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Nexstar asks FCC to reduce $720,000 fine over Hawaiian Telcom spat

The front of the Federal Communications Commission building in Washington, D.C. (FCC public domain image)
The front of the Federal Communications Commission building in Washington, D.C. (FCC public domain image)

Nexstar Media Group is asking the Federal Communications Commission (FCC) to toss out or substantially reduce a $720,000 fine imposed over the broadcaster’s carriage dispute with a Hawaii-based cable TV operator last year.

In February, the FCC’s Media Bureau imposed the fine after upholding a complaint brought by Hawaiian Telcom that accused Nexstar of not engaging in good faith negotiations over carriage of certain Honolulu-based local TV channels last summer.

The fine was imposed based on the number of TV stations and related translators affected during the dispute, as well as the length of time that the FCC accused Nexstar of failing to negotiate a new carriage agreement in good faith, as required under federal law.

Last week, Nexstar exercised its option to have the FCC take another look at the fine, with attorneys for the broadcaster arguing that the financial liability imposed exceeded the FCC’s own authority.

“The forfeiture should be canceled or, at a minimum, substantially reduced,” attorneys for Nexstar said in the filing.

According to Nexstar’s interpretation of federal law, the fine imposed by the FCC should not have exceeded $7,500 for the apparent violation. But the agency “[magnified] the forfeiture to nearly three-quarters of a million dollars based upon a series of questionable multipliers and a draconian upward adjustment that is based on no apparent rationale other than that Nexstar is a large and successful broadcaster,” attorneys said.

“Every action that the FCC and its bureaus take must be consistent with both the scope of their authority and the Administrative Procedure Act’s reasoned decision-making requirement,” Nexstar continued. “This bedrock principle applies not only to substantive determinations of whether conduct is consistent with or violates applicable law, but also to the manner in which the FCC and the Bureau assess forfeitures for alleged violations.”

For this reason, Nexstar believes that “the forfeiture proposed therein should be cancelled or, at a minimum, reduced to a rational amount.”

Last summer, Hawaiian Telcom filed a series of complaints with the FCC over Nexstar’s apparent behavior while both sides were working toward a new carriage agreement for the channels.

The first complaint accused Nexstar of turning down an offer to keep KHON (Channel 2, Fox) and a sister-channel on its cable platforms while both sides worked toward a new agreement. Nexstar later demanded Hawaiian Telcom withdraw that complaint as a condition of any future agreement, which triggered a second filing by the cable operator to the FCC.

The agency ultimately dismissed the first complaint, but upheld the second, saying Nexstar’s demand that Hawaiian Telcom withdraw its grievance as a condition of a new carriage deal was proof that the broadcaster did not negotiate in good faith as required by law.

In its appeal, Nexstar admits it demanded a retraction of the first complaint, but said that shouldn’t be used against the broadcaster because Hawaiian Telcom forced the issue.

“The parties were nearing agreement when Nexstar proffered the release provision, and Nexstar would not have presented the proposal at all had [Hawaiian Telcom] not previously filed a good faith negotiation complain,” attorneys for Nexstar wrote in the appeal, noting that the withdrawal requirement was ultimately not present in the finalized deal that allowed Hawaiian Telcom to restore the channels.

Nexstar said the new deal negated any notion that the release condition was proof that the broadcaster “frustrate[d] the functioning of a competitive market,” as alleged by the FCC when it imposed the fine.

“The simple fact is that HTSC had lodged a good faith complaint against Nexstar in the midst of the renewal negotiations and, as those negotiations were reaching conclusion, Nexstar proposed a ‘clean slate’ provision which, contemporaneously with a renewal of retransmission consent, would bring the pending dispute to a close,” attorneys for Nexstar asserted. “Such provisions are commonplace and customarily requested by both broadcasters and [cable TV operators] in such situations.”

In a separate matter, Hawaiian Telcom has asked the Commissioners of the FCC to review the Media Bureau’s decision to not uphold its original grievance that claimed Nexstar acted in bad faith when it turned down a proposal to extend its original contract during negotiations.

In its appeal on the matter, Hawaiian Telcom said Nexstar “used the looming blackout deadline as a cudgel in an attempt to force Hawaiian Telcom’s capitulation to whatever Nexstar’s last proposal was before time ran out.”

Last month, the Media Bureau sided against Hawaiian Telcom, saying federal law doesn’t force broadcasters to accept or even consider an extension of an expiring contract.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 10 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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