operators to qualify for the permanent license, the bill requires that they must deliver local TV signals when possible. Dish has already accomplished this, but DirecTV would have to meet the bill’s May 31, 2020 deadline for 12 “unserved” rural TV markets.

NAB President and CEO Gordon Smith commented on the inclusion of these provisions into the appropriations bill:

“NAB strongly supports key pro-consumer provisions in the appropriations bill released today that address the expiring STELAR bill. Under this legislation, AT&T-DirecTV will be encouraged to finally serve all satellite TV subscribers with their local TV stations. The bill also ends the five-year renewal cycle of satellite TV legislation that has incentivized pay-TV companies to deny carriage of broadcast TV stations during retransmission consent negotiations.”

AT&T is one of the opponents of letting STELAR sunset, and made its stance clear in a recent blog post.

It is expected that President Trump will approve the appropriations bill. 

WASHINGTON—Following a year where a record number of TV blackouts occurred due to retransmission disputes, the U.S. House of Representatives have passed the Television Viewer Protection Act, HR 5035, that aims to ensure cable and satellite TV customers have access to broadcast network programming, in part with a mandate for good faith negotiations between broadcasters and MVPDs.

The bill, which was co-sponsored by House Communications Subcommittee Chair Rep. Mike Doyle (D-Pa.) and House Energy & Commerce Committee ranking member Rep. Greg Walden (R-Ore.) in a bipartisan effort, passed on suspension, a procedure that is typically reserved for noncontroversial items.

In addition to making good faith negotiations required—something required in the STELAR Act—TVPA provides consumers with transparency regarding their fees on cable and satellite bills, as well as gives MVPD buying groups the same good faith negotiation requirements.

One thing that this bill is not is a renewal of the STELAR Act, which is currently still set to expire at the end of the year and deals with compulsory digital signal-licenses.

“The Television Viewer Protection Act will benefit millions of Americans who subscribe to cable or satellite TV service,” said Doyle.

TVPA will now make its way to the Senate, where reports are that it will pass, with Doyle reportedly hoping to have the bill in front of President Donald Trump’s before the end of the year.