NAB asked the FCC to sanction “collusive price setting”...

groups like the ACA want the FCC to limit as part of the agency’s consideration of changes to ownership rules (CD May 31 p15). The commission “must draw a bright line which prohibits this activity, and the only natural and reasonable place to draw such a bright line is for there to be a complete prohibition on all collusion,” said ACA in an ex parte filing. It dismissed NAB’s arguments that retrans fees don’t affect prices for consumers, and that joint negotiations don’t drive those fees up. “Economists expect that downstream markets will pass through a significant share of upstream price changes and there is no sense in which economists generally subscribe to any sort of theory suggesting that collusion in upstream markets is in general less harmful than collusion in downstream markets,” the cable association said. An FCC “sanction” of joint retrans negotiations could lead to “much more extensive collusion” among broadcasters, the ACA said. “It might well become the norm that all four of the Big 4 stations in many DMAs begin to threaten simultaneous withdrawal of all of their signals as a coercive bargaining strategy to increase retransmission consent fees,” said ACA of designated market areas. “A bedrock principle of competition policy is that providers of competing products should not be allowed to collusively set prices.” An NAB spokesman said it was “laughable” to suggest broadcasters have undue market power over pay-TV providers. “In virtually every American city, separately owned TV stations provide viewers with local news, the most popular network programming, foreign language and religious programming,” said the NAB spokesman. “Contrast that with cable’s business model, where ‘clustering’ and single monopoly cable providers are the norm. The FCC should reject ACA’s rhetoric and not inject government into the free market retransmission consent negotiation process."