ATVA: Retrans Harm Outweighs Benefits Of Gray Duopoly

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The American Television Alliance (ATVA) on Monday (7/9) officially filed comments on the proposed transfer of two broadcast TV stations from Red River Broadcast Co. to Gray Television.


As RBR+TVBR reported on May 2, Gray is creating a duopoly in Sioux Falls, S.D., by buying a peacock in a deal brokered by Kalil & Co. If approved, the transfer would give Gray a “top four duopoly” in the Sioux Falls DMA.

The ATVA argues that Gray has failed to make an adequate public interest showing in its desire to own the market’s NBC affiliate. 

As ATVA explains, although the FCC’s rules generally prohibit this kind of duopoly, the Commission recently began allowing exceptions for broadcasters who demonstrate, based on specific circumstances in the local market, that an exception is in the public interest.

In its comments, ATVA argues that Gray failed to make such a showing … because it neither addresses the impact of retransmission consent fees on consumers nor demonstrates that any benefits arising from the duopoly will outweigh the harms.

The ATVA notes that the Commission previously found that top-four duopolies “lead to higher consumer prices (and did not abandon that finding when it amended its local media ownership rule last fall).”

New evidence filed in the Sinclair-Tribune proceeding “confirms that prior finding,” the ATVA adds.

The subject of rapidly increasing retransmission fees has become one of the key fighting points of ATVA and the American Cable Association, which is a member of the alliance. Many TV companies have moved to combat declining advertising revenue by raising retransmission fees paid by cable companies. MVPDs complain that this cost is passed on to the customer, leading to untenable rate increases in an era of increased cord-cutting.

In this matter, in which Red River Broadcasting Co. is selling KDLT-46 in Sioux Falls for $32.5 million, Gray “failed to even address the issue of retransmission consent fees, notwithstanding the Commission’s explicit suggestion that they do so. Instead, they focus entirely on other issues, such as ratings and overall revenues in Sioux Falls. This is a remarkable omission in light of the importance of retransmission consent to Gray’s overall revenues and the Commission’s prior conclusion that consolidation leads to higher consumer prices.”

The “retransmission consent-related harms to consumers” are the basis of ATVA’s argument against permitting the duopoly. In fact, ATVA downplayed Gray’s “purported benefit” that the duopoly would result in more news coverage, rather than less. “Such claims are simply not cognizable under established Commission precedent,” ATVA claims.

The filing was made on ATVA’s behalf by Michael Nilsson and Mark Davis of Harris Wiltshire & Grannis LLP.