The FCC has denied Gray Television's retransmission consent complaint against Frontier Communications, saying Frontier did not violate the agency’s good-faith standards, its totality of circumstances test or its notice requirements.
Gray had alleged that Frontier had failed to negotiate a new contract in good faith, as FCC rules require, and had also violated customer notice requirements about a potential blackout.
According to the FCC good-faith standard, “broadcasters and MVPDs must actively participate in retransmission consent negotiations, with the intent of reaching agreement, though failure to reach agreement is not itself a violation of the rules or statute.“
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As to the notice requirements, “cable operators [must] notify subscribers of any changes in rates or services at least 30 days in advance of the change, unless the change results from circumstances outside of the cable operator’s control (including failed retransmission consent or program carriage negotiations during the last 30 days of a contract).”
The FCC's Media Bureau concluded Frontier had done both of those things. "We agree with Frontier that it complied with the obligation to negotiate retransmission consent in good faith, including its per se obligation to negotiate retransmission consent, its per se obligation to designate a representative with authority to make binding representations on retransmission consent, and compliance with the totality of the circumstances test," the bureau said in denying the complaint. "We also find that Frontier fulfilled its customer notice obligations."
Frontier had said it had a business reason for not accepting Gray offers, which was that the carriage was not as valuable as it had been. The FCC agreed that was legitimate. "We find that a party is permitted to adjust its bargaining position as negotiations proceed and doing so is not bad faith. In this case, Frontier ascertained information causing it to conclude that a station was less valuable to it than previously thought," the bureau said.
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The FCC also concluded that it was not misleading for Frontier to assert that over-the-top access to Gray TV's programming continued to be available over the station's own web site and mobile applications.
Gray had formally complained to the FCC that Frontier was not negotiating in good faith and did not give its customers "as soon as possible" notice of a potential blackout, both of which are required under FCC rules.
The complaint asserted that Frontier appeared never to have intended to carry the stations after the contract expired Dec. 18. "Instead, it just strung Gray along for weeks making us believe progress was being made until informing Gray with less than an hour to go that Frontier’s negotiator actually had no authority to enter into an agreement on the terms she had most recently offered to us and in fact she could not agree to terms along the lines of any of the proposals she had made over the last several weeks."
If the lead negotiator had no power to negotiate, Frontier could hardly be negotiating in good faith, which would violate FCC rules.
Frontier begged to differ.
“The simple fact is that Frontier and Gray disagree over the value of Gray’s stations,” the cable company said in its reply to the FCC complaint. “After 25 days of negotiation and three offers put forth by Frontier, any of which Gray could have accepted, Gray now cries foul because Frontier did not agree with the financial terms that Gray wanted to force on Frontier and its customers.”
While Gray asserted that Frontier “removed Gray’s stations from its online channel guides several weeks before the agreement was due to expire,” and possibly even before negotiations on a new carriage deal began, Frontier said that was not the case and that it did not update its “customer-facing” channel guides until after the agreement had expired."
