Sinclair Decides Not to Submit Mediacom Negotiation to Binding Arbitration
BALTIMORE, Jan. 11 /PRNewswire-FirstCall/ -- Sinclair Broadcast Group,
Inc. (Nasdaq: SBGI) today sent the attached letter to each of the members
of Iowa's Congressional delegation in response to a letter, a copy of which
is also attached, received by Sinclair from them. In its response, Sinclair
informed the respective Senators and Congressmen that it has decided not to
submit to binding arbitration in an attempt to resolve the impasse Sinclair
has reached in its negotiations with Mediacom Communications Corp. (Nasdaq:
MCCC). These negotiations involve whether or not cable systems owned by
Mediacom will resume carriage of a number of television stations which they
recently discontinued carrying.
As noted in the letter, Sinclair does not believe binding arbitration
is an appropriate course of action to take to resolve issues raised in a
commercial negotiation between two companies in the private sector.
Sinclair's view was influenced in part by the numerous alternative ways in
which the public can continue to view the programming carried by the
impacted stations if Mediacom continues to fail to carry them. These
alternatives include free, over-the-air transmission, as well as carriage
by direct competitors of Mediacom such as DirecTV and the Dish Network and,
in parts of Cedar Rapids, Iowa, the cable overbuilder, McLeod USA.
As Sinclair has previously informed the public, it is possible that the
lack of carriage may continue for the foreseeable future and strongly
encourages members of the public who want to watch our programming to take
advantage of the alternative means for doing so. The stations and markets
impacted are:
Des Moines/Ames (KDSM-FOX), Cedar Rapids (KGAN-CBS), Mobile-Pensacola
(WEAR-ABC/WFGX-MNT), Peoria/Bloomington (WYZZ-FOX),
Greenville/Spartanburg/Asheville (WLOS-ABC/WMYA-MNT), Lexington (WDKY-FOX),
Madison (WMSN-FOX), Nashville (WZTV-FOX/WUXP-MNT/WNAB-CW), Minneapolis
(WUCW- CW), Paducah/Cape Girardeau (KBSI-FOX/WDKA-MNT),
Springfield/Champaign/Decatur (WICS-ABC/WICD-ABC), St. Louis (KDNL-ABC),
Tallahassee (WTWC-NBC), Birmingham (WTTO-CW/WABM-MNT), Norfolk (WTVZ-MNT)
and Milwaukee (WCGV-MNT/WVTV-CW).
Sinclair Broadcast Group, Inc., one of the largest and most diversified
television broadcasting companies, currently owns and operates, programs or
provides sales services to 58 television stations in 36 markets. Sinclair's
television group reaches approximately 22% of U.S. television households
and is affiliated with all the major networks.
Forward-Looking Statements:
The matters discussed in this press release include forward-looking
statements regarding, among other things, future operating results. When
used in this press release, the words "outlook," "intends to," "believes,"
"anticipates," "expects," "achieves," and similar expressions are intended
to identify forward-looking statements. Such statements are subject to a
number of risks and uncertainties. Actual results in the future could
differ materially and adversely from those described in the forward-looking
statements as a result of various important factors, including and in
addition to the assumptions identified above, the impact of changes in
national and regional economies, successful integration of acquired
television stations (including achievement of synergies and cost
reductions), FCC approval of pending license transfers, successful
execution of outsourcing agreements, pricing and demand fluctuations in
local and national advertising, volatility in programming costs, the market
acceptance of new programming and our news central strategy, our local
sales initiatives, and the other risk factors set forth in the Company's
most recent reports on Form 10-Q and Form 10-K, as filed with the
Securities and Exchange Commission. There can be no assurances that the
assumptions and other factors referred to in this release will occur. The
Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements.
Below is the letter sent to Sinclair and Mediacom by Iowa's
Congressional delegation:
January 10, 2007
Rocco Commisso, CEO
Mediacom Communications Corporation
100 Crystal Run Road
Middletown, NY 10941
David D. Smith, President and CEO
Sinclair Broadcast Group
10706 Beaver Dam Road
Hunt Valley, MD 21030
Dear Mr. Commisso and Mr. Smith:
We are writing on behalf of our constituents, the up to 250,000 Iowa
consumers who are currently unable to receive signals for KGAN, the local
CBS station in the Cedar Rapids area, and KDSM, the local Fox station in
the Des Moines area.
