The Federal Communications Commission (FCC) has proposed a $720,000 fine against Nexstar Media Group after upholding a complaint filed by a Hawaiian cable television owner that claimed the broadcaster didn’t negotiate toward a new carriage agreement in good faith.
The complaint was filed by Hawaiian Telcom last summer after it was forced to pull two Honolulu-based television stations — KHON (Channel 2, Fox and CW) and KIII (Channel 9) — and several digital television networks affiliated with the Nexstar-owned stations.
Like other cable and satellite companies, Hawaiian Telcom paid fees to Nexstar in exchange for the right to redistribute their local broadcast channels to cable subscribers. The channels were dropped from Hawaiian Telcom’s cable system after both sides were unable to renew an earlier agreement prior to its expiration.
In its complaint, Hawaiian Telcom said Nexstar turned down an offer that would have kept the two channels and associated digital broadcast networks on its cable system for one week while both sides continued to negotiate. Instead, just before the expiration of the original deal, Nexstar countered with an offer to preserve the channels on Hawaiian Telcom for “consecutive one-hour lengths totaling only two hours in length.”
“Nexstar’s failure to honor the terms and conditions of the expired retransmission consent agreement while negotiations were ongoing constitutes bad faith negotiating,” Mary Talbott, the chief legal officer for Hawaiian Telcom, wrote in the initial filing.
At one point, Nexstar offered to sign a new carriage agreement with Hawaiian Telcom on condition that it withdraw the FCC complaint, attorneys for the cable company wrote in a follow-up brief. Both sides ultimately did reach an agreement without the condition, and Hawaiian Telcom moved forward with the grievance.
On Wednesday, officials at the FCC said Hawaiian Telcom didn’t meet the burden of proof necessary to establish that Nexstar violated the law by refusing to agree to a temporary extension while negotiations were still ongoing. But the agency said Nexstar’s demand that the cable operator withdraw its FCC complaint in order to strike a new agreement was proof that the broadcaster did not engage in good faith negotiations at some point in the process.
The FCC proposed $240,000 in fines connected to KHON and KHII, and another $480,000 in fines for four television stations that rebroadcast KHON and KIII programming. All told, the fines total $720,000.
“We find that Nexstar breached its duty to negotiate in good faith with respect to each of the six stations whose carriage was the subject of the parties’ negotiations,” a spokesperson for the FCC wrote in the order issued on Wednesday.
It continued: “We also take into account that the harm suffered by Hawaiian Telcom’s subscribers was multiplied with each station that went dark, which in this case, included three of the big six broadcast stations, including the top-rated station.”
In this specific case, the FCC said Nexstar ordered Hawaiian Telcom to withdraw the FCC complaint as part of a proposed contract agreement extended to it on July 12, with the stipulation remaining in place until Nexstar withdrew it on July 20.
“For each of the stations, therefore, an apparent violation began on July 12, 2023 and continued for eight days until July 20, 2023, the date on which the parties executed a renewal agreement that no longer contained that provision,” the FCC said.
Nexstar is required to pay the fine within 30 days, though it will be given an opportunity to appeal the fine or request that it be changed to a lower amount. Such requests are rarely granted by the FCC; it wasn’t clear if Nexstar intended to appeal the fine or pay it.