NCTA: Gray Hasn't Made Case for Hawaii Duopoly

Says keeping two of top four stations requires exceptional circumstances
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Cable operators not looking for a boost in broadcaster retrans leverage, have told the FCC Gray Television has not made a case for being allowed to own two of the top four stations in Honolulu.

Gray is seeking to retain both stations in its deal to buy another high-rated station in the market. Gray in June struck a deal, subject to FCC approval, to buy Raycom for $3.6 billion.

In a broadcast deregulation decision late last year, the FCC loosened its prohibition on owning two of the top four-rated stations in a market, saying it would still presume it was not in the public interest, but that presumption could be rebutted on a case-by-case basis. 

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

For example, Sinclair attempted to make such a showing before its proposed deal to acquire Tribune stations crumbled.

But in comments on the Gray/Raycom deal, NCTA-The Internet & Television Association, NCTA said that simply invoking deal efficiencies like economies of scale and cost savings that could lead to program investments is not enough to overcome the presumption of not being in the public interest.

NCTA said one of the ways the combo would not be in the public interest is that it would raise retrans fees.

Related: Gray TV Reaches Agreement to Renew NBC Affiliations

"The ability to jointly negotiate higher retransmission consent fees and higher advertising rates might also give them more money to spend on programming, but those anticompetitive results are reasons for prohibiting common ownership, not allowing it," said NCTA.

NCTA wants the FCC to make it clear for this and other transactions just how high the bar is for allowing combos that would otherwise be prohibited.

"[T]he case-by-case showings that it authorized when it voted to retain the general prohibition on common ownership of Top-Four stations require applicants to demonstrate that the harms the Commission has recognized that are associated with common ownership are outweighed by unusual benefits or that there are other exceptional circumstances with regard to such common ownership," NCTA told the FCC in reply comments on the deal. "Gray/Raycom has not made such a showing regarding their Honolulu stations."

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