Is Nexstar Media Group, the company founded by former TVB Chairman Perry Sook, not playing fair with respect to how it has been negotiating a retransmission fee agreement impacting one of the nation’s small cable TV providers?
The President/CEO of the American Cable Association says no, and wants Congress, the Department of Justice and the FCC to examine the broadcast TV station owner’s recent conduct.
In an opinion piece distributed to ACA members on Tuesday (1/22), lobbying group leader Matthew M. Polka spoke out against broadcast consolidation, which “threatens to extract even more money from pay-TV subscribers who rely on their cable TV connection to see ‘free TV.'”
The comments came shortly after Michael Nathanson, Senior Research Analyst at MoffettNathanson LLC, told NATPE 2019 attendants in Miami Beach that consolidation is inevitable in an environment where Wall Street — and attendees — are talking more about over-the-top (OTT) delivery and the top digital players than broadcast TV station owners.
While Wall Street may not have its collective focus on broadcast TV, with its ad-driven business model repeatedly trashed by Pivotal Research Group Senior Research Analyst for Advertising Brian Wieser, ATSC 3.0 and the next-gen broadcast TV standard offer technological advancements — including “addressable advertising” — that position broadcast ownership groups as perhaps more important than MVPDs in the coming years.
That friction could impact ACA members more than anyone. While Nathanson reiterated earlier comments he made in an investor note saying CBS Corp.‘s reunification with Viacom “is inevitable this year,” he also calls The E.W. Scripps Co. a “motivated seller.” Then, there is continued combination of media conglomerates along the same lines as FOX’s deal with The Walt Disney Co., although “there are not a lot of natural chess pieces out there.”
With Nexstar planning to merge with Tribune Broadcasting, giving it scale in the way of original programming and a national MVPD-distributed network, Polka is running out of time to make his case on behalf of ACA members that Nexstar “illustrates the problem” of retransmission fee gouging “almost perfectly.”
Polka notes that Nexstar “recently blacked out its signals to two smaller, rural video providers who would not agree to huge rate increases.” In response, Nexstar, Polka notes, “has now asked a local government to pressure one of these providers into accepting its demands for higher rates.”
Polka calls this request “preposterous.”
Yet, Polka and the ACA think that Nexstar is on the right track when it seeks government oversight of retransmission consent.
Only, ACA wants a “full examination” of Nexstar’s conduct in connection with its proposed acquisition of Tribune and include a broader discussion of retransmission consent issues when Congress renews key satellite legislation.
Nexstar Media Group,which in early 2017 closed on its acquisition of Media General, struck the ire of the ACA in the final days of 2018, when it failed to reach a new retransmission fee agreement with TDS, a provider serving such locales as St. George, Utah; Prineville, Oregon; and Mesquite, Nev.
While these locales may be small in size, over-the-air signals may not be present. This makes MVPDs essential for viewing network television affiliates from the nearest DMA.
Impacted are My Network affiliate WNDY-28 and The CW affiliate WISH-8 in Indianapolis; ABC affiliate WKRN-2 in Nashville; and ABC affiliate WATE-6 in Knoxville.
These are “markets” where TDS offers IPTV. Some 93,000 people are impacted, the American Cable Association (ACA) notes.
Also impacted are the small cities of Crooked River Ranch, Prineville and Crooked River Ranch, Ore. TDS is the parent of BendBroadband, and in these towns the retrans agreement dates to when TDS acquired Crestview in 2017. Nexstar-owned CBS affiliate KOIN-6 in Portland, Ore., is off the air here.
The former Baja markets now owned by TDS perhaps present the biggest headache for Nexstar, impacting towns in New Mexico, Southwestern Utah and an area of Texas near the border with Nex Mexico.
As TDS sees it, “Nexstar is demanding up to a 175% rate increase.”
These blackouts continue today, threatening access to the Super Bowl and the Oscars.
Polka continues,”Nexstar’s specific behavior can only be described as egregious. Reports indicate that, among other things, Nexstar has insisted that subscribers from one of the providers – TDS Telecom – pay high rates even for stations that lose network affiliation and do not have top-rated programming. As a result, if a Nexstar station replaces CBS programming (including the Super Bowl and the Grammy Awards) with infomercials, reruns, and filler programming, it now expects subscribers to continue paying rates akin to highly-rated programming. Nexstar even shut down a translator antenna in New Mexico, preventing subscribers from accessing Nexstar’s signals over-the-air.”
It is unclear as to which CBS station owned by Nexstar Polka refers to.
How is Nexstar seeking “government” help? It has asked a local city council to “pressure” one of the providers into reaching a deal with Nexstar, citing the station’s importance to public safety.
A similar situation was recently seen in El Centro, Calif., where a court challenge pitting Charter Communications against the city was seen during a bitter retransmission fee disagreement between the owner of Spectrum cable TV services and Brian Brady-owned Northwest Broadcasting.
While Sook and Polka won’t be dancing in Punxsutawney anytime soon, the Pittsburgh-based ACA says Nexstar is right about one thing. “Precisely because broadcast stations do ‘a great deal to keep [their] communit[ies] safe,’ government officials should be concerned when broadcasters abuse the public trust. And they should intervene when such abuse threatens subscribers. Nexstar’s actions also confirm our longstanding view that something is fundamentally wrong in the retransmission consent marketplace more generally. As Congress renews key satellite television legislation this year, it should consider Nexstar’s behavior – and commonsense reform to protect the public from such behavior.”