ACA to FCC: If Gray-Raycom Goes Through, Retrans Fees Will Go Up

But is pleased with Gray assertion it won't trigger after acquired clauses for spin-offs
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Fish gotta swim, birds gotta fly, and retrans fees gotta go up if Gray Television is allowed to buy Raycom.

That was the message from the American Cable Association to the FCC in comments on the proposed merger, though it was pleased with Gray's assertion it would not use station contract clauses to boost the retrans prices for some of the stations involved in the deal.

Gray in June struck a deal, subject to FCC approval, to buy Raycom for $3.6 billion.

ACA is already on the record wanting to make sure that Gray is not allowed to raise the retrans fees of stations before spinning them off to other buyers in its purchase of Raycom's TV stations.

It was concerned with so-called after-acquired clauses in TV station retrans agreements with cable operators. In such agreements, a broadcaster requires that if it buys a station getting lower retrans fees from the cable operator, its higher fees will apply. ACA wanted the FCC to make sure that for the stations that are being spun off to new owners, Gray does not structure the deal so that it briefly owns those stations and trigger the higher fee, which the new owner would then get.

Gray has since indicated to the FCC that it would not trigger any of those clauses, though ACA says the FCC needs to make that an official condition of the merger just in case, and in case it decides to approve it.

On the retrans issue broadly, in reply comments filed Sept. 21, ACA asked the FCC to ignore a couple of Gray's assertions about the deal: "One is Gray's contention it will retain every incentive to avoid imposing blackouts on MVPDs," said ACA. "Even if this dubious assertion were true, the mere fact that Gray could threaten blackouts involving more stations after the transaction would allow it to command higher prices. Another is Gray's contention that retransmission consent issues are more appropriately dealt with in a rulemaking. This conveniently ignores that specific harms caused by this specific transaction."

"Owning more stations in more markets allows a broadcaster to withhold programming from more stations if negotiations fail," says ACA president Matt Polka. "In such circumstances, all other things being equal, retransmission consent prices will rise. ACA urges the FCC to ignore Gray's distractions and keep its eye on the ball."

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