MediaCom Poised to Drop 22 Sinclair Stations

Jan 5, 2007  •  Post A Comment

A potentially precedent-setting battle between MediaCom Communications and Sinclair Broadcast Group over broadcast TV retransmission rights payments escalated today, with MediaCom saying it will drop 22 Sinclair stations from its cable systems in 12 states at midnight tonight.

MediaCom Chairman and CEO Rocco B. Commisso said he is being forced to drop the stations after failing to reach agreement on a new carriage contract, a move that will deny 500,000 MediaCom households cable access to some major network stations. MediaCom, the country’s No. 8 multiple system operator, provides service in smaller cities.

MediaCom and Sinclair have been fighting over retransmission since September. Sinclair, which hasn’t been getting retransmission fees, wants MediaCom to start paying fees for its 22 stations in MediaCom’s service areas, arguing that it should be getting the kinds of fees cable program providers get. MediaCom has been trying to limit fees to 12 major network stations that get the majority of local viewership and to get other, lesser stations for less or nothing.

The fight had already been escalating, with MediaCom filing an anti-trust lawsuit against Sinclair and a complaint with the Federal Communications Commission charging that Sinclair wasn’t engaging in “good faith” negotiations. Meanwhile Sinclair has been offering local residents $100 to sign up with satellite services competing with MediaCom.

The FCC’s Media Bureau rejected MediaCom’s complaint yesterday, urging the two companies to engage in binding arbitration. Mr. Commisso said today MediaCom would appeal the Media Bureau’s action to FCC commissioners. He said his company is willing to engage in binding arbitration, but that Sinclair has been unwilling to negotiate, and that it has been increasing the amount of its payment demands, asking rates that are 100 percent to 500 percent higher than it is getting from Comcast or from satellite services for the same channels.

“The egregious demands by Sinclair will become a lightning-rod issue for Congress and are going to lead to much higher consumer rates,” he said.

Barry Faber, Sinclair’s VP-general counsel, called the Media Bureau’s action yesterday “a resounding victory not just for Sinclair, but for all broadcasters in their efforts to be fairly compensated by cable companies. In addition to its overall holding that our actions in this negotiation have been completely legal, we were particularly gratified by the FCC’s conclusion that marketplace considerations for the value of broadcast stations can take into account the prices cable companies pay for nonbroadcast, cable channels.”

(Editor: Gilbert)