Nexstar Cites Retrans 'Good Faith’ Effort

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Nexstar Broadcasting Inc. last week told the Federal Communications Commission that it has been negotiating “in good faith” to reach retransmission-consent deals with Cox Communications Inc. and denied that it’s been colluding with another broadcaster.

Nexstar filed a 38-page answer to the complaint that Cox lodged against it with the FCC in January.

In its papers Nexstar, which is seeking cash for carriage, contends that it has been attempting to negotiate with Cox and hasn’t made any “take-it-or-leave-it” type offers.

NOT 'COERCIVE BULLIES’

Nexstar also claims that despite Cox’s “unfounded” attempt to characterize it “as coercive bullies making one outrageous unilateral proposal, the fact remains that this is solely a dispute over everyday business.”

The broadcaster is embroiled in a bitter public retransmission consent dispute with Cox and Cable One Inc., which has resulted in Nexstar pulling a half-dozen stations — which it either owns or manages — from the lineups of those two MSOs.

Cox initially lost KRBC in Abilene, Texas, and KLST in San Angelo, Texas, on Jan. 1 and then KTAL in Texarkana, Texas, affecting 105,000 subscribers.

Nexstar claims its chief operating officer, Duane Lammers, told Cox that it could continue to carry the stations in question if it agreed to pay one penny a month per subscriber for them while the parties negotiated a final retransmission-consent pact. Cox declined, according to Nexstar.

By putting “forth repeated requests to maintain the status quo,” Nexstar alleged that Cox is violating the “good faith” duty to negotiate required by federal regulations.

In its papers, Nexstar said Cox must recognize the FCC can’t compel the broadcaster “to agree with Cox’s position that it is not obligated to consider payment of cash compensation.”

Cox plans to file a rebuttal to Nexstar’s answer, MSO spokesman David Grabert said last Friday.

“We have the opportunity to make some things clear to the FCC about how some things actually went down,” Grabert said. “The facts are the facts, and it is really clear they have not wanted to negotiate with us in good faith.”

Nexstar didn’t agree to meet with Cox until Jan. 31, until after the MSO filed its FCC complaint, according to Grabert.

“The only offer that we received from them prior to the meeting was a last-minute request for 30 cents per sub,” Grabert said.

“They clearly did that and timed it to when our customers were under threat of going dark … right off the bar, we lost the two [stations]. We don’t think that’s in the best interest of consumers.”

Nexstar also manages stations for Mission Broadcasting Inc., several of which have been dropped, and Nexstar denied Cox’s charge that it is colluding with that TV station group. Mission has merely designated Nexstar, and Lammers, as their agent for retransmission-consent talks, according to Nexstar’s papers.

The broadcaster charged that Cox’s filing of a complaint with the FCC is “a bullying tactic.”

Earlier this month, Cox moved several cable systems where Nexstar was about to pull off TV stations to another division. That meant those stations are now covered by a retransmission-consent pact that extends to the end of the year, so they can remain on Cox’s lineup.

“Cox has flatly violated all standards of good faith with its last-minute reorganization,” Nexstar alleged.

Nexstar mentioned in its papers that satellite providers are paying cash for carriage, an argument that TV station groups are often citing now in asking MSOs for license fees.

CASH FROM TELCOS

Last week, a Wall Street analyst predicted that regional phone companies that plan to launch video service will also be forced to pay cash to carry local broadcast stations, which will initially put them at a competitive disadvantage but ultimately cause problems for MSOs.

The telcos, with little negotiating leverage, “are likely to face significant pressure to agree to cash-for-carriage deals” by TV stations, according to a report by Craig Moffett, an analyst with Sanford Bernstein & Co.

As a result, the margins that the phone companies achieve with their fiber optic networks will be eroded, Moffett wrote.

“Cash for local retrans would exacerbate what we expect to be a 15% programming-cost disadvantage for the RBOCs in video, further lowering RBOC margins and limiting their video-pricing flexibility,” Moffett said.

The American Cable Association, a lobbying group for small operators, is trying to prepare its members for broadcast’s argument that if DBS pays cash for carriage, MSOs should, too.

“If satellite pays, frankly, maybe they’re making a bad deal,” ACA president Matt Polka said.

“No one’s putting a gun to their head to pay... just because satellite jumps off a bridge doesn’t mean we have to.”

In terms of the requirement to negotiate in good faith, Polka said that the retransmission-consent options that a broadcaster puts forth to an MSO may not be reasonable.

“The alternatives [from a broadcaster] may be, 'I can shoot you in the head or I can stab you in the heart,’ “ Polka said. “Sometimes that is the Hobson’s choice. … We’re in a war. It’s going to be a bloody war.”

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