Sinclair Seeks Retrans Conditions on Comcast/TWC

Says it should not get to play favorites with owned stations
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Sinclair Broadcasting has told the FCC it must either put conditions on the Comcast/Time Warner Cable merger—including retrans conditions—deregulate broadcasters, or deny the deal.

That came in comments to the FCC Monday.

Sinclair argues that the deal would create a company with "unprecedented" horizontal and vertical scale, scale it could use to raise prices, reduce competition, and diminish localism, diversity and consumer choice.

"Simply stated, post-transaction the combined company could have sufficient size and scale to exercise significant leverage over competitors in the programming industry, including local broadcast television, and potentially to drive them out of business or to reduce their ability to compete for quality programming," Sinclair says.

Among the conditions it wants the FCC to impose are a requirement that Comcast provide its broadcast networks—NBC most notable among them—to stations at terms no "less advantageous" that the terms it provides its O&O's. That means NBC could not charge more in reverse compensation to Sinclair than it does its own stations.

Sinclair complains that escalating reverse retransmission fees—networks charging stations for affiliations [also called reverse compensation]—need addressing in the deal. “The impact of these increases on a broadcaster is that it must either increase retransmission consent fees, or, if it fails to do so, then decrease budgets for news and original programming or otherwise reduce investment or costs," says Sinclair. "Reverse retransmission fees could continue to rise, to a level that would make it impractical for broadcasters to invest in and produce new programming, which could affect their future business prospects.”

Sinclair wants a condition capping reverse compensation at 50% of retrans fees in a market.

Sinclair also says Comcast (and TWC) cable systems should provide no less advantageous retrans deals to non-owned stations than to its O&O's.

And given that TWC has a management deal with Bright House and "routinely negotiates" for it, Sinclair says the FCC needs to take that into account when determining whether the new company controls more than 30% of video subs. Comcast is spinning off systems to Charter that would take it under 30%, but Sinclair says the Bright House relationship takes it above that threshold.

"Absent either denial of the transaction or imposition of conditions," says Sinclair, "the communications ecosystem could forever and dramatically change to the detriment of consumers and competition alike."

Sinclair is speaking from experience when it talks about size and market power. It owns 162 TV stations in 78 markets, including 19 NBC affiliates. But it says it is up against a mostly unregulated cable industry that combines "combine program origination, distribution, and consumer access."

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