by Lance Turner
Posted 9/16/2013 03:10 pm
Updated 3 months ago
The American Cable Association is one of several groups that have made filings with the Federal Communications Commission to stop or alter terms of Sinclair Broadcast Group's purchase of Allbritton Communications' television stations, including KATV-TV, Channel 7 of Little Rock.
For its part, the ACA is asking the FCC to deny the sale or prohibit Sinclair from representing multiple television stations in a single market in retransmission consent negotiations, according to TV News Check.
Sinclair already owns television stations in Harrisburg-Lancaster, Pa., and Charleston, S.C., and will pick up additional Allbritton stations in those markets after the sale closes. In its filing (PDF), the ACA says that gives Sinclair too much negotiating power with cable operators:
The transaction would allow Sinclair to negotiate retransmission consent for both the CBS and ABC affiliates in Harrisburg and the Fox and ABC affiliates in Charleston. These combinations of two "Big Four" network affiliates will give Sinclair more leverage in these markets than it already has, leading to higher prices for retransmission consent. In both of these markets, the transaction would harm consumers by increasing the cost of pay-TV service, and increasing the threat of blackouts and the harm caused by actual blackouts.
That kind of bargaining power over the increasingly lucrative revenue streams that TV stations get from cable operators, who must pay to carry local stations' content, is the top reason deals like Sinclair's for Allbritton station are so attractive. They're practically the thing driving industry consolidation.
The ACA, along with a group called Free Press and Jesse Jackson's Rainbow PUSH coalition, is also unhappy with the Sinclair/Allbritton deal as it pertains to television ownership caps, according to Broadcasting & Cable.
That part of the complaint gets to the heart of a now commonplace business arrangement in local television ownership: the practice of controlling multiple network affiliates in one market through "share services" or "joint sales agreements."
There's a prime example of that deal at work in Little Rock, where Nexstar Broadcasting Group owns NBC affiliate KARK-TV, Channel 4, but also manages Mission Broadcasting's Fox affiliate, KLRT-TV, Channel 16. In fact, Nexstar "manages" KLRT out of the same TV studios and offices as it "owns" KARK, and does so with many of the same personnel and overlapping newsgathering resources.
Sinclair plans similar arrangements involving the Allbritton stations it's buying in markets where it already owns competing TV stations. And so, the ACA, Free Press and Rainbow PUSH
took aim at the spin-offs required by FCC local ownership rules.
They argue the spin-offs are in name only and allow Sinclair to continue to control the stations.
ACA says the shared services agreements should invalidate the entire deal because by their very nature they are not in the public interest. "Sinclair's intention to negotiate retransmission consent for multiple ostensibly separately owned competing stations in a single DMA violates fundamental principles of competition and thus warrants denial of the Applications."
Sinclair's $985 million deal for Allbritton's station is set to close in the fourth quarter.