Before the

Federal Communications Commission

Washington, D.C. 20554

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| In the Matter of:                | * | CSR-8010-C                   |
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| ATC Broadband LLC and Dixie      | ) |                              |
| Cable TV, Inc.                   | * |                              |
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| Gray Television Licensee, Inc.,  | * |                              |
| licensee of WSWG-DT, Valdosta,   | ) |                              |
| Georgia                          | * |                              |
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| Retransmission Consent Complaint |   |                              |
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MEMORANDUM OPINION AND ORDER

**Adopted: February 18, 2009** **Released: February 18, 2009**

By the Senior Deputy Chief, Policy Division, Media Bureau:

# Introduction

1.  On August 15, 2008, ATC Broadband LLC and Dixie Cable TV, Inc.
    (collectively "ATC Broadband") filed a retransmission consent
    complaint and petition for declaratory ruling[^1] against Gray
    Television Licensee, Inc., licensee of television station WSWG-DT,
    Valdosta, Georgia ("WSWG") pursuant to Sections 76.7 and 76.65 of
    the Commission's Rules.[^2] WSWG is a CBS affiliate serving the
    Albany, Georgia Designated Market Area ("DMA"). ATC Broadband sought
    to retransmit WSWG outside the station's DMA on ATC Broadband's
    cable systems serving communities in the Savannah, Georgia and
    Jacksonville, Florida DMAs. ATC Broadband alleges WSWG failed to
    negotiate with it in good faith for retransmission consent by
    abruptly ending negotiations due to a prohibition on out-of-market
    carriage in WSWG's network affiliation agreement ("Affiliation
    Agreement"), by failing to seek a waiver of this prohibition from
    CBS, and by generally failing to communicate with ATC Broadband.
    Furthermore, ATC Broadband argues the Affiliation Agreement violates
    the network non-duplication rules. As relief, ATC Broadband requests
    the Commission to order WSWG to honor its retransmission consent
    offer in the form of a retransmission consent agreement, to provide
    retransmission consent through December 31, 2011, and to declare
    both the Affiliation Agreement and WSWG's actions to be in violation
    of the Commission's rules.[^3] ATC Broadband has filed an answer[^4]
    to which WSWG filed a reply.[^5] For the reasons stated below we
    find that WSWG did not fail to negotiate in good faith with ATC
    Broadband, and we deny WSWG's retransmission consent complaint and
    petition for declaratory ruling.

# background

2.  Section 325(b)(3)(C) of the Communications Act (the "Act") obligates
    broadcasters and multichannel video programming distributors
    ("MVPDs") to negotiate retransmission consent agreements in good
    faith.[^6] Specifically, Section 325(b)(3)(C)(ii) directs the
    Commission to establish regulations that:

> \[U\]ntil January 1, 2010, prohibit a television broadcast station
> that provides retransmission consent from engaging in exclusive
> contracts for carriage or failing to negotiate in good faith, and it
> shall not be a failure to negotiate in good faith if the television
> broadcast station enters into retransmission consent agreements
> containing different terms and conditions, including price terms, with
> different \[MVPDs\] if such different terms and conditions are based
> on competitive marketplace considerations.[^7]

3.  In its *SHVIA Good Faith Order*, the Commission adopted rules
    implementing good faith negotiation standards and the complaint
    procedures for alleged violations of these rules.[^8] The *SHVIA
    Good Faith Order* adopted a two-part test for good faith.[^9] The
    first part consists of a brief, objective list of negotiation
    standards.[^10] Engaging in any of the conduct proscribed by these
    objective standards constitutes a *per se* violation. Under the
    second part of the test, an MVPD may present facts to the Commission
    which, even though they do not allege a violation of the objective
    standards, given the totality of the circumstances, constitute a
    failure to negotiate in good faith.[^11] However, failure to reach
    an agreement is not a violation of our rules.[^12] Pursuant to the
    Satellite Home Viewer Extension and Reauthorization Act of 2004
    ("SHVERA"), the Commission has adopted rules to extend 47 U.S.C. §
    325(b)(3)(C) until 2010 and to amend that section to impose a
    reciprocal good faith retransmission consent bargaining obligation
    on broadcasters and MVPDs.[^13] Either party to a retransmission
    consent negotiation, believing themselves aggrieved under the good
    faith rules, may file a complaint pursuant to Section 76.7 of the
    Commission\'s rules.[^14] The burden of proof in good faith
    complaints is on the complainant.[^15]

