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Nevada Broadcasters Association

The requirement that television broadcasters and MVPDs (including cable and satellite television providers) negotiate in good faith over the provisions of retransmission consent agreements is often cited in arguments by one side or the other when negotiations over the fees to be paid under those agreements break down.  In a consent decree released last week, the FCC showed that the requirement is more than just a few words in the statutes and rules governing these negotiations, reaching an agreement with TV licensee Howard Stirk Holdings, LLC to pay a penalty of $100,000 for violations of those requirements and to also adopt a compliance plan setting up internal corporate controls to ensure that similar violations do not occur in the future.

The consent decree was based on violations described in a decision of the FCC’s Media Bureau released last November (here) finding that 18 television station licensees, operating stations in separate markets, had failed to negotiate retransmission consent in good faith.    The Stirk company and the other stations covered by the November decision had used a single negotiating agent who the Bureau found failed to comply with three of the Commission’s nine “per se” good faith negotiating standards set out in Section 76.65(b)(1) of the Commission’s rules.  Specifically, the Bureau found that the stations had not operated in good faith based on these perceived violations: (1)  refusal to negotiate retransmission consent agreements; (2) refusal to meet and negotiate retransmission consent at reasonable times and locations, or acting in a manner that unreasonably delays retransmission consent negotiations; and (3) failure to respond to a retransmission consent proposal of the other party, including the reasons for the rejection of any such proposal.

In reaching this conclusion, the Bureau pointed to instances where the negotiating agent did not respond to offers for the carriage of single stations in the negotiating group, did not put forward proposals for the carriage of such stations and was slow in responding to proposals put forth by the MVPD and did not respond in detail to those proposals or make meaningful counterproposals.  The Bureau, at the time, ordered the stations to negotiate in good faith and reserved questions of liability, indicating that those could be taken up in the future.  The future appears to be now in last week’s consent decree, as least for the Strik company.

Takeaways for TV stations?  While the FCC will not get into the substance of retransmission consent negotiations (it will not question the economics proposed by either side – see this article from over a dozen years ago where the FCC made that clear), it does require that the parties seriously negotiate over the terms of such carriage.  Parties cannot simply say no and not advance proposals as to what they would accept to resolve the negotiations.  Parties cannot unilaterally cut off negotiations.  And the obligation is one that is unique to each station – so unrelated stations cannot join together and refuse to even consider deals offered for any particular station.  This decision shows that there are real teeth in these regulations – and penalties may follow for violation of the Commission’s standards.

Courtesy Broadcast Law Blog