What Did ACA Tell The FCC On Nexstar Merger?

By on Nov, 28 2016 with Comments 0

On Tuesday, Nov. 22, Ross J. Lieberman — the SVP/Government Affairs at the American Cable Association — had a conversation with a woman named Jessica Almond.

Almond is a legal advisor to FCC Chairman Tom Wheeler, and the conversation most certainly had more to offer than simple Thanksgiving wishes and pleasantries.

According to the ACA, Lieberman and Almond reviewed the cable industry lobbying group’s position on the DOJ-approved merger between Media General and Nexstar Broadcasting, which awaits the Commission’s okay. This won’t come until the FCC’s incentive auction, set this morning to enter Round 41 of Stage 3 of the Reverse Auction, concludes or the commission presents the companies with a waiver.

Approval of the merger is expected, given the DOJ’s approval and widespread consensus that the FCC’s green-light is merely a formality.

That said, the ACA reiterated that, upon the FCC’s approval, the Commission “must adopt a condition limiting the triggering of so-called ‘after-acquired station’ clauses found in Nexstar’s existing retransmission consent agreements.”

This very act, the ACA argues, will be a big money saver for the industry and for consumers.

Should inaction be seen, the clauses “will force dozens of MVPDs and millions of consumers to immediately pay dramatically higher fees and be saddled with other more onerous terms and conditions, totaling at least $24 million in just the first year,” the ACA claims.

Nexstar’s retransmission consent agreements with MVPDs are structured so that if the station group acquires another broadcast station that is already carried by that MVPD, the rates, terms, and, conditions of the MVPD’s agreement with the acquired station will be replaced by the rates, terms, and conditions contained in the MVPD’s agreement with Nexstar.

“These after-acquired station clauses thus permit Nexstar to acquire stations in new markets and replace lower retransmission consent rates and less onerous terms and conditions an MVPD had previously negotiated in good faith with the station’s owner prior to its acquisition with Nexstar’s own much higher rates,” ACA states.

“After-acquired station” clauses of any nature are likely to draw the scorn of the ACA. However, it points to SNL Kagan data that show, on a station/network basis, “Nexstar led all TV station groups with an average retransmission consent rate of $1.67 per sub per month, whereas the total/weighted average of the industry is an estimated $0.88.”

In the ACA’s view, this data also point to “Nexstar’s strong financial interest in getting deals approved as quickly as possible – even reasonable delays mean the loss of additional retransmission consent revenue increases.”

It is not publicly known if the FCC is willing to implement such clauses.

But, with approval in limbo pending the spectrum auction’s finality and Republican control set to reshape the Commission, any decision could be held until after Wheeler exits and yields FCC control to his successor.

That could hit the “reset” button on the clauses, with a decision anyone’s guess.

About The Author: Adam R Jacobson is a veteran radio industry journalist and advertising industry analyst with general, multicultural and Hispanic market expertise. From 1996 to 2006 he served as an editor at Radio & Records.

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