As we previously reported, the FCC is cracking down on certain practices that may occur in the retransmission consent process. During the process of negotiation, both parties may seek to limit subsequent legal exposure once they have reached an agreement. Thus, as part of the settlement, there may be standard provisions stating that neither party may file or complain to the FCC.
Unfortunately, the FCC is now looking at such provisions critically. Rather than considering them as part of a settlement process, the Commission is now looking at the provisions as a violation of the “good faith” provisions of the statute. The Commission stated:
“As noted, the Good Faith Order plainly states that “proposals for contract terms that would foreclose the filing of complaints with the Commission” are presumptively at odds with the good faith negotiation requirement. In denouncing this and similar proposals, the Commission explained:
[A]ny effort to stifle competition through the negotiation process would not meet the good faith negotiation requirement. Considerations that are designed to frustrate the functioning of a competitive market are not ‘competitive marketplace considerations.’ Conduct that is violative of national policies favoring competition . . . is not within the competitive marketplace considerations standard included in the statute."
Importantly, the FCC rejected the argument that a provision preventing the filing of a complaint applied to both parties and was limited to the facts surrounding the specific negotiations.
“Contrary to Nexstar’s suggestion, the Good Faith Order contains no exception or qualifying language that supports interpreting the phrase “proposals for contract terms that would foreclose the filing of complaints” as narrowly as Nexstar advocates. In particular, the fact that the provisions called for a mutual release of claims is irrelevant, as is the fact that Hawaiian Telcom was not prevented (nor would have been prevented) from filing any complaint.”
Bottom line, provisions in retransmission consent settlement contracts that prevent parties from complaining to the FCC will not be enforceable and will lead to fines from the FCC. This decision follows several previous decisions and now makes it clear the FCC will fine stations for including such provisions in their retransmission consent agreements.
You can see the FCC’s decision here.
You can find a good article on this subject from Policyband here.