4.  ATC Broadband is a cable operator serving the communities of Alma,
    Blackshear, Baxley, and Patterson, which are located in the
    Savannah, Georgia and Jacksonville, Florida DMAs.[^16] To ensure
    that its customers receive at least one dependable CBS signal, ATC
    Broadband currently carries redundant CBS programming from Savannah
    CBS affiliate, WTOC-TV and Jacksonville CBS affiliate WTEV-TV.[^17]
    WSWG is a digital-only CBS-affiliate[^18] licensed to Valdosta,
    Georgia and serves the Albany, Georgia DMA.[^19] ATC Broadband
    asserts that out of the surrounding CBS affiliates, WSWG's
    transmitter is physically closest to its cable system headend and
    provides the most reliable signal -- one that can be received by its
    cable communities over the air. [^20] Accordingly, ATC Broadband
    wrote to the station on March 29, 2007 requesting retransmission
    consent to carry WSWG on its cable systems.[^21]

5.  WSWG proceeded to negotiate carriage terms with ATC Broadband.[^22]
    On April 12, 2007, WSWG offered an unexecuted retransmission consent
    agreement to ATC Broadband and requested that the latter complete,
    sign, and remit copies of the document for WSWG's final
    signature.[^23] After making this offer, WSWG contacted CBS to
    request permission to grant retransmission consent to ATC Broadband
    to carry the station's signal outside of its market.[^24] WSWG's
    Affiliation Agreement (the "Affiliation Agreement") with CBS bars
    carriage of WSWG on cable systems located outside of the station's
    market.[^25] CBS informed WSWG that their Affiliation Agreement
    would not permit carriage of WSWG outside its DMA unless ATC
    Broadband's cable systems were located in areas in which WSWG was
    significantly viewed or had been historically carried.[^26] ATC
    Broadband does not dispute that neither of these conditions were
    met.[^27] Accordingly, on April 17, 2007, WSWG informed ATC
    Broadband that it was retracting its retransmission consent offer,
    citing restrictions under the station's affiliation agreement with
    CBS.[^28]

6.  After the station's April 17th retraction, ATC Broadband asserts it
    attempted to contact WSWG several times but received no
    response.[^29] On October 5, 2007, ATC Broadband warned WSWG that
    its failure to respond within 15 days would be construed as WSWG's
    refusal to negotiate in good faith.[^30] ATC Broadband states that
    WSWG did not respond to this warning.[^31] However, WSWG asserts
    that on a second occasion, it did seek permission from CBS to grant
    retransmission consent to ATC Broadband,[^32] but was advised that
    CBS's position on such carriage had not changed.[^33]

# DISCUSSION

> **A. Retransmission Consent**

7.  The Commission declines to find that WSWG's conduct during the
    course of retransmission consent negotiations with ATC Broadband
    violated the Commission's good faith standards. ATC Broadband
    asserts that WSWG violated the sixth objective negotiation standard
    under the good faith test by executing an Affiliation Agreement with
    CBS that requires WSWG not to enter into a retransmission consent
    agreement with any cable system that is located outside of the
    Albany, Georgia DMA.[^34] Section 76.65(b)(1)(vi) of the
    Commission's rules states that a television broadcast station's duty
    to negotiate retransmission consent agreements in good faith is
    violated when that station executes "an agreement with any party, a
    term or condition of which, requires that such Negotiating Entity
    not enter into a retransmission consent agreement with any other
    ...multichannel video programming distributor."[^35] However, as ATC
    Broadband itself concedes,[^36] the term "any party" in this context
    refers to an "MVPD" as "this provision is intended to cover
    collusion between a broadcaster and an MVPD requiring non-carriage
    by another MVPD."[^37]

