Ten months ago, the owner of DirecTV, AT&T TV NOW and U-Verse scored a FCC Media Bureau victory in a matter that pointed fingers largely at licensees with shared services agreements with Sinclair Broadcast Group.
It was the Bureau’s determination that the licensees failed to negotiate in good faith for consent to carry the signals of these group’s stations. Reconsideration of the decision landed in the hands of the FCC’s five Commissioners. They weren’t swayed by the appeal plea.
As such, the FCC affirmed the Media Bureau finding that 18 stations owned by the broadcast TV station ownership groups with Sinclair ties failed to negotiate for retransmission consent in good faith.
This results in a proposed a forfeiture from the Commission of $512,228 — against each station.
Yes, it is a forfeiture totaling $9,220,104.
AT&T, parent of DirecTV, AT&T TV NOW and U-Verse, in late June 2019 filed the “bad faith” complaint with the FCC against the groups — all with agreements giving Sinclair control of their stations — that collectively “pulled” the licensees’ stations from DirecTV and U-Verse homes on May 30 and June 10, respectively.
The licensees involved are Deerfield Media, GoCom Media of Illinois, Howard Stirk Holdings, Mercury Broadcasting Company, MPS Media, Nashville License Holdings, Nashville License Holdings (Roberts Media), and Second Generation of Iowa/Waitt Broadcasting.
These eight groups, as defined by the Commission, on December 9, 2019 filed an Application for Review of the Media Bureau decision. It sought a reversal of a Memorandum Opinion & Order in which Media Bureau Chief Michelle Carey declared, “We find that Defendants’ violated the per se good faith negotiation standards.”
Much of the complaint contains redacted information, and this was neither revealed by the Media Bureau in the MO&O nor by the Commissioners in the Sept. 15 Order.
Still, Carey in her decision made it clear that the Bureau finds that the licensees’ actions, “including a persistent refusal to negotiate, an unreasonable delay of negotiations, and a failure to respond to AT&T’s proposals, violated each of the per se good faith standards raised in AT&T’s complaint. Because we find three clear violations of the per se negotiating
standards, and because of the pending civil proceeding, we need not address, and decline to reach, the separate question of whether Defendants also committed a violation under the totality of the circumstances standard.”
With the Media Bureau under the belief that the stations remain “blacked out” to AT&T subscribers, Carey said, “Given the violations of the good faith negotiation standards we have found in this case, and the guidance provided herein, we urge the parties to expeditiously go to the bargaining table and commence negotiations ‘in an atmosphere of honesty, purpose and clarity of process.’”
That didn’t happen. Instead, the licensees fought further. And, they’ve now been defeated, with a near-unanimous ruling coming from the Commissioners. “After careful consideration of the underlying record, we deny the AFR, affirming both the Bureau’s reasoning and its conclusions. The Bureau’s factual analysis was sound, and its legal analysis conformed to the guidance of Commission rules and precedent. We reject the Defendants’ claim that the Bureau was ‘misled’ or ‘uncritical.'”
As such, the following forfeitures were spelled out by the Commission:
Deerfield Media: a company based in Park City, Utah, owned by Stephen Mumblow.
- KBTV-4 in Port Arthur, Tex.: $512,228
- WSTR-64 in Cincinnati: $512,228
- WJTC-44 and WPMI-15 in Mobile, Ala.-Pensacola, Fla.: $1,024,456
- WHAM-13 in Rochester, N.Y.: $512,228
- KMYS-35 in Kerrville, Tex., serving San Antonio: $512,228
GoCom Media of Illinois: a company that sees Ric Gorman as CEO.
- WCCU-27 in Champaign-Urbana, WBUI-23 in Decatur, and WRSP-55 in Springfield, Ill.: $1,536,684
Mercury Broadcasting Company: an entity based in San Antonio led by Van Archer III.
- KMTW-36 in Hutchinson, Kan.: $512,228
This station in May 2010 was fined $16,000 for “willful and repeated violation of Section 73.670 of the Commission’s Rules” by failing to comply with the limits on commercial matter in children’s programming.
MPS Media: led by Eugene Brown
- WSWB-38 in Wilkes Barre-Scranton: $512,228
- WFLI-53 in Chattanooga, Tenn: $512,228
- WNBW-9 in Gainesville, Fla.: $512,228
- WTLF-24 in Tallahassee, Fla: $512,228
Nashville License Holdings (d/b/a Tennessee Broadcasting): led by CEO Michael Lambert
- WNAB-58 in Nashville: $512,228
Roberts Media: headed by Clearwater, Fla.-based Larry Roberts
- KMTR-16 in Eugene-Springfield, Ore.: $512,228
Second Generation of Iowa: managed by Thomas J. Embrescia
- KFXA-28 in Cedar Rapids, Iowa: $512,228
Waitt Broadcasting: led by COO John Schuele, from Omaha
- KMEG-14 in Sioux City, Iowa: $512,228
While all five Commissioners approved and concurred with the Media Bureau ruling, embattled Republican Mike O’Rielly — whose future on the FCC now depends on a Joe Biden presidential victory in November — only did so in part.
“Even though it is a novel decision, I agree that the record so far contains sufficient evidence of possible violations to proceed with the notices, and therefore I approve of issuing the NALs,” O’Rielly says. “However, I cannot fully endorse our analysis on the amount of the proposed forfeitures and, therefore, concur with respect to that section of the item.”
Thus, it is the hefty $9 million+ in fines that is O’Rielly’s beef, and perhaps for good reason: COVID-19 pandemic-fueled ad revenue declines at broadcast media have been brutal for many companies, and such forfeitures could present a severe financial blow to the licensees.
“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,” he argues. “While appropriate sanctions are warranted for regulatory shortcomings, I hope the Commission will conduct a more thorough analysis of whether to adjust the proposals downward if this case proceeds.”
For Democratic Commissioner Geoffrey Starks, who will offer an exclusive look inside the agency as part of Hispanic Radio LIVE, begs to differ. “The Media Bureau noted in the underlying order that this was the most egregious example of delay we’ve seen since the good faith negotiation rules were adopted. I therefore fully support proposing the maximum statutory forfeiture for these apparent, per se, violations, given the resulting direct harm to consumers. 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.”
To little surprise, the American Television Alliance (ATVA) today cheered the FCC’s order.
“ATVA applauds the FCC’s recognition of the need for serious reform regarding the retransmission negotiations process,” said 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.”
