ACA: Top-Four Tying Is Retrans 'Good Faith' Violation

Counters NAB pushback on contentious issue
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Small and midsized cable operators say nothing in the National Association of Broadcasters opposition changes their request that the FCC make certain broadcast retrans negotiations de facto violations of its good faith standard.

The American Cable Association told the FCC back in December that broadcasters with a top-four network affiliate should not be able to tie carriage of must-have programming like a regional sports network to that negotiation but instead negotiated each separately.

The FCC is currently considering, under a congressional directive, what, if any, changes to make to the standard for what constitutes good-faith negotiation, including whether bundling might be a violation.

ACA says it is, while the NAB said definitely not in a response to ACA's filing.

In an ex parte letter this week, ACA defended its initial position taking aim at NAB's criticisms, saying they are misleading and no reason to retain the presumption that bundling is consistent with competition.

ACA argues that the tying of a top-four affiliate and an RSN with games of a local sports team, both "must-have" programming in a market, cannot be said to be based on "competitive marketplace considerations," as the FCC found was the case for other forms of tying in its earlier good faith order back in 2000.

For one, said ACA, the higher price for the bundled programming is not based on marketplace competition, but its increased market power based on that tying. The remedy, separate the negotiations and let each stand on its own competitive merits.

As to NAB's economic counter-arguments, ACA—actually both NAB and ACA employ analysis from outside economists—says that NAB's analysis is based on a "serial misreading." It says that an expansive upstream content market does not necessarily mean negotiations for must-have programming are competitive or that a la carte pricing in the downstream market is analogous to negotiations for must-have programming.

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