FCC Fines Broadcaster $150,000 for Failure to Negotiate Retransmission Consent in Good Faith

The FCC has fined Mission Broadcasting $150,000 for failing to negotiate a retransmission consent agreement in good faith. The case shows some of the pitfalls that TV broadcasters and multi-channel video programming distributors (MVPDs) can face when negotiating retransmission consent arrangements.

Television stations and MVPDs - cable and direct broadcast satellite operators - are required to negotiate retransmission consent agreements in good faith. The FCC’s rules contain a number of examples of behavior that demonstrates a lack of good faith, such as the refusal by a party to offer more than a single, unilateral proposal. Even if those specific acts are absent, a lack of good faith can be shown by the “totality of the circumstances.” In adopting the good faith rule, the FCC stated that “proposals for contract terms that would foreclose the filing of complaints with the Commission” are presumptively contrary to the good faith requirement.

The negotiations between Comcast Cable Communications and Mission Broadcasting for carriage of CW network station WPIX(TV) in New York City in 2022 apparently were contentious, and resulted in suspension of carriage by Comcast for a brief period. Nexstar Media Group, which is the licensee of numerous television stations in other markets and has shared programming and services relationships with Mission, acted as Mission’s representative in the negotiations. At one point, Nexstar presented an offer to Comcast which would have prevented either party from seeking FCC action related to certain carriage negotiations. Comcast filed a complaint with the FCC alleging that Nexstar’s offer, made on behalf of Mission, violated the obligation to negotiate in good faith. Shortly thereafter, the parties entered into an agreement for carriage of WPIX(TV) which did not include the provision precluding the parties from seeking FCC action regarding carriage disputes.

Even though the parties ultimately reached an agreement without including that provision, the FCC found that because Mission’s offer included the prohibited provision, it violated the obligation to negotiate a retransmission consent agreement in good faith.

There are several takeaways from this case that can provide useful guidance to TV broadcasters and MVPDs in navigating carriage negotiations.

First, while a station’s right to negotiate a carriage agreement can be delegated to a third party, provided that the third party does not have an attributable interest in a TV station in the same market, the licensee of the station will remain responsible for the acts of its representative. In this case, Comcast brought the complaint against Nexstar as well as Mission. While the FCC acted only against Mission, it noted that the allegations against Nexstar were under review and did not rule out further action against Nexstar. It is important for broadcasters to carefully choose the party that will represent them in negotiations, and to obtain indemnification from that party for any liability resulting from that party’s actions.

Second, bad faith negotiating positions can result in liability even if the final agreement does not contain those positions. In other words, there is no “no harm-no foul” rule.

Third, liability for failure to negotiate in good faith can be substantial. The FCC’s base forfeiture for violation of the cable broadcast carriage rules is $7,500. The FCC also has the discretion to treat each day of a continuing violation as a separate violation and to impose a forfeiture for each day. In this case, the FCC determined that each of the ten days between Nexstar’s offending proposal and the ultimate definitive agreement constituted a separate violation, for a total base forfeiture amount of $75,000. The FCC then adjusted the forfeiture upward to $150,000 based on Mission’s prior violations of FCC rules and its financial relationship with Nexstar. In essence treating Mission and Nexstar as a single entity for financial purposes, the FCC adjusted the forfeiture upward to ensure that the fine was not “merely an affordable cost of doing business,” but a “meaningful sanction and deterrent against future misconduct.”

For more information about the retransmission consent good faith negotiation requirements, contact an attorney in our Media practice group.