Ramifications of AT&T Complaint Win Mightn't Much Affect Future Retrans Talks

They are rare because the burden of proof on the complainant is "pretty high," said Rick Brecher of Greenberg Traurig. The decision on the nine Sinclair sidecar station groups was made on an objective per se rules basis instead of a subjective totality of circumstances basis, and the facts presented in the ruling were largely cut and dried, Brecher said. "You've got to participate, you've got to respond, you can't delay unreasonably."

The FCC has taken a fairly hands-off approach to retrans negotiations, considering them matters between private negotiating parties and not wanting to wade into issues like prices and terms and conditions, said Scott Friedman of Cinnamon Mueller, who's representing C Spire in a pending retrans complaint (see 1906040031). He said there's pressure to get deals done if there's a programming blackout. Far more complaints are filed than get adjudicated, since most end up dismissed after the MVPD and broadcaster ink an agreement.

Good-faith complaints often had been considered pointless because the agency won't act, but that may have changed and the rules now might be seen as having actual teeth, said cable lawyer Craig Gilley of Mintz Levin. This Deerfield decision "has proven there is a line." Broadcasters in general might be more careful, he said. The FCC won't want to be involved in every negotiation, but "now there's a line that can't be crossed," he said.

Brecher said the rules are pretty clear, saying the opinion indicates that when the record shows someone hasn't met their obligations, "the FCC isn't going to turn a blind eye." The decision doesn't say anything about how the agency looks at totality of circumstances cases, he said. Friedman said there likely won't be practical effects on negotiations broadly. It's tough to say given how heavily redacted the order was.

Perkins Coie's Marc Martin, outside counsel for the broadcasters, emailed us that, "As you might expect, the Defendants are disappointed with the Bureau’s decision and are currently evaluating their options."

All the station groups named in the ruling are Sinclair sidecars. A Sinclair spokesperson told us it isn’t involved in retrans negotiations on their behalf. “This matter is between these licensees and the FCC,” the spokesperson emailed. “We have no involvement in these negotiations and no insight into the allegations.”

The nine station groups violated the per se good-faith standards by "a persistent refusal to negotiate, an unreasonable delay of negotiations, and a failure to respond to AT&T’s proposals," the bureau said. It said there's no need to address the separate issue of whether they also violated the totality of circumstances standard. It said Duane Lammers of Max Retrans, representing the station groups in talks with AT&T, didn't make a single formal or informal offer or proposal.

It said a programming blackout was already underway when Lammers made an effort to negotiate, and he "unreasonably delayed actual negotiation" on the stations' behalf. "This is the most egregious example of delay that we have encountered since the good faith rules were adopted," the bureau said. Lammers didn't comment.

A footnote said the outcome of a pending civil suit against Max Retrans in U.S. District Court in St. Louis (docket 19-cv-01925, in Pacer) alleging trade secret theft and breach of contract could support a finding the station groups violated the totality of the circumstances good-faith standard. It's reserving the right to return to the issue after a court decision.

The bureau urged the sides "to expeditiously go to the bargaining table and commence negotiations." Staff didn't impose penalties but said it was only partially resolving the complaint "in order to expeditiously resolve the underlying dispute" and that it reserved the right to take enforcement action.

The heavy redaction in the ruling makes it difficult to understand the precise nature of the offense or what lessons broadcasters are meant to take from it, said Gray Television Vice President-Government Relations and Distribution Rob Folliard. “If it’s a warning shot, I’m not sure what they were shooting at.” He’s not sure how or if broadcasters will approach retrans negotiations differently in the wake of the FCC decision.

Asked about the aggressive redactions, an FCC spokesperson provided a link to the protective order in the proceeding. “The redactions are consistent with the protective order,” the representative emailed.

The decision seems to say the agent for the broadcasters involved didn’t always respond in a timely or complete fashion to negotiation overtures, and a broadcast attorney said the FCC decision will discourage such behavior going forward, along with using agents for joint negotiations. The ruling may also be taken as a signal to both broadcasters and MVPDs to deescalate their conflicts, the attorney said. The past year has had an unusually high number of blackouts, say the lawyer and MVPD allies seeking retrans rule changes.

The decision "shows again that the entire retransmission consent process is broken and demands immediate reform," AT&T said. "This was clearly one of the more egregious examples of how broadcasters routinely hold consumers hostage into paying higher and higher retrans fees," it said, urging Satellite Television Extension and Localism Act reauthorization to head off increased TV blackouts "as the FCC will no longer be a backstop against such bad faith conduct from broadcasters."

AT&T said it has reached deals with three of the nine broadcasters in the complaint. The telco MVPD remains in talks with the rest.