FCC Shoots Down Mediacom

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Mediacom Communications Thursday lost its cry for help from the Federal Communications Commission, which rejected the cable company’s allegations that Sinclair Broadcast Group hasn’t negotiated in good faith during stalled retransmission-consent talks.

In a 12-page order, the FCC's Media Bureau ruled against Mediacom, which filed an emergency complaint Oct. 31 with the regulatory body seeking relief. The decision means that the operator is running out of options to avoid losing carriage of Sinclair’s stations this weekend.

The FCC agreed with Sinclair that the TV-station owner’s failure to grant retransmission consent to Mediacom represents nothing more than "a fundamental disagreement between the parties over the appropriate valuation of Sinclair's signals."

The agency indicated that in light of its finding that "Sinclair did not breach its obligation to negotiate retransmission consent in good faith," the regulatory body’s "formal involvement in this dispute is ended."

But in its ruling, the commission said, “Nonetheless, we strongly encourage the parties to engage in hard bargaining to achieve an agreement.”

The FCC suggested that Sinclair and Mediacom submit their dispute to binding arbitration by the FCC’s Media Bureau or the American Arbitration Association.

The cable company’s retransmission-consent extension with Sinclair expires at 12:01 a.m. Jan. 6.

If Mediacom doesn’t get another extension or reach a new deal, it will have to stop carrying 22 Sinclair stations in markets reaching about 700,000 of its subscribers.

“We are extremely pleased that the FCC ruled so completely in our favor in this matter," Sinclair vice president and general counsel Barry Faber said in a prepared statement.

"In its order, the FCC agreed with virtually every argument advanced by Sinclair and disagreed with virtually every claim made by Mediacom, and this decision represents a resounding victory not just for Sinclair, but for all broadcasters in their efforts to be fairly compensated by cable companies,” he added.

In its ruling, the FCC disagreed with Mediacom’s argument that the price it pays for subscription cable programming isn’t an appropriate measure of the value of free, over-the-air broadcast signals.

“Mediacom appears to characterize as inconsistent with competitive marketplace considerations the fact that Sinclair seeks compensation commensurate with other programmers carried by Mediacom that are generally lower-rated than the Sinclair stations,” the FCC said. “We disagree. It seems reasonable that the fair market value of any source of programming would be based in large part on the measured popularity of such programming.”

Faber remarked on that part of the FCC’s ruling.

“In addition to its overall holding that our actions in this negotiation have been completely legal, we were particularly gratified by the FCC's conclusion that marketplace considerations for the value of broadcast stations can take into account the prices cable companies pay for non-broadcast, cable channels," he said.

“We are disappointed with the Media Bureau’s decision, which is against the best interests of Mediacom customers and has far-reaching consequences to television viewers all over America,” Mediacom chairman and CEO Rocco B. Commisso said in a prepared statement. “However, we are pleased that the bureau strongly encouraged the parties to submit to binding arbitration and to continue carriage of the stations. We offered this solution to Sinclair over a month ago, but they refused. We are committed to binding arbitration and are hopeful that Sinclair will heed the bureau’s recommendation and avoid a disruption in service to our customers.”

“As for the merits of the decision, we believe the bureau got it wrong,” Mediacom senior VP and general counsel Joseph Young said. “It is unfortunate that the chairman’s office chose to deny our request for a full commission vote on this important matter. Contrary to Sinclair’s assertion that ‘the FCC’s formal involvement has ended,’ Mediacom is going to exercise its right to have the order reviewed by the full commission. Given the immediate negative impact the decision will have on the public, we intend to ask chairman [Kevin] Martin to schedule this review on an expedited basis. Once all of the commissioners have an opportunity to review this matter, Mediacom believes it will prevail on the merits.”

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