Former FCC commissioner: 'No white hats' in Mediacom-Sinclair dispute

Former FCC Commissioner Nicholas Johnson sees no good guys or bad guys in the Mediacom-Sinclair retransmission dispute that could yet inconvenience hundreds of thousands of Iowa households.

“There are no white hats anymore,” the University of Iowa law professor said. “You have two corporate monoliths that are going after each other like two dinosaurs from ages past.”

Sinclair had threatened to withdraw Fox affiliates KFXA in Cedar Rapids and KDSM in Des Moines, as well as CBS affiliate KGAN in Cedar Rapids, from Mediacom as the New Year arrived if Mediacom did not agree to substantially increase its retransmission payments. By early afternoon Thursday, the two sides had agreed to an eight-day extension of the agreement that will avoid interference from the dispute in the broadcast of the Orange Bowl. But the eight days will not cover some other big TV events, such as the Super Bowl, and Sinclair General Counsel Barry Faber said he's still advising Mediacom customers not to take an agreement for granted.

Johnson said he's no admirer of Sinclair Broadcast Group, which is known for its heavy-handed tactics. But he said Sinclair, which wants more money from Mediacom to carry 22 of its stations, is justifiably trying to improve its revenue model using retransmission fees to replace flagging advertising revenues, and is allowed by law to do so using retransmission negotiations.

“The old advertising model is no longer working for broadcasters,” Johnson said. “Everybody is looking for a new business model in an age in which people are used to getting all their information free off the Internet and their own advertising revenue off the Internet has not been enough to compensate for the loss,” Johnson said.

Mediacom has asked the FCC to prevent Sinclair from taking its stations off its cable network, claiming Sinclair is violating good faith rules governing retransmission negotiations. The cable provider says Sinclair has achieved an inequitably strong bargaining position by creating “duopolies” of two television stations in markets where it should only control one.

Among the duopolies Mediacom claims Sinclair is operating are KFXA, the Cedar Rapids Fox affiliate, and KGAN, the Cedar Rapids CBS affiliate. Sinclair counters that it only has management agreement for KFXA, and is willing to turn over retransmission negotiations to the station's true owner.

Johnson says duopolies are a serious concern, but he doesn't see the retransmission negotiations as being the place to address that issue.

“Here, the question is the remedy,” Johnson said. “The fact that Sinclair is a really bad actor and has duopolies in the violations of the law goes to whether Sinclair should be allowed to keep its broadcasting license, not whether they should accept from Mediacom whatever Mediacom has to offer.”

A group called Iowans for Better Television has had a “very powerful petition” pending for five years with the FCC to revoke the license of Sinclair's KGAN, based on factors ranging from its technical transmission capabilities to inadequate community service, Johnson said. The FCC didn't act under the Bush administration, but Johnson said the group has told him they plan to make a new push under the Obama FCC.

While much of the media focus on the dispute has been on how Sinclair's denial of carriage rights for the station would hurt Mediacom, Johnson said Sinclair would also be hurt financially. He said viewership of the Sinclair stations would drop substantially, forcing Sinclair to lower its advertising rates to attract advertisers.

Mediacom's actions in resisting Sinclair's higher retransmission fee demands are understandable, Johnson said. The cable provider will have to raise its subscription fees to cover the rates, and doesn't want to be at a price disadvantage to satellite TV networks which have been making inroads on cable's market.

“It's very much more complicated than what most of the news reports made clear,” Johnson said. “There are economic realities and arguments on all sides, and it is a very small tempest in a very large teapot.”