News

'Hammer' Time

11/28/2008 7:00 PM Eastern

Duane Lammers doesn't duck controversy, and he's been in the spotlight many times during his career as a TV-station executive. His former employees and colleagues say that's because Lammers, who is nicknamed “The Hammer,” won't back down from a fight.

The 47-year-old Missouri native won a reputation as a tough and shrewd negotiator during his tenure as chief operating officer for Nexstar Broadcasting Group. Now, Lammers is using those skills as a station consultant, conducting retransmission-consent talks with dozens of cable operators on behalf of several station groups.

Lately, he's been busy. In 2005, Lammers led the fight when Nexstar yanked its TV stations from Cox Communications and Cable One for nearly a year, one of the longest standoffs of its kind.

The next year, Lammers again made headlines when he took on a fellow broadcaster in Terre Haute, Ind., airing a garish attack ad that criticized a rival station's weather reporting and technology, at one point claiming that a rival's power failure could “leave you in the dark for hours. Just like it did during the storms of April 2.” Comedy Central's Jon Stewart lampooned both Lammers and the weather-attack spot on The Daily Show.

That same year, Lammers wasn't afraid to overrule NBC by refusing to let Nexstar's Terre Haute station air The Book of Daniel, the Peacock Network's controversial show that featured Jesus Christ as a recurring character.

These days, Lammers is a big player in the high-stakes battle between broadcasters and cable operators across the nation as, under federal law, thousands of retransmission-consent deals are set to expire Dec. 31. At the core of the debate is this simple question: How much should the signals of free, over-the-air broadcasts be valued? Cable operators say prices will ultimately increase for consumers.

With ad revenue nose-diving in a dismal economy, broadcasters are under increased financial pressure to demand cash license fees in exchange for carriage of their signals from cable operators. Nexstar is considered one of the pioneers in extracting such compensation, and Lammers is credited with developing that company's strategy.

Both sides are digging in. Four small cable operators have filed complaints with the Federal Communications Commission against the TV-station groups and companies for whom Lammers is consulting, including Communications Corp. of America and Granite Broadcasting, both owned by Silver Point Capital, a hedge fund. The operators allege that the stations, whose retransmission talks are being handled by Lammers, aren't negotiating in good faith and have made “take-it-or-leave-it” offers, in violation of federal regulations.

Silver Point's station groups fired back in their own FCC complaints against three of those cable operators, denying their allegations and accusing the operators of bad-faith negotiating, as well as conspiring with the American Cable Association to file “specious” complaints against broadcasters.

The ACA, a lobbying group for independent cable operators, called the conspiracy charges “an utter lie,” and the cable companies' attorney denied the allegation. The ACA has accused the stations that Lammers represents of using “abusive” negotiating tactics.

“The system allows broadcasters like Lammers to negotiate in ways where they don't care what happens to cable operators or consumers, because all they want is pay, period,” ACA president Matt Polka said. “They don't care whether consumers have to pay $4 to $6 more for broadcast signals or not.”

Lammers, now based outside of St. Louis, declined to comment for this story, as did Nexstar and Silver Point. Communications Corp. of America couldn't be reached for comment. But in an October 28 e-mail to Multichannel News, Lammers called the cable operators' complaints “baseless.”

In a statement, Granite said, “We are making every effort to reach agreements with the cable companies in a timely manner; however, we cannot reasonably be expected to continue allowing companies who refuse to pay to continue carrying our signal.”

Lammers, a graduate of the University of Missouri, spent 11 years at Nexstar, where he won a reputation as a hard-nosed negotiator. He's a hometown boy made good, with traditional Midwestern roots and a blue-collar background that makes him no nonsense and not one to suffer fools gladly, according to Lammers' colleagues.

Before Nexstar, the devoted St. Louis Cardinals and NASCAR fan ran KFDX-TV in Wichita Falls, Texas, and WHTM-TV in Harrisburg, Pa., where he worked with Susana Schuler, who is now vice president of news for Raycom Media.

In Texas, Lammers was nicknamed “The Hammer,” while Schuler said she was known as “Nails.” The “Hammer” moniker stuck.

“He's very direct,” said Schuler, explaining Lammers's nickname. “He hammers points home. He drives things 'til they're done. He's very much like a hammer.”

In 1997, fledgling Nexstar hired Lammers as general manager of WTWO in Terre Haute, the second station that the growing Irving, Texas-based broadcaster acquired. Nexstar CEO Perry Sook built the company, and it now owns or operates 50 stations.

Lammers moved up Nexstar's corporate ladder, and in October 2002 he was named chief operating officer. He remained in Terre Haute and was still running WTWO, but also was supervising 700 corporate-level employees, receiving total compensation of $568,192 last year, according to court documents filed by Nexstar this year.