8.  Nevertheless, under the Commission's rules, ATC Broadband may also
    "demonstrate, based on the totality of the circumstances of a
    particular retransmission consent negotiation, that a television
    broadcast station... breached its duty to negotiate in good faith as
    set forth in § 76.65(a)."[^38] By looking at the totality of
    circumstances, ATC Broadband argues that WSWG's abrupt retraction of
    its retransmission consent offer, its failure to seek a waiver from
    CBS to enable carriage by ATC Broadband, and its failure to
    communicate with ATC Broadband after its April 17th retraction, all
    evidence WSWG's failure to negotiate in good faith.[^39]
    Furthermore, ATC Broadband asserts WSWG failed to act in good faith
    by not providing copies of its Affiliation Agreement or detailing
    its communications with CBS.[^40] Without the Affiliation Agreement,
    ATC Broadband argues it cannot confirm the extent to which WSWG is
    barred from permitting carriage of its signal outside the Albany,
    Georgia. DMA.[^41]

9.  We find that under the totality of the circumstances test, WSWG did
    not fail to negotiate for retransmission consent in good faith.
    WSWG's community of license and ATC Broadband's cable systems are
    located in different DMAs and WSWG is not significantly viewed or
    historically carried in the communities served by ATC Broadband.
    And, although reciprocal bargaining obligations still apply to
    carriage negotiations between parties in different markets, a
    "different calculus" applies.[^42] The Commission has stated that
    "negotiations involving truly distant broadcasters and MVPDs and
    negotiations for which a broadcaster is contractually precluded from
    reaching consent may be truncated, \[and therefore,\] MVPDs and
    broadcasters alike will not be required to engage in an unending
    procession of extended negotiations."[^43] Either party in such
    retransmission consent negotiations for out-of-market carriage has
    the right, "after evaluating the prospect of distant signal
    carriage, to reject the proposal and terminate further
    negotiation."[^44]

10. Although the parties are in different DMAs, WSWG appears to have
    commenced carriage negotiations with ATC Broadband in earnest and
    even offered retransmission consent terms for further approval.
    WSWG's abrupt retraction of its retransmission consent offer and its
    failure to thereafter correspond with ATC Broadband, given the
    circumstances presented in this negotiation, do not evidence lack of
    good faith. Once WSWG had fully evaluated the prospect of
    out-of-market carriage and formally terminated the negotiations with
    ATC Broadband, it had no further obligation to engage in extended
    negotiations.

11. Furthermore, while a broadcaster must provide reasons for rejecting
    any aspect of an MVPD's offer, and a blanket rejection without
    explanation does not constitute good faith, broadcasters are also
    not required to justify their explanations by document or
    evidence.[^45] WSWG's citation to "restrictions under \[WSWG's\] CBS
    affiliation agreement" provided sufficient justification for WSWG's
    retraction of its retransmission consent offer without WSWG having
    to provide a copy of its Affiliation Agreement.

12. Finally, WSWG did not fail to seek a waiver of the prohibition on
    out-of-market carriage contained in its Affiliation Agreement. ATC
    Broadband argues reciprocal bargaining obligations still subject
    broadcasters to a "heightened duty of negotiation," such that it is
    "incumbent upon broadcasters subject to such contractual limitations
    that have been engaged by an out-of-market MVPD to negotiate
    retransmission consent of its signal to at least inquire with its
    network whether the network would waive the limitation with regard
    to the MVPD in question."[^46] WSWG asserts that it asked CBS
    Affiliate Relations if "CBS' policy would permit WSWG to grant
    retransmission consent for carriage... by cable systems located
    outside the Albany, Georgia DMA."[^47] Whether or not we are
    provided with a full copy of the Affiliation Agreement, it is clear
    that WSWG would not have been seeking permission to be carried
    outside its market unless such carriage was prohibited. We find that
    WSWG's two requests for permission to be carried by ATC Broadband
    sufficiently evidence that it sought a waiver of the out-of-market
    carriage prohibition. Accordingly, we do not find, and decline to
    issue a declaration, that WSWG violated its obligations to negotiate
    for retransmission consent in good faith.

