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Before the Federal Communications Commission Washington, D.C. 20554

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Before the Federal Communications Commission Washington, D.C. 20554 Before the Federal Communications Commission Washington, D.C. 20554 ) In the Matter of ) ) Amendment of the Commission’s ) MB Docket No. 10-71 Rules Related to Retransmission ) Consent ) ) COMMENTS OF BLOCK COMMUNICATIONS, INC. (“BCI”) I. Introduction and Summary. As both a broadcaster and smaller cable operator, BCI calls on the Commission to take firm action to reign in anticompetitive, anticonsumer conduct now proliferating the retransmission consent environment. As some broadcasters maneuver to squeeze out competing stations solely to gain retransmission consent leverage, and as some national networks demand a major cut of retransmission consent revenues from affiliates, consumers are losing on all fronts, facing sharply higher basic cable costs, while losing access to adjacent market stations, in many cases, stations available on cable for decades. No marketplace forces constrain this conduct, and the consumer harm is manifest. The Commission must step in as the “cop on the beat.” If the Commission fails to take firm action, major cost increases and service disruptions will result. Consumers will face steep basic cable rate increases in 2012 and beyond, just to cover new retransmission consent fees. Consumers will also contend with significant disruptions in viewing patterns, as broadcasters and networks cut off cable carriage of more adjacent market stations. The Commission has authority to prevent these harms; and it must act to do so. We make clear at the outset: BCI vigorously supports free, over-the-air broadcasting. “The national over-the-air television broadcast system is an American triumph.”1 But, in the current retransmission consent environment, certain powerful broadcasters and networks are manipulating the system in blatantly anti-competitive ways, all to extract ever-increasing fees from consumers. That conduct is contrary to the public interest, and the Commission must address it. These comments describe the following three areas of anticompetitive, anticonsumer retransmission consent conduct requiring Commission intervention: Broadcaster attacks on the significantly viewed status of adjacent market stations solely to gain leverage in retransmission consent negotiations; Broadcasters and networks preventing distribution of adjacent market stations, even in communities within the adjacent market station’s noise limited service contour, solely to gain leverage in retransmission consent negotiations; National broadcast networks’ demands for a major “cut” of retransmission consent revenues from affiliates. We also describe why the Commission should harmonize the syndicated exclusivity and network nonduplication rules by adopting a Grade B/noise limited service contour exception for network nonduplication. This will aid in limiting the ability of in-market broadcasters to require cable systems to black out competing programming that is readily available over-the-air. 1 See, e.g., In the Matter of Innovation in the Broadcast Television Bands: Allocations, Channel Sharing and Improvements to VHF, ET Docket No. 10-235, Comments of Block Communications, Inc. et al, at 6 (filed Mar. 18, 2011). 2 Block Communications, Inc. Comments MB Docket No. 10-71 May 27, 2011 Block Communications, Inc. BCI is a privately-held, family-owned media and communications company headquartered in Toledo, Ohio. BCI is owned by the Block family, which has been in the media business for over 100 years. BCI’s operations include television broadcasting, newspaper publishing, cable television, high-speed Internet access, and telecommunications services. BCI’s media and communications businesses include five smaller market television stations, two cable systems, two newspapers, and a telephone company. BCI acquired broadcast stations WLIO (Lima, Ohio) in 1972, WDRB (Louisville, Kentucky) in 1984, KTRV (Boise, Idaho) in 1985, WAND (Decatur, Illinois) in 2000, and WMYO-TV (Salem, Indiana) in 2001. BCI built its first cable system in 1965 in Toledo, Ohio, and acquired the cable system serving Sandusky, Ohio, in 1981. II. The Commission must act to reign in the anti-competitive, anti-consumer conduct proliferating the current retransmission consent environment. As a broadcaster and cable operator, BCI sees with disturbing clarity the looming retransmission consent crisis. Absent Commission intervention before the upcoming retransmission consent round, the conduct of certain broadcasters and networks will propel major basic cable rate increases in 2012, easily ranging between $3.00 and $5.00 per month, just to cover new retransmission consent fees. At the same time, consumers will suffer significant disruption in established viewing patterns, as