“The man has basically been Perry Sook's right-hand man, if not the most important person in the company,” said Paul Greeley, Nexstar's former vice president of marketing.

As chief operating officer, Lammers also helped develop Nexstar's retransmission-consent strategy, Nexstar said in legal filings this year. He and Sook were willing to pull the broadcaster's signals — risking lost viewers and advertising — to try to get cash compensation from cable. Nexstar and Lammers took that issue public in 2005 in their battle with Cox and Cable One, yanking their stations.

Lammers played hardball during negotiations, employing his own unique tactics. “The most important trait I learned working for Nexstar is how to negotiate, and how to be willing to walk away from a deal if it wasn't in the best interest of what you needed,” Schuler said. “It's served me very, very well. I learned a lot of things from them, and that really came from Duane.”

At one point during the Cox-Cable One dispute, three of the MSO's executives traveled to Nexstar's headquarters outside Dallas to negotiate face to face, meeting in a conference room with Lammers. “I saw Duane walking around with a penny,” Greeley said. “He told them he would allow them to carry our signal, in the markets where they were in dispute, if they would agree that our signals and our channels were worth at least a penny as a starting point. … I thought it was an ingenious move on his part.”

But the Cox executives wouldn't concede the “penny” point and left, and the dispute continued, according to Greeley. Cox declined to comment.

Finally, after nearly a year, new contracts were reached at the end of 2005 and Nexstar's stations went back on the Cox and Cable One systems. At the time, Nexstar, Cox and Cable One wouldn't comment on the details of their deals.

But for 2006, Nexstar reported retransmission-consent revenue of $13.7 million, with $8.7 million of that described as “compensation” and $5 million identified as ad revenue.

In an affidavit earlier this year Sook, while not citing Cox or Cable One by name, said that in 2005 Nexstar was a pioneer and one of the first broadcasters to convince cable operators to pay for retransmission consent.

Schuler, Lammers' former colleague and friend, described him as a “tremendous negotiator” who is passionate about local television. She said that Lammers and Sook wouldn't back down from cable, and weren't afraid to pull their signals and “risk audience” to prove their stations' worth, “and it worked.” They did get compensation for those stations, helping to pave the way for other broadcasters, according to Schuler.

“We are valuable and we are what the audience connects to,” she said. “He's right, and we have to stand our ground. But he gets a bad rap.”

Lammers has rarely been shy about taking a public stand. In 2006, Lammers made headlines by refusing to let Nexstar's WTWO, an NBC affiliate, air the Peacock Network's controversial show, The Book of Daniel, which was about an Episcopal priest and featured Jesus as a character. On the station's Web site, Lammers noted that WTWO always had a right to reject NBC programming, adding, “I am reaffirming that right to let them know I will not allow them to make unilateral decisions affecting our viewers.”

A half-dozen other stations followed suit, and Daniel was short-lived.

“I don't think he [Lammers] likes to take the limelight, but he's very much a maverick,” Schuler said.

Lammers took the fight to a rival station in 2006 when WTWO aired a political-attack-style ad criticizing the weather coverage of a rival station in Terre Haute. Lammers went ahead with the 60-second promo against the advice of his own meteorologists, according to Greeley and Chris O'Neal, who was then WTWO's creative-services director and who also voiced concerns about the ad.

“If you know Duane, he absolutely hates his enemies with a passion,” said O'Neal, who recalled Lammers saying he had once sent a dozen dead roses to a rival station. “So he wanted to go full force at them [WTHI]. … He told me to take off the gloves in no uncertain terms.” Executives close to the situation said WTHI meteorologists had taken shots at WTWO's weather reporting and claimed their Doppler radar was more powerful.

WTHI couldn't be reached for comment.

In its promo, WTWO boasted that its meteorologists had 15 years more combined experience than WTHI's weather team, who depended on poorly positioned Doppler radar that had a “dead zone” over a highly populated area. “He's not going to mince words,” Schuler said. “When he thinks he is being wronged or somebody is not being truthful, but they're getting an edge, he's going to tell it like it is.”

Comedy Central's Stewart aired, and poked fun at, WTWO's promo on May 8, 2006, but none of it phased Lammers, according to Greeley. “That didn't worry him at all. … If it was something that he felt or believed in, or felt right about, he wasn't afraid to do the unusual or the unconventional,” he said. “He didn't do it to draw attention to himself.”

In April this year, Lammers gave Nexstar notice that he had been hired as a consultant for Silver Point and its stations and was leaving. In May, Nexstar sued him in federal court, alleging that his work for Silver Point would violate his non-compete and non-disclosure clauses, charges that Lammers denied.

