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Broadcasters Balk at FCC Retrans Fines

A communications tower in the clouds
(Image credit: John Lund via Getty Images)

No big surprise here, but the broadcasters fined in the Federal Communications Commission‘s first-ever finding of failure to negotiate retransmission consent in good faith want the regulator to cancel the levies, which total more than $10 million.

The FCC last month 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 each. 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.

Those station groups — Deerfield Media, GoCom Media, Howard Stirk Holdings, HSH, Mercury Broadcasting, MPS Media, KMTR Television, Second Generation of Iowa and Waitt Broadcasting — have jointly filed a response to the FCC, saying the agency was off base and the fines should go away. Some of the defendants also filed individually.

Mercury Broadcasting, for example, told the FCC that if it does not cancel the fine, it should reduce Mercury's penalty given that it owns only a single station, and citing “its demonstrated inability to pay and history of past compliance.”

Related: Small TV Stations Locked in Retrans Dispute With DirecTV

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

AT&T filed the complaint in June 2019 against the stations and groups, and the FCC said all of them failed to meet its standard for good-faith negotiations. All the groups were represented by consultant 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 AT&T-owned DirecTV and U-verse TV. The FCC said in granting the complaint that the stations had unreasonably delayed negotiations, including by not responding to AT&T’s 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; 3) and fine them.

Related: AT&T: FCC's Max Retrans Smackdown Should Stand

The FCC 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."

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 upholding one and levying a fine was unprecedented. Such complaints have generally been dismissed for failing to show the negotiations were not in good faith, or dropped after the parties involved reach an agreement and publicly bury the hatchet, at least for the time being.