We understand that representatives of Sinclair Broadcasting and
Mediacom Communications have been engaged in significant negotiations to
arrive at a new contract and new pricing structure for broadcast of these
Sinclair-owned stations over the Mediacom cable system for a number of
months. We were pleased that a temporary agreement to continue service
through the holidays was reached. However, because negotiations have
continued to prove unsuccessful, and access to these stations has now been
cut off, it is the consumers of our state who are being harmed by this
unfortunate situation. Thousands of Iowans have been left with little
recourse to the disruption of service.
Last Thursday, January 4, the Federal Communications Commission Media
Communications Bureau issued a Memorandum Opinion and Order which stated in
part:
Both parties could agree to final binding arbitration by the Media
Bureau. We note that, if both parties agree to final binding
arbitration by the Media Bureau, we would require Sinclair to
authorize Mediacom's continued carriage of its stations' signals
during the pendency of arbitration pursuant to the terms of the
November 30, 2006 agreement between the parties. In the alternative,
this arbitration could be conducted through the American Arbitration
Association. Although we would not have authority to order continued
carriage in this case, we would encourage the parties to do so.
Given that negotiations stand at an impasse, binding arbitration would
seem to present the parties with an alternative mechanism for resolving
this dispute. We therefore urge that you consider the clear guidance of the
Federal Communications Commission in agreeing to a process to bring the
parties to an agreement without further harming Iowa consumers. Thank you
for your attention to this matter.
U.S. Senator Tom Harkin
U.S. Congressman Bruce Braley
U.S. Congressman Leonard Boswell
U.S. Congressman Steve King
U.S. Senator Charles Grassley
U.S. Congressman Dave Loebsack
U.S. Congressman Tom Latham
Below is Sinclair's letter responding to the Iowa Congressional
delegation:
January 11, 2007
U.S. Senator Tom Harkin
U.S. Senator Charles Grassley
U.S. Congressman Bruce Braley
U.S. Congressman Dave Loebsack
U.S. Congressman Leonard Boswell
U.S. Congressman Tom Latham
U.S. Congressman Steve King
Congress of the United States
Washington, DC 20510
Dear Senators Harkin and Grassley and
Congressmen Braley, Loebsack, Boswell,
Latham and King
Thank you very much for your recent letter to me concerning the
situation involving Sinclair and Mediacom and its impact on the citizens of
Iowa.
Please know that Sinclair takes its obligation to serve the public
interest very seriously. Although it is unfortunate that the failure of
Sinclair and Mediacom to reach agreement has an impact on your
constituents, I must respectfully disagree with your conclusion that
"[t]housands of Iowans have been left with little recourse to the
disruption of service." To the contrary, Mediacom simply represents one of
several delivery methods for broadcast television stations like KDSM and
KGAN.
In fact, consistent with Sinclair's obligations as an FCC licensee,
both stations are available completely for free over the air to consumers.
Moreover, both DirecTV and the Dish Network, which are direct competitors
to Mediacom (providing essentially the same service), continue to carry
both KDSM and KGAN. In addition, in certain parts of Cedar Rapids, Mediacom
also has competition from at least one other cable company (which continues
to carry KGAN) which stands ready to serve the public. In effect, the
failure of Mediacom to rebroadcast the signals of these stations is no
different than one store failing to carry a specific product, requiring
consumers to visit a different store if they care to purchase that product.
With response to your suggestion that we submit to binding arbitration,
at this point in time Sinclair has concluded it is not prepared to do so. I
hope you can understand Sinclair's reluctance to agree to such an unusual
approach to resolve what is essentially a disagreement on price in a
commercial negotiation between two parties, parties which are legally
entitled to make their own decisions on how best to run their respective
businesses. I suspect our view on this subject is the same one that most of
your constituents would hold if, for example, someone suggested they
arbitrate the price of their house if a potential buyer was not willing to
meet the minimum price they thought appropriate. Moreover, the numerous
alternative ways, discussed above, for your constituents to receive our
signals greatly mitigate any need to take such drastic measures if
negotiations between the parties continue to be unsuccessful. Finally,
although the FCC also suggested arbitration, I note that the FCC has stated
that it has no authority to order such an approach and has concluded, after
an exhaustive review of the situation, that Sinclair has met its obligation
to negotiate in good faith.
Thank you very much for your interest in this matter and I would be happy
to discuss any aspects of it with you in greater detail if that would be
helpful.
Sincerely yours,
David D. Smith
President and Chief Executive Officer
SOURCE Sinclair Broadcast Group, Inc.
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CONTACT:
Barry M. Faber, V.P. & General Counsel,
Sinclair Broadcast Group, +1-410-568-1500
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