> **B. Network Non-Duplication**

13. We find ATC Broadband's network non-duplication arguments are also
    without merit. ATC Broadband argues that the Affiliation Agreement
    between WSWG and CBS violates the Commission's network
    non-duplication rules. It argues network non-duplication protection
    only extends to cable community units located within the 35-mile
    "geographic zone" of large network affiliates such as Savannah CBS
    affiliate WTOC-TV and Jacksonville CBS affiliate WTEV-TV, and that
    by Commission rule, such affiliates are prohibited from contracting
    for broadcast territorial exclusivity rights which exceed this
    geographic zone.[^48] ATC Broadband argues the Affiliation Agreement
    between WSWG and CBS, by barring carriage of WSWG in the Savannah
    and Jacksonville CBS affiliates' DMAs, specifically grants these
    affiliates network non-duplication protection that *de facto*
    extends well beyond their 35-mile geographic zones of protection and
    up to the limits of their markets.[^49]

14. However, as a factual matter, WSWG's Affiliation Agreement allows
    carriage of WSWG in the Savannah and Jacksonville DMAs if WSWG is
    significantly viewed or historically carried in those areas.
    Therefore, WSWG is not barred from being carried in the Savannah and
    Jacksonville affiliates' DMAs and ATC Broadband's network
    non-duplication argument fails.

15. Furthermore, the Commission stated in the *SHVERA Reciprocal
    Bargaining Order* that "neither the text nor the legislative history
    of the SHVIA or the SHVERA indicate a congressional intent to
    restrict the rights of networks and their affiliates through good
    faith or reciprocal bargaining obligation to agree to limit an
    affiliate's right to redistribute affiliated programming... \[to\]
    interfere with the network-affiliate relationship or to preclude
    specific terms in network-affiliate agreements."[^50] As the
    Commission reaffirmed in its *2005* *Report to Congress*, "cable
    operators' ability to retransmit duplicative distant broadcast
    signals is governed in the first instance by the contract rights
    negotiated between broadcasters and their programming
    suppliers."[^51] In that *Report*, the Commission declined to
    endorse or recommend modifications to the network non-duplication
    rules that would have superseded "contract arrangements between
    broadcasters and their program suppliers that are permitted by the
    rules."[^52] Accordingly, we do not find that WSWG's Affiliation
    Agreement with CBS violates our network non-duplication rules.

# IV. CONCLUSION  {#iv.-conclusion .unnumbered}

16. We do not find that WSWG violated the Commission's objective good
    faith standards, or given the totality of the circumstances, failed
    to negotiate with ATC Broadband in good faith. We further decline to
    find that the Affiliation Agreement between WSWG and CBS violated
    the network nonduplication provisions of our rules.

# V. ORDERING CLAUSES {#v.-ordering-clauses .unnumbered}

17. Accordingly, **IT IS ORDERED** that the retransmission consent
    complaint and petition for declaratory ruling pursuant to Sections
    76.7 and 76.65 of the Commission's Rules, 47 C.F.R. §§ 76.7 and
    76.64, filed by ATC Broadband LLC and Dixie Cable TV, Inc. against
    Gray Television Licensee, Inc., licensee of WSWG-DT, Valdosta,
    Georgia **IS DENIED**.

18. This action is taken under authority delegated by Section 0.283 of
    the Commission's rules, 47 C.F. R § 0.283.

FEDERAL COMMUNICATIONS COMMISSION

Steven A. Broeckaert

Senior Deputy Chief, Policy Division

Media Bureau

[^1]: ATC Broadband Retransmission Consent Complaint, filed Aug. 15,
    2008, at 1 ("Complaint").

[^2]: 47 C.F.R. §§ 76.7 and 76.64.

[^3]: Complaint at 8-9.

[^4]: WSWG Answer, filed Sep. 8, 2008 ("Answer").

[^5]: ATC Broadband Reply, filed Sep. 22, 2008 ("Reply").

[^6]: 47 U.S.C. § 325(b)(3)(C).

[^7]: 47 U.S.C. § 325(b)(3)(C)(ii).

[^8]: *See Implementation of the Satellite Home Viewer Improvement Act
    of 1999: Retransmission Consent Issues*, 15 FCC Rcd 5445 (2000)
    ("*SHVIA Good Faith Order*"), *recon. granted in part*, 16 FCC Rcd
    15599 (2001).

[^9]: *See SHVIA Good Faith Order*, 15 FCC Rcd at 5457, ¶ 30.

[^10]: *See id.* at 5462-64, ¶¶ 40-46.

[^11]: *See id.* at 5458, ¶ 32. The Commission adopted the following
    standard at 47 C.F.R. § 76.65(b)(2):

    \(2\) Totality of the circumstances. In addition to the standards
    set forth in § 76.65(b)(1), a Negotiating Entity may demonstrate,
    based on the totality of the circumstances of a particular
    retransmission consent negotiation, that a television broadcast
    station or multichannel video programming distributor breached its
    duty to negotiate in good faith as set forth in § 76.65(a).

