The FCC has issued a $2.25 million forfeiture against Houston multichannel video programming distributor (MVPD) TV Max and its affiliates for continuing to retransmit six broadcast television stations after their agreements had expired.  The Forfeiture Order follows a June 2013 Notice of Apparent Liability, in which the Commission proposed the forfeiture.

Prior to January 1, 2012, TV Max had retransmission consent agreements with Fox Television Holdings, Inc.; Univision Communications, Inc.; Post-Newsweek Stations, Houston, Inc.; and ABC, Inc. for the six stations in question.  By March 2, 2012, however, each of those agreements had expired – yet TV Max continued to retransmit the signals of those stations without consent.  TV Max claimed that it was no longer required to obtain retransmission consent for those stations under the master antenna television (MATV) exception to the retransmission consent requirement.  Under that “narrow” exemption, an MVPD can provide a signal obtained using an MATV system without entering into a retransmission consent agreement only if: (1) the signal is available to the subscriber at no charge and at the subscriber’s option; and (2) the antenna facility is owned by the subscriber or the building owner or available for purchase by the subscriber or building owner upon termination of service.  The Commission found that although by January 1, 2012, TV Max had begun to install MATV systems on some of the buildings it serves, it did not complete the installation of those systems until July 26, 2012.  Even then, “TV Max retransmitted at least some broadcast signals received at its off-site cable headend via its fiber ring rather than through the on-site MATV system” – meaning that it would not have qualified for the exception.

The Forfeiture Order includes several points that will be of interest to broadcasters and MVPDs alike:

  • First, the FCC rejected the argument by TV Max that it could stop paying retransmission consent fees as soon as it adopted a plan to install MATV systems.  Instead, the FCC reiterated that its rules provide “no exception for planning or beginning conversion to a MATV system” and further clarified that the MATV exception “does not apply to signals retransmitted from an off-site headend facility, even if the customer also has access to a MATV or over-the-air version of the signal.”
  • Second, the Commission found that the MVPD’s claims that it could not afford the retransmission consent fees sought by the broadcasters “do not justify its retransmission of the Stations’ signals without each station’s express authority.”  Although the Forfeiture Order repeated TV Max’s characterization of the broadcasters’ requests as “price gouging,” it did not appear to influence the agency’s disposition.
  • Third, the FCC concluded that each day of continued retransmission without the broadcasters’ consent constituted separate violations, making them “not only willful, but also repeated.”
  • Finally, the Commission observed that “TV Max obtained a substantial financial benefit from its MATV scheme by not paying retransmission fees to the Stations.”  In reaching this conclusion, the agency noted that TV Max “did not reduce the price of its cable service (nor alter its promotional website noting its delivery to subscribers of the programming of the six Stations) after allegedly removing the broadcast channels from its channel lineup.”

In affirming its proposed forfeiture of $2.25 million, the Commission noted that it actually provided TV Max a break, given that a pure application of the base forfeiture amount would have resulted in a forfeiture of more than $16.4 million.

The Forfeiture Order comes as the FCC is reviewing its network non-duplication and syndicated exclusivity rules—two components of the regulatory regime for broadcast distribution.  Reply comments in that proceeding are due by July 24.

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