broadcasters and networks force cable operators to pull more signals. Many of the developments we discuss here are new, and were either not present or not significant in previous rounds. To avert widespread consumer harm, the Commission must dig beneath the rhetoric and learn how powerful broadcasters and networks are manipulating 3 Block Communications, Inc. Comments MB Docket No. 10-71 May 27, 2011 retransmission consent. We discuss below recent retransmission consent developments requiring near-term Commission intervention and propose specific action the Commission should take. A. The Commission must stop broadcasters’ attacks on the significantly viewed status of adjacent market stations solely to gain retransmission consent leverage. In the past three years, certain broadcasters have initiated Commission proceedings to have stations taken off the Commission’s significantly viewed list.2 In nearly all cases, the petitions targeted adjacent market stations that have had significantly viewed status for years and that have been carried for years on cable systems in the petitioning station’s DMA. There is one reason, and only one reason, for an in-market station to attack the decades-old significantly viewed status of another station: To block a competitor so as to gain retransmission consent leverage and extract higher fees. Significantly viewed status is an exception to cable black out obligations under the network nonduplication and syndicated exclusivity regulations.3 As some broadcasters have pushed for major increases in retransmission consent fees, their strategies have been frustrated by competition – the cable system having access to a significantly viewed station affiliated with the same network. Certain broadcasters have responded to this situation by using regulatory 2 See, e.g, In the Matter of WPBF-TV Company Petition for Waiver of Sections 76.92(f) and 76.106(a) of the Commission’s Rules, Memorandum Opinion and Order, 25 FCC Rcd 9102 (2010); In the Matter of WGME Licensee, LLC Petition for Waiver of Section 76.92(f) of the Commission’s Rules, Order on Reconsideration, 25 FCC Rcd 13520 (2010); In the Matter of Centex Television Limited Partnership Petition for Waiver of Section 76.92(f) of the Commission’s Rules, Order on Reconsideration, 25 FCC Rcd 13526 (2010); In the Matter of WyoMedia Corporation Petition for Waiver of Sections 76.92(f) and 76.106(a) of the Commission’s Rules, Memorandum Opinion and Order, 26 FCC Rcd 3770 (2011); In the Matter of WISN Hearst-Argyle Television, Inc. Petition for Waiver of Sections 76.92(f) and 76.105(a) of the Commission’s Rules, Memorandum Opinion and Order, DA 11- 539, CSR-7764-N (rel. Mar. 23, 2011). 3 47 C.F.R. § 76.92(f) (network nonduplication); 47 C.F.R. § 76.106(a) (syndicated exclusivity). 4 Block Communications, Inc. Comments MB Docket No. 10-71 May 27, 2011 proceedings to eliminate the competition. Predictably, higher retransmission consent fees and higher costs for consumers follow. BCI has first-hand experience with this conduct. Two broadcast stations in Toledo sought waivers of the significantly viewed status of two Detroit television carried on BCI’s Toledo cable system.4 The two Detroit stations at issue could be received over-the-air in Toledo, had been “significantly viewed” in the City of Toledo for more than 40 years, and have been carried on BCI’s cable system for nearly as long. After decades of this harmonious status quo, the Toledo stations suddenly challenged the Detroit stations’ significantly viewed status.5 The only explanation: The stations aimed to eliminate competitors, gain leverage, and extract higher retransmission consent fees from BCI and its customers. The significantly viewed cases demonstrate broadcasters’ increasing actions to eliminate competitors, drive up retransmission consent fees, and, in many cases, disrupt long-established viewing patterns. The Commission should not tolerate this anticompetitive, anticonsumer conduct by broadcast licensees. 4 The two Toledo stations sought network nonduplication exclusivity for only those cable subscribers in the City of Toledo. The Toledo stations could not gain access to diaries collected by The Nielsen Company to establish a loss of significant viewership in the other communities of Lucas County, Ohio served by BCI’s cable system. See In the Matter of WTVG, Inc. Petition For Waiver of Section 76.92(f) of the Commission's Rules, Memorandum Opinion and Order, 25 FCC Rcd 2665 (MB 2010); In the Matter of WUPW Broadcasting, LLC Petition For Waiver of Section 76.92(f) of the Commission's Rules, Memorandum Opinion and Order, 25 FCC Rcd 2678 (MB 2010) (“Media Bureau Orders”). 5 Applications for Review seeking full Commission review of the Media Bureau Orders have been filed with the Commission. See In the Matter of WTVG, Inc. and WUPW Broadcasting, LLC Petitions for Waiver
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