On June 24, the FCC issued a Notice of Apparent Liability against a cable operator for retransmitting six broadcast station signals without the broadcaster’s consent.  The proposed fine was set at $2,250,000.

The Communications Act and FCC rules prohibit cable operators from retransmitting a broadcast signal without the station’s “express authority.”  Receiving this authority is referred to as “retransmission consent.”

In this case, the cable operator served more than 10,000 subscribers in approximately 250 apartment and other multiple-dwelling unit buildings (MDUs).  The cable operator had retransmission consent agreements with each of the six broadcast stations whose signals it was providing to its customers for the 2008-2011 carriage cycle, but the agreements expired in late 2011 and early 2012.  For the 2012-2014 cycle, each of these broadcasters exercised their right to elect retransmission consent on the cable operator’s system.

The cable operator did not extend or enter into new agreements in place for the 2012-2014 cycle, and instead continued carrying the stations’ signals.  Each of the six broadcasters filed complaints with the FCC.  In response, the cable operator claimed that retransmission consent was not required because it was carrying the signals under the master antenna television (MATV) exception to the retransmission consent rules.  

MATVs are defined as video distribution facilities that use closed transmission paths without using any public right-of-way.  Under the MATV exception, a broadcaster’s consent is not required if, among other things, the broadcast signal distributed to MATV subscribers is directly received by the MATV facilities.  The MATV exception applies only when an operator merely facilitates a subscriber’s access to an over-the-air television signal received by a MATV antenna and where the signal made available to subscribers, without charge and consistent with the exception’s other requirements, is the same over-the-air signal received by the MATV antenna.

In this case, the cable operator received the signals from an off-site headend and delivered them to the MDUs over a fiber ring connection. The FCC found that the MATV exception did not apply under these circumstances.  The operator also claimed that it was in the process of converting its MDU systems to allow reception of broadcast signals at each MATV facility and intended to complete that process before its retransmission consent agreements expired.  However, that process was not complete by the time its agreements had expired and the FCC did not find the cable operator’s intentions to convert from cable operations to MATV operations to provide a viable excuse for continuing to retransmit the broadcast stations without consent.  The FCC acknowledged that the cable operator did not charge for the broadcast stations, but found this fact unavailing as well.  The FCC further found that the violations continued even after the MATV conversion process was complete in July 2012 (almost seven months after most of the retransmission consent agreements expired) because the cable operator did not deliver the broadcast signals solely through the MATV system in even those MDUs that had undergone conversion.

The base fine for violation of the FCC’s broadcast carriage rules is $7,500, with a maximum of $37,500 for each violation or each day of a continuing violation, up to a total of $375,000.  In this case, the FCC increased the proposed fine amount to the maximum amount of $2,250,000 ($375,000 for each station) based on several factors.  First, the violations involved six separate stations.  Second, the FCC found that the violations were not only willful – because the cable operator “consciously and deliberately retransmitted” the signals without retransmission consent agreements – but also repeated, because they are continuing and have lasted for over a year.  Third, and perhaps most significantly, the cable operator continued the unauthorized retransmissions even after the FCC’s Media Bureau initially found that the retransmissions did not comply with the Communications Act and FCC rules.

The cable operator has 30 days to pay the proposed fine or seek to reduce or cancel it.

If you have questions about the broadcast carriage rules or retransmission consent agreements, please contact Scott Friedman at (312) 372-3930 or sfriedman@cinnamonmueller.com, or Elvis Stumbergs at (202) 872-6881 or estumbergs@cinnamonmueller.com.