FCC Defends Axing Coordinated Retrans Among Top Four

Responds to Sinclair challenge to decision
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The FCC is getting a workout in the U.S. Court of Appeals for the D.C. Circuit, including a filing Monday defending its decision to limit coordinated retransmission consent.

Sinclair sued the FCC over its decision to prevent coordinated negotiations by noncommonly owned top four stations in a market, which are usually the Big Four affiliates. Sinclair and the FCC are also squaring off in the court over the FCC's incentive auction, which Sinclair has also challenged.

In a 56-page filing, the FCC tells the court that it has the authority to prohibit joint retrans, and actually took a less restrictive approach than it could have given that it found, and reasonably so, that joint negotiations by separately owned top-four stations violates the duty of the parties, by law, to negotiate retransmission consent in good faith.

The FCC told the court that joint retrans has led to retrans price increases due to a lack of competition. The FCC said that anticompetitive impact was "particularly pernicious when two or more of the four most popular broadcast stations in a market team up to negotiate retransmission consent."

The FCC pointed out that its rule change did not sweep in all stations, just those in that particularly pernicious category.

"The Commission adopted a narrow, targeted rule banning joint negotiation of retransmission consent by separately owned Top Four stations in the same market," the FCC told the court. "The rule focuses solely on joint negotiation of retransmission consent; it does not bar broadcasters from entering into other types of sharing agreements (e.g., an agreement between two stations to sell advertising time jointly or to share a traffic helicopter)."

The FCC says it applied sound economic theory to substantial evidence to come to its decision, and did not misapply antitrust principles or diverge from precedent in doing so.

Sinclair argues the FCC decision was arbitrary and capricious and lacked the authority to take the action it did.

Coordinated retrans was back in the spotlight this week on the news that a new version of satellite reauthorization legislation being introduced in the house would enshrine that coordinated retrans decision in law.

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