The Federal Communications Commission (FCC) this week approved the transfer of two television broadcast licenses over the objection of DIRECTV and a number of other industry advocacy groups.
The decision cleared the way for the transfer of control of Fox affiliate WFQX-TV (Channel 32) in Cadillac, Michigan and satellite station WFUP-TV (Channel 45) in Vanderbilt, Michigan, from Cadillac Telecasting to the Mario Peter Iacobelli Revocable Trust.
The ruling marks another setback for DIRECTV, which has increasingly challenged broadcast station transactions at the FCC on the grounds that industry consolidation gives station owners greater leverage during carriage negotiations.
DIRECTV filed a petition to deny the application in March, arguing that the transaction would create attributable ownership interests between the stations and Heritage Broadcasting, the owner of WWTV (Channel 9, CBS) in Cadillac and WWUP (Channel 10, Fox) in Sault Ste. Marie. The pay TV provider claimed the combination could ultimately result in higher retransmission consent costs that would be passed on to distributors and consumers.
The stations have maintained close operational ties for nearly two decades. After agreeing to acquire WFQX and WFUP in 2007, Cadillac Telecasting entered into a shared services agreement with Heritage Broadcasting that included put and call options tied to debt guarantees provided by Heritage.
In opposing DIRECTV’s petition, Heritage and Cadillac argued that the satellite provider’s claims were speculative and unsupported by evidence.
The FCC agreed: In a decision issued by the FCC’s Media Bureau this week, the agency said the proposed transaction complies with federal ownership rules and that concerns over higher programming fees were speculative at best,
“The proposed transaction fully complies with the Commission’s rules, including the post-Zimmer Radio Local Television Ownership Rule, and there are no issues or potential public interest harms identified in the record that would require further consideration,” the agency said.
The FCC also concluded that DIRECTV failed to provide transaction-specific objections that would justify blocking an otherwise compliant deal.
In recent months, DIRECTV has lost similar challenges brought to the FCC concerning station purchases or swaps involving Sinclair, Gray Media, the E. W. Scripps Company, Nexstar Media Group and TEGNA.
One day before the FCC approved Nexstar’s $6.2 billion acquisition of TEGNA by granting waivers to its media ownership rules, DIRECTV filed a lawsuit challenging the deal on antitrust grounds. In April, a federal judge overseeing the case granted a temporary injunction that prevents Nexstar from commingling most of its operations with TEGNA, though the company is allowed to operate TEGNA as a subsidiary and is permitted to make financial disclosures as required by law. Nexstar is appealing the injunction.
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