FCC proposes $10 million fine against 18 TV stations over DirecTV negotiation

(Image: AT&T/Handout, Graphic: The Desk)

The Federal Communications Commission (FCC) has proposed a fine totaling more than $10 million against the owner of 18 broadcast television stations for failing to negotiate in good faith with AT&T over re-transmission fees paid in exchange for the right to carry stations on AT&T U-Verse TV and satellite service DirecTV.

According to a heavily-redacted notice issued by the FCC and obtained by The Desk on Tuesday, the issue stems from a round of negotiations between AT&T and Deerfield Media, the owner of 18 local television stations across the country. Those stations are operated under a shared services agreement with Sinclair Broadcast Group, which was not a party to the complaint, the FCC said.

Negotiations between AT&T and Deerfield Media took place in March 2019 before the expiration of AT&T’s re-transmission agreement to carry the stations. During the negotiations, AT&T alleged representatives from Deerfield Media offered numerous proposals multiple times with financial and other terms that would be exchanged for AT&T’s right to carry the stations on AT&T U-Verse TV and DirecTV.

The problem, AT&T alleged, is that each time Deerfield Media came back to the negotiating table, their terms were substantially different from before.

In late May 2019, Deerfield Media began pulling their stations from AT&T U-Verse and DirecTV, with all stations going dark on both platforms by mid-June. Within days of the final stations being pulled, AT&T filed a complaint with the FCC alleging Deerfield Media wasn’t negotiating in good faith as required by Section 325 of the federal Communications Act.

Four months after the stations were pulled, AT&T and Deerfield Media reached an re-transmission agreement. But by then, the complaint was already working its way through the FCC. In November 2019, the FCC’s enforcement bureau found in favor of AT&T, saying Deerfield Media didn’t participate in good-faith negotiations earlier in the year.

Deerfield Media appealed the decision, only to be denied this week when FCC commissioners found in favor of the enforcement bureau and proposed a $512,228 fine against each station owned by the broadcast company. The fine marks the first time the FCC has issued a notice of liability against a broadcast operator for not negotiating a re-transmission agreement in good faith.

“The [FCC’s] rules requiring good faith negotiation for re-transmission consent are intended to do more than make sure parties play nice with each other,” FCC commissioner Geoffrey Starks said in a statement. “When effective, they also protect consumers from service interruptions when negotiations between broadcasters and multichannel video programming distributors break down.”

Starks said consumers have been confronted with the reality of losing local stations at an alarming rate, and “consumers continue to experience blackouts, losing local broadcast programming at a time when access to local news and information can be critical.”

“Filing a complaint brought countless other hardships, consumers continue to experience blackouts, losing local broadcast programming at a time when access to local news and information can be critical,” Starks said.

Fellow commissioner Michael O’Rielly said he agreed with the FCC’s decision to hold Deerfield Media liable, but felt the fine imposed was too high.

“Even during better days, when our country is not facing the challenges of a global pandemic, imposing the statutory maximum on individual stations by way of a novel, first-time application of the rules could be disproportionately punitive and significantly threaten the operations of these stations,”O’Rielly said.

Correction: An earlier version of this story erroneously said the proposed fine was over $500,000. The actual fine being proposed is over $10 million, and while it’s technically true that $10 million is “over $500,000,” the article has been updated to reflect the greater amount.