FCC Proposes Forfeiture for Eight TV Station Groups for Failure To Negotiate In Good Faith

The Federal Communications Commission (FCC) considered an application for review (AFR) Tuesday by fifteen licensees in eight television broadcast station groups regarding 18 stations. In its decision, the FCC denied the AFR and proposed a penalty of $512,228 against each of the stations.

The defendants asked the FCC to review the Media Bureau’s decision that they did not negotiate in good faith with DirecTV and AT&T for consent to carry and broadcast the defendants’ licensed stations. The Bureau granted the AT&T complaint, and found that the defendants “refused to negotiate, unreasonably delayed negotiations, and failed to respond to AT&T’s carriage proposals, each constituting a per se breach of the duty to negotiate in good faith.”

Two Commissioners attached statements to the decision; Commissioner O’Rielly approved in part and concurred in part, while Commissioner Starks fully supported the decision.

“For the first time since the retransmission consent good faith negotiation rules were established, the Commission today adopts notices of apparent liability (NALs) for their alleged violation,” Commissioner O’Rielly said.  “Even though it is a novel decision, I agree that the record so far contains sufficient evidence of possible violations to proceed with the notices, and therefore I approve of issuing the NALs.”

The order began by citing that the Communications Act of 1934 requires broadcasters and multichannel video programming distributors (MVPDs) to negotiate retransmission consent in good faith. The FCC also implemented a Good Faith Order to define “good faith.” The FCC noted that the 18 stations serve a broad area of the United States, ranging from Florida to Oregon, and “collectively provide the four major commercial broadcast networks…to millions of viewers.”

According to the FCC, AT&T sought to negotiate with each station group but received no responses to proposals as the current agreements were close to expiring. In June 2019, AT&T filed the complaint claiming that the defendants “failed to negotiate retransmission consent in good faith by: (1) refusing to negotiate regarding retransmission consent; (2) unreasonably delaying retransmission consent negotiations; (3) failing to respond to retransmission consent proposals, including with the reasons for the rejection of proposals; and (4) breaching confidentiality and/or relying upon a breach of confidentiality to establish its negotiating position, in violation of the totality of the circumstances test.”

After the complaint was filed they reached an independent carriage agreement, but subscribers had lost access to these stations for four months before the agreements were signed. The Bureau granted the complaint in its November 2019 decision, finding that the defendants “violated the per se good faith negotiation requirements by refusing to negotiate with AT&T, unreasonably delaying negotiations, and failing to respond to AT&T’s proposals.” The Bureau noted that while the station groups attempted to collectively negotiate, that “does not excuse any member of that join negotiation from its individual obligation to comply with the good faith obligations of the statute and the Commission’s rules.” The Bureau also pointed to the fact that most of the stations were still unavailable as of its order, despite the parties’ other agreement.

The AFR averred that the Bureau’s decision “rests upon an ‘erroneous finding as to an important or material question of fact,’ ‘conflicts with statute, regulation, case precedents, or established Commission policy,’ and ‘involves application of a newly minted policy which should be overturned or revised.’”  The Bureau found that the Commission agreed with the its reasoning and conclusions, finding that the defendants “repeatedly refused to negotiate for carriage of the stations’ signals or to respond to any of AT&T’s proposals for carriage,” which caused unreasonable delays and led to millions of consumers losing access to this programming The FCC stated that this constituted a per se failure and violation. The FCC added that it has rejected the defendants’ allegations that the Bureau was “misled” or “uncritical.” Furthermore, the Commission stated that the Bureau’s decision “did not depart from the Commission’s rules and precedent.” Thus, the FCC in agreement with the Bureau found the television station groups willfully and repeatedly violated the Act and the FCC’s rules by their aforementioned conduct and has proposed a forfeiture of $512,228 for apparent liability for each of the stations.

Commissioner Starks stated, “The Media Bureau noted in the underlying order that this was the most egregious example of delay we’ve seen since the good faith negotiation rules were adopted. I therefore fully support proposing the maximum statutory forfeiture for these apparent, per se, violations, given the resulting direct harm to consumers. Going forward, Negotiating Entities should be on notice that similar instances of apparent failure to negotiate for retransmission in good faith, especially when resulting in blackouts and other harms to consumers, could result in similar proposed penalties.”