RETRANS WARS

ACA Asks FCC To Block Sale of KTKA Topeka

The cable trade group alleges that the ABC-NBC-Fox triopoly resulting from the sale would give New Vision Television undue bargaining power in its retrans negotiations with cable and satellite operators and ultimately drive up cable rates for consumers.

Ramping up its campaign against retransmission consent, the American Cable Association today asked the FCC to block or condition the sale of KTKA Topeka, Kan., alleging that the likely duopoly that will result from the sale will give the duopoly operator undue bargaining leverage in retrans negotiation with cable and satellite operators.

“If this very troubling transaction is allowed to go through unchanged, Topeka’s pay television viewers will suffer irreparable economic harm either by paying higher subscription rates or losing total access to as many as three of Topeka’s Big Four stations at the same time,” ACA CEO Matt Polka said in a statement.

ACA called on the FCC either to block the sale or adopt a transaction-specific condition that would prevent the station from jointly bargaining retransmission consent with another major TV station in the Topeka.

“ACA is drawing the line in the Topeka market because based on empirical data from many local TV markets, we know that TV stations that jointly negotiate retransmission consent deals, especially the affiliates of ABC, CBS, NBC, and Fox, charge pay television providers higher fees than stations that bargain on their own,” Polka said.

At issue is PBC Broadcasting’s proposed acquisition of ABC affiliate KTKA from Free State Communications for a reported $1.5 million.

PBC, owned by Todd Parkin, is expected to turn over operation of the station to New Vision Television, which owns the NBC affiliate (KSNT) and low-power Fox affiliate in Topeka, forming a virtual triopoly in the market. PBC is New Vision’s duopoly partner is two other markets: Youngstown, Ohio, and Savannah, Ga.

BRAND CONNECTIONS

ACA has been arguning that there is a nexus between media consolidation and rising retransmission consent fees for many years, calling on regulators to examine effects of duopolies that rely on LMAs and SSAs to circumvent the FCC’s local TV station ownership caps.

ACA cited evidence provided by cable operator Suddenlink Communications showing that these broadcaster negotiating alliances drive up the cost of retransmission consent by about 21%. 

In 2010, ACA members CableAmerica, USA Companies and Pioneer Telephone Cooperative also documented in FCC filings that TV station duopolies charge 30%, 133% and 161% more for retransmission consent, respectively, than TV stations they bargain with on a one-on-one basis.


Comments (14)

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Jennifer C. Kerr says:

March 17, 2011 at 11:37 am

The ACA is afraid that these stations might be able to get what they are actually worth from the cable companies, instead of the deflated value that they have historically wanted to pay.

Sandy Hinkle says:

March 17, 2011 at 1:23 pm

Actually, no. ACA members and their customers want to pay just what the FREE market rate for retransmission consent would be, if it ever WAS a free market, which it is not.

    Jeff Baenen says:

    March 17, 2011 at 2:34 pm

    “Free market rate” sounds like an oxymoron. There’s “free” and then there’s a “market rate.” What people usually mean by the term “free market” is free of and unfettered by government intervention — which is ironically what ACA is calling for here. This kind of mewling is getting tedious…

Clayton Mowry says:

March 17, 2011 at 2:13 pm

Actually, cable needs to stop “whining” ! Cable TV is a $38 billion industry with 40+ margins. How many customers would cancel cable tomorrow if they lost the local news and local network affiliates? Many more than cable could withstand. Yet when local stations ask for a fraction of what customers pay for channels with a national HH rating of .0001% cable runs to the FCC and Congress and screams “no fair”. When you get home tonight, check your cable bill and divide the TV delivery portion by the number of channels you actually watch, then count how many are local affiliates. Stop griping, cable guys, you built a behemoth industry on the back of free-over-the-air TV and now that you guys would to make every big TV event a paid program, you are whining about free markets….? Give me a break! Where are the lawmakers on the soaring cable bills you stick people with every month, including channels people don’t ask for that they are forced to buy?

Don Thompson says:

March 17, 2011 at 2:24 pm

Cable isn’t popular because of broadcasting; broadcasting is popular because of cable.

    Jeff Baenen says:

    March 17, 2011 at 2:31 pm

    Huh?

    Kathryn Miller says:

    March 17, 2011 at 3:45 pm

    broadcasting was popular before cable was thought of, and there has been no real change in consumer perception about broadcast programming in decades. Compared to consumer perceptions of cable tv, this situation is highly stable.