In June, Nexstar won a preliminary injunction against him. But Nexstar and Lammers amicably settled their pending complaints and counterclaims in September, with a judge dismissing the litigation in October.

In court documents, Nexstar argued that Lammers had been privy to its “trade secrets” regarding retransmission-consent negotiations. “The only 'negotiation strategy' I was ever aware of was quite simple: To cut the best deal possible,” Lammers said in his affidavit. “I successfully negotiated many retransmission contracts for Nexstar. My success was the product of shrewd bargaining skills, tough negotiating tactics, and a healthy dose of common sense. There was nothing secret, confidential or magic about it.”

As a consultant now for Silver Point and its station groups, Lammers has new issues to deal with. In September and October, a flurry of retransmission-consent-related complaints were filed against the Silver Point broadcasters he represents — Communications Corp. of America, also known as ComCorp, and Granite — by four small cable operators.

In their pending FCC complaints, the operators allege that Lammers' hard-ball approach crosses the line from mere tough negotiating to the point of violating FCC rules. The operators charge that Lammers has been overly aggressive, used intimidation, threatened to pull stations and offered take-it-or-leave it deals seeking cash license fees for the stations he represents.

Baja Broadband of Alamogordo, N.M., has a complaint pending against ComCorp at the FCC. In turn, the broadcaster filed two complaints against Baja, which charge the cable operator with bad-faith negotiating, as well as illegally carrying its station, KTSM-TV of El Paso, Texas, without proper written consent. Baja Broadband denies the charges, and claims it has the right to carry KTSM.

“His job as a consultant, and I understand that, is to represent his client,” Baja Broadband CEO Peter Kahelin said. “I don't particularly like his tactics … He's quite aggressive, very aggressive, and I would imagine for some operators that aggression is enough to scare them into making decisions that may be become very favorable to Duane's clients. There's no doubt he's very good at his job.”

Kahelin said that in one phone conversation, Lammers called the cable system's management “cheaters” for carrying KTSM's signals, according to Kahelin.

“I asked him to repeat it,” Kahelin said. “Not only did he repeat it, but he went, 'Yes, cheater, cheater, cheater.' I just laughed at him and I said, 'You want to say it a fourth [time]?' And he said, 'Yeah, cheater.' And I said, 'Words spoken of a little and a pitiful man.'”

One of the FCC complaints pending against Lammers and ComCorp was filed by the Lafayette Utilities System, which is looking to overbuild and launch a municipal cable system in Lafayette, La., in January. The LUS accuses Lammers of trying to make it carry and pay license fees for two stations — a low-power station and a Baton Rouge, La., station — in order to get the one station it really wants: the Fox affiliate KDAN-TV.

Lammers, at one point proclaiming “cash is king,” is demanding the same “exorbitant” license fees for all three stations, according to the LUS complaint. The exact fees were redacted in the complaint, but this year some broadcasters have sought license fees of 30 cents a month, per subscriber.

LUS's filing says that during an Oct. 14 call to LUS consultant Steve Creeden and project manager Frank Ledoux, Lammers said: “I have the leverage and will use it. You may or may not know who I am, but there are only two guys in the country that do what we do, and I am one of them. I have pulled stations off for up to 10 to 12 months in order to get an agreement.”

Lammers has denied the conversation took place that way, but Creeden said he took notes during the Oct. 14 phone call, and stands by the accuracy of the comments he attributed to Lammers. “I would never had made statements like that in my negotiation style 'cause I don't think it accomplishes anything positive,” Creeden said.

Attorneys for ComCorp, in a Nov. 13 letter to the FCC, called the LUS's complaint “rife with unfounded and spurious allegations.”

Lammers isn't the only retransmission-consent consultant, but he's garnered the most attention this year for his work for ComCorp, which has stations in 10 markets, and Granite, which has stations in nine markets. There are others who have been consulting longer, with more clients.

For example, ATV Broadcast in Carmel Ind., once worked for Granite, and is now handling retransmission-consent talks for more than 100 stations.

ATV Broadcast chairman Mike Ruggiero has met Lammers, and said his company's approach to working with cable companies is much different than that of the ex-Nexstar executive. “He's a rough and tough negotiator, and it's just not our style,” Ruggiero said. “Our style is more work with the cable operator, listen to the cable operator, empathize with the cable operator, because this is not an easy thing that they're going through.”

ComCorp and Granite have denied the allegations made by the operators at the FCC, filing answers and their own FCC complaints against at least three of the cable operators.

In his October e-mail to MCN, Lammers called the FCC complaints pending against the stations he represents “baseless” and “an abuse” of process.

“Thousands of retransmission-consent agreements have been completed in markets across the country, including a couple of hundred by me,” Lammers wrote. “These agreements were completed without conflict, complaint and with professionalism.”

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