The facts of the case read like a “made for TV” movie. Cable TV giant Comcast, which owns the NBC television network, plays “hard ball” with WHDH-TV, Boston (Channel 7) owner Ed Ansin for over a year and refuses to negotiate his station’s long-time NBC affiliation. In September 2016, Comcast summarily announces that it will not renew Channel 7’s NBC affiliation and will instead launch its own NBC affiliate in Boston next year. Then in a final touch that would make even the mob blush, Comcast makes a “low-ball” offer to buy Ansin’s station after they had just devalued it.
Channel 7 fights back with a breach of contract and antitrust lawsuit before a federal judge in Boston dismisses the case on May 16, 2016. Case closed, end of story, right? Not even close. It’s prime time for the FCC and the Congressional Commerce Committees to conduct a full-scale inquiry into this controversy. Here’s why.
{mosads}When Comcast negotiated government approval of its purchase of NBC, it promised the Federal Communications Commission (FCC) that as it “negotiates and renews agreements with its broadcast affiliates, Comcast will continue its cooperative dialogue with its affiliates to maintain free, over the air access…” But, the federal judge ruled that clever legal wordsmithing means that Comcast’s promise is meaningless and does not assure any station of a “cooperative dialog” regarding affiliation renewal, or viewers continued over the air access. The FCC and the Commerce Committees in Congress now have the opportunity – and obligation – to ask the tough questions.
1. What exactly did Comcast/NBC mean when they promised the FCC and the NBC affiliates a “cooperative dialog” regarding affiliation renewals?
2. Is an absolute refusal to negotiate at all consistent with a promise of a “cooperative dialog?”
3. What are the public interest implications for the four million Boston area viewers who will lose free over-the-air access to NBC programming including the NFL and the Olympics?
4. What does it say about Comcast/NBC’s good faith that it informed Channel 7 of its refusal to negotiate regarding an affiliation renewal on a Friday and then on the following Monday made him a low-ball offer to buy the Station?
5. What are the implications of the Comcast/NBC power grab in Boston for other local NBC affiliated TV stations – particularly affiliates in markets where Comcast is the monopoly cable provider?
Beyond the specific facts in Boston, the Comcast/Channel 7 controversy raises two broader public policy questions. The first involves the always somewhat contentious relationship between the national broadcast networks and the local affiliated stations. Recently the networks gained the leverage to extract completely uneconomic terms from the local affiliates. For example, one local station in a very small market recently received a demand to increase its current $350,000 per year “reverse” network compensation payment to $1,350,000 – an outrageous increase by any standard. The Comcast/Channel 7 controversy is a symptom of the same unhealthy imbalance of power. TV viewers will be disserved if the networks succeed in driving diversely owned local stations out of business or forcing them to all merge into mega-groups.
The second broader public policy question involves the government’s review of major media mergers. The imposition of negotiated “conditions” has long been a safety valve to allow private parties to close transactions that pose a threat to competition and the public interest. The slippery, and apparently meaningless, “cooperative dialog” language in the Comcast/NBC conditions raises the question whether conditions ever can be relied upon to protect the public interest. Perhaps, as former FCC Commissioner Mike Copps has argued for years, problematic mergers like Comcast/NBC simply should be blocked.
If the FCC and Congress do not step in, Comcast will be free to implement its radical Boston “experiment” to move all NBC programming from Channel 7 – a free-over-the-air local broadcaster that covers all of Boston – to Comcast’s own pay-cable news channel, supplemented by a significantly weaker broadcast signal in New Hampshire. If this “experiment” is successful, it almost certainly will be repeated in other cities. That can’t be a sequel the FCC or the Commerce Committees want to see played out over and over again.
Preston Padden has spent 40 years as a media business executive including serving as President of the ABC Television Network and the Association of Independent Television Stations among other senior positions with Fox Broadcasting Company, The Walt Disney Company, and Metromedia. He advised Channel 7 after its lawsuit was filed.