Kathy Mohn says:

March 17, 2011 at 2:40 pm

Let me get this straight, the”broadcaster negotiating alliances drive up the cost of retransmission consent”. How come there is no vehement objection to the cable negotiating alliances? Why is it acceptable for Viacom, Universal, Disney, Rainbow, Fox and others to negotiate their many channels collectively? The law the U. S. Congress passed in 1992 was designed to level the playing field. The fact is the playing field is level – Mr. Polka yearns for the good old days when cable companies could resell another companies work and not have to pay a dime for it!

Media consolidation is no different than any other business that needs/wants to reduce costs in the face of rising competition. More importlantly, such consolidations are legal in the eyes of the F.C.C.

My advice to Mr. Polka is stop the whining! The Retran rules have been in place for nearly 20 years. Let’s all negotiate in good faith and go back to business of serving our customers (viewers & advertisers) in our communities…

Sandy Hinkle says:

March 17, 2011 at 2:58 pm

“Free market” means a market where negotiations can occur WITHOUT government intervention — like through the retrans rules, must-carry, network non-duplication, syndicated exclusivity, broadcast basic requirements, etc. Nothing like that exists today, although the broadcasters who benefit from the government-created retrans market monopoly like to call the market “free and local” so you can divert attention from holding onto your gravy train. And ReTranMan, the fact is that we DO think the “cable negotiating alliances” are just as bad as the “broadcast negotiating alliances.” Maybe you didn’t see us last year fighting against Comcast-NBCU, or in the past, Fox-DirecTV, Liberty-DirecTV, CBS-Viacom, Cap Cities-ABC, ABC-Disney, Time Warner-AOL, Comcast-AT&T and Time Warner-Adelphia-Comcast, just to name a few. Finally, to your comment about “let’s all negotiate in good faith…” It’s a lot easier for you and your broadcast bretheren to say that when you can wield your government-created monopoly and prevent our members from getting a lower-priced signal from somewhere else. You guys slay me. You all whine about protecting your “free and local market,” but the first time there’s any hint of competition in the market, like what Time Warner did recently with Fox and the out-of-market stations in the northeast, you go crying off to Congress to protect your “free markets.” You want there to be negotiations in good faith? Then let’s do away with all of the advantages you were given by Washington and see what a REAL negotiation would look like.

    Kathryn Miller says:

    March 17, 2011 at 3:47 pm

    drop cable copyright fees voluntarily (in otherwords, enter the free marketplace for video) and then somebody will read what you posted above. Speaking of a free market.

    Jeff Baenen says:

    March 17, 2011 at 6:05 pm

    Wow, SmlCbleGuy, more mangled definitions. Know what a “monopoly” is? Here’s an example: What a cable operator had in a given market before the advent of DBS and telco TV. Thanks to antiquated FCC rules any TV station owner in any market must have at minimum 7 unaffiliated competing TV station owners (the so-called “8 Voice Test”). By definition, this is far from a monopoly — it’s not even an oligopoly. All the 1992 Cable Act mandates (other than must-carry, and believe it or not plenty of broadcasters would probably be happy to see that scrapped) is that distributors pay for local TV content the same way they pay for national TV content. Got a problem with that? When was the last time you gave away your product for free…?

Manuel Morales says:

March 17, 2011 at 6:14 pm

Interesting stuff. The ACA’s retained Law Firm calls the seller in this matter a major client.

Clayton Mowry says:

March 18, 2011 at 3:50 pm

The Seller in this matter happens to be a small cable operator (in other states) and a member of ACA, now that is ironic…….

Sandy Hinkle says:

March 20, 2011 at 10:46 pm

Not true commonsenseTV, at all. And GuyFawkes, do you deny that broadcasters are given by federal regulation an exclusive right in the DMA to prevent an ACA cable operator member from obtaining access to network programming from any station other than the in-market station? And, Guy Fawkes, the 1992 Cable Act does not mandate that cable operators pay local TV stations the same way they pay for national TV content. Doesn’t even say who should pay whom. What about all of the cable subscribers that would NEVER see a weak broadcast signal without carriage by cable? Fact is, broadcasters should pay cable for giving them more viewers than they would ever have on their own. But that fact is never factored into the negotiation for retransmission consent. Why? Because broadcasters use their government-granted exclusive, monopoly market to charge consumers “take it or leave it” retrans rates. Fact is, without retrans, you wouldn’t have a business because of cable’s increasing ratings and advertising gains year after year. And now you’re just trying to hold onto the government gravy train. Now you want the federal government to mandate that sports be carried on broadcast TV. Why? Because broadcast television is losing marketshare right and left everyday. Why should consumers have to pay you for something they’d rather buy elsewhere through cable. The NCAA tournament this weekend, which was split among several cable channels, was the highest rated first round since 1991. Let’s face it. If it weren’t for all of the government-granted perks the broadcast industry gets, you guys wouldn’t get paid by cable, satellite or telcotv customers at all.


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