[^12]: *SHVIA Good Faith Order*, 15 FCC Rcd at 5462, ¶ 40.

[^13]: *In the Matter of: Implementation of Section 207 of the Satellite
    Home Viewer Extension and Reauthorization Act of 2004: Reciprocal
    Bargaining Obligation*, 20 FCC Rcd 10339, 10342, ¶ 7, 10344, ¶ 13
    (2005) ("*SHVERA Reciprocal Bargaining Order*"). The current version
    of the Commission's adopted standards are found at Section
    76.65(b)(1)(i)-(vii) of the Commission's rules:

    1\) Standards. The following actions or practices violate a
    broadcast television station\'s or multichannel video programming
    distributor\'s (the "Negotiating Entity") duty to negotiate
    retransmission consent agreements in good faith:

    \(i\) Refusal by a Negotiating Entity to negotiate retransmission
    consent;

    > \(ii\) Refusal by a Negotiating Entity to designate a
    > representative with authority to make binding representations on
    > retransmission consent;
    >
    > \(iii\) Refusal by a Negotiating Entity to meet and negotiate
    > retransmission consent at reasonable times and locations, or
    > acting in a manner that unreasonably delays retransmission consent
    > negotiations;

    \(iv\) Refusal by a Negotiating Entity to put forth more than a
    single, unilateral proposal;

    > \(v\) Failure of a Negotiating Entity to respond to a
    > retransmission consent proposal of the other party, including the
    > reasons for the rejection of any such proposal;
    >
    > \(vi\) Execution by a Negotiating Entity of an agreement with any
    > party, a term or condition of which, requires that such
    > Negotiating Entity not enter into a retransmission consent
    > agreement with any other television broadcast station or
    > multichannel video programming distributor; and
    >
    > \(vii\) Refusal by a Negotiating Entity to execute a written
    > retransmission consent agreement that sets forth the full
    > understanding of the television broadcast station and the
    > multichannel video programming distributor.
    >
    > 47 C.F.R. § 76.65(b)(1)(i)-(vii).

[^14]: *See* 47 C.F.R. § 76.7.

[^15]: *See* 47 C.F.R. § 76.65(d).

[^16]: *See* Complaint at 2 and Exhibit A.

[^17]: *See id*. at 2 & n.2.

[^18]: Answer at n.1.

[^19]: *See* Complaint at 2 and Exhibit A.

[^20]: *See* Complaint at 2; Reply at 3 & n.8 (citing Declaration of
    Paul D. Williams, President, Signal Associates, Inc., at ¶ 5 &
    Exhibit A (chart showing the distances between ATC Tower, Alma,
    Georgia and the transmitters of four CBS affiliates)).

[^21]: *See* Complaint at 2 and Exhibit B, Mar. 29, 2007 e-mail from
    Greg Davis, President of ATC Broadband, to Nick Waller, President
    and General Manager of WSWG-DT).

[^22]: *See* Complaint at 2.

[^23]: Complaint at 3 and Exhibit C, Apr. 12, 2007 e-mail from Nick
    Waller, President and General Manager of WSWG-DT to Greg Davis,
    President of ATC Broadband (Mr. Waller wrote: "If the attached
    agreement is acceptable, please complete Schedule B and fill in the
    other blanks and sign two originals. Mail them to me at 1801
    Halstead Blvd., Tallahassee, FL 32309. I'll sign and return an
    original to you promptly.").

[^24]: Answer, Declaration of Nick Waller at ¶ 2 ("Waller Decl."). WSWG
    admits it extended the offer to ATC Broadband because it was unaware
    of the restrictions in its Affiliation Agreement at the time. *See*
    Answer at 2 ("Shortly \[after sending its draft agreement to ATC
    Broadband\], Mr. Waller *learned* that WSWG's affiliation agreement
    with the CBS Television Network precluded WSWG from granting
    retransmission consent on ATC's cable systems.") (emphasis added);
    *see also* note 28 *infra* (WSWG admitted it "misunderstood" the
    terms of its Affiliation Agreement.)

[^25]: In its Answer, WSWG states the Affiliation Agreement "permits
    WSWG to grant retransmission consent only on cable systems (1)
    located within the station's television market (as defined in
    Sections 76.55(e) and 76.59 of the FCC's Rules), (2) located in an
    area in which the station is "significantly viewed," or (3) on which
    the station had been carried on October 5, 1992 and does not receive
    the station's signal via satellite." Answer at 2 & n.2 (quoting Dec.
    5, 2006 Affiliation Agreement between CBS Affiliate Relations and
    Gray Television Group, Inc., at Sec. 3(d)). WSWG did not provide a
    copy of the Affiliation Agreement with its Answer.

[^26]: Answer at 3 (citing Waller Decl. at ¶ 2).

[^27]: WSWG and ATC Broadband do not dispute that WSWG is neither
    significantly viewed nor historically carried in any area served by
    ATC Broadband in the Savannah or Jacksonville DMAs. Answer at Waller
    Decl. at ¶ 4.

[^28]: Complaint at 3 and Exhibit E, Apr. 17, 2007 E-mail from Nick
    Waller, President and General Manager of WSWG-DT to Greg Davis,
    President of ATC Broadband (Mr. Waller wrote: "I regret to inform
    you that we will be unable to permit retransmission of WSWG-DT's
    signal due to restrictions under our CBS affiliation agreement. I'm
    sorry for the misunderstanding which was entirely mine.")

[^29]: Complaint at 4.

[^30]: Complaint at 4 (citing Exhibit G, Oct. 5, 2007 Letter from Paul
    D. Williams, President, Signal Associates, Inc. on behalf of ATC
    Broadband, to Nick Waller, President and General Manager, WSWG-TV).

[^31]: Complaint at 4.

[^32]: Answer, Waller Decl. at ¶ 3.

[^33]: *Id*.

[^34]: *Id*. at 5-6.

[^35]: 47 C.F.R. § 76.65(b)(1)(vi).

[^36]: Complaint at 6 & n.19.

[^37]: *SHVERA Reciprocal Bargaining Order*, 20 FCC Rcd at 10355, ¶ 34.

[^38]: 47 C.F.R. § 76.65(b)(2).

[^39]: Complaint at 6.

[^40]: Reply at 2.

[^41]: *Id*.

[^42]: *SHVERA Reciprocal Bargaining Order*, 20 FCC Rcd at 10353, ¶ 31.

[^43]: *Id.* at 10345, ¶ 14.

[^44]: *Id.* at 10353, ¶ 31; *but cf.* *id*. at 10354, ¶ 32 (the
    Commission concedes that "\[a\]s the distances involved \[between a
    cable operator's systems and a distant station\] lessen, we would
    expect the party requested to engage in retransmission consent
    negotiations to be more willing to engage in extended
    negotiations.").

[^45]: *See Mediacom Comm. Corp. v. Sinclair Broadcast Group*, 22 FCC
    Rcd 35, 41, ¶ 15 (2007).

[^46]: Complaint at 6 (citing *SHVERA Reciprocal Bargaining Order*, 20
    FCC Rcd at 10355, ¶ 35).

[^47]: Answer, Waller Decl. at ¶ 2.

[^48]: *See* Complaint at 7-8 (citing 47 C.F.R. § 76.92(a), Note to §
    76.92, and § 76.658(m)). Pursuant to the Note to Section 76.92,
    "\[w\]ith respect to network programming, the geographic zone within
    which the television station is entitled to enforce network
    non-duplication protection and priority of shall be that geographic
    area agreed upon between the network and the television station. In
    no event shall such rights exceed the area within which the
    television station may acquire broadcast territorial exclusivity
    rights as defined in § 73.658(m) of this Chapter..." Section
    76.658(m) specifically prohibits any contract that extends network
    non-duplication protection beyond a 35-mile zone.

[^49]: Complaint at 8.

[^50]: *SHVERA Reciprocal Bargaining Order*, 20 FCC Rcd at 10354, ¶ 33

[^51]: *Retransmission Consent and Exclusivity Rules: Report to Congress
    Pursuant to Section 208 of the Satellite Home Viewer Extension and
    Reauthorization Act of 2004*, 2005 WL 2206070, ¶ 49 (Sept. 8, 2005).

[^52]: *Id*. at ¶ 50.