Cedar Rapids Television Co. v. Mcc Iowa LLC
| Decision Date | 30 November 2007 |
| Docket Number | No. 07-CV-124-LRR.,07-CV-124-LRR. |
| Citation | 524 F.Supp.2d 1127 |
| Parties | CEDAR RAPIDS TELEVISION COMPANY, d/b/a KCRGTV9, Plaintiff, v. MCC IOWA LLC and MCC Illinois LLC, Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
John M. Bickel, Shuttleworth & Ingersoll, Cedar Rapids, IA, for Plaintiff.
TABLE OF CONTENTS
I. INTRODUCTION AND RELEVANT PROCEDURAL BACKGROUND ........................1128
II. JURISDICTION ...........................................................1129
III. FINDINGS OF FACT .......................................................1129
A. Parties and Players ................................................1129
B. Jargon: "Must-Carry" v. "Retransmission Consent" ...................1130
C. 1997 Retransmission Consent Agreement ..............................1131
D. Changes in the Industry ............................................1131
E. Relevant Communications Between the Parties ........................1132
F. Communications in 2007 .............................................1133
IV. CONCLUSIONS OF LAW .....................................................1134
A. Parties' Arguments .................................................1134
B. Analysis ...........................................................1135
1. Applicable law .................................................1135
2. Declaratory Judgment Act .......................................1135
3. Adequacy of 2005 Letter ........................................1136
V. JUDGMENT ...............................................................1138
The matter before the court is Plaintiff Cedar Rapids Television Company's, d/b/a KCRG-TV9 ("KCRG"), Complaint and Demand for Jury ("Complaint") (docket no. 2).
On October 31, 2007, KCRG filed the Complaint. On November 2, 2007, Defendants MCC Iowa LLC and MCC Illinois LLC (collectively "Mediacom") filed an Answer.
On November 15, 2007, Mediacom filed a trial brief ("Mediacom's Trial Brief') (docket no. 7). On November 16, 2007, KCRG filed a trial brief ("KCRG's Trial Brief') (docket no. 8).
On November 16, 2007, the court commenced a bench trial1 on the Complaint. Fed.R.Civ.P. 57 (). The bench trial concluded on the same day. Attorneys John M. Bickel and Mark A. Zaiger represented KCRG. Attorney Mark McCormick represented Mediacom.
On November 20, 2007, KCRG filed Plaintiff's Supplemental Trial Brief (docket no. 11) and Mediacom filed Reply Brief and Argument of Defendants MCC Iowa and MCC Illinois (docket no. 12).
The court finds the matter fully submitted and ready for decision. This order constitutes the court's Federal Rule of Civil Procedure 52(a) findings of fact and conclusions of law.
The Declaratory Judgment Act, 28 U.S.C. § 2201, et seq., does not confer jurisdiction upon federal courts. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 94 L.Ed. 1194 (1950); see Mo. ex rel. Mo. Hwy. & Transp. Comm'n v. Cuffley, 112 F.3d 1332, 1334 (8th Cir.1997) (). Therefore, a federal court must gain its power to issue declaratory judgments from some independent basis of jurisdiction. Cuffley, 112 F.3d at 1334; Victor Foods, Inc. v. Crossroads Econ. Dev. of St. Charles County, Inc., 977 F.2d 1224, 1227 (8th Cir.1992).
KCRG claims there is diversity jurisdiction, pursuant to 28 U.S.C. § 1332. KCRG is an Iowa corporation with its principal place of business in Cedar Rapids, Iowa. MCC Iowa LLC and MCC Illinois LLC are both Delaware corporations with their principal places of business in Wilmington, Delaware. Therefore, there is complete diversity between the opposing parties. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996) (). The amount in controversy exceeds $75,000.00. The court is satisfied it has subject matter jurisdiction over this case, and it is appropriate for the court, under the Declaratory Judgment Act, to determine the rights and duties of each of the parties.
After assessing the credibility of the two trial witnesses, the court finds the following facts by a preponderance of the evidence:2
A. Parties and Players
KCRG is a television station. Specifically, it is an ABC affiliate that serves a designated marketing area ("DMA"), consisting of twenty-one Iowa counties and including four major cities: Cedar Rapids, Waterloo, Dubuque and Iowa City. There are about 160 different cable systems Within KCRG's DMA.
Mediacom is a cable company that is a subsidiary of Mediacom Communications Corporation and Mediacom Broadband LLC. It is one of the cable systems within KCRG's DMA.
John Phelan is the Vice President and General Manager of KCRG. He has been employed with KCRG since 1984 and been in management since 1990. In 1998, Phelan began working in his current positions.
Jane Belford is the Vice President of Programming and Legal Affairs for Mediacom Communications Corporation. She is an in-house attorney who negotiates contracts with large programmers. Since 1999, Belford has been handling business with Mediacom's "must-carry" stations and "retransmission consent" stations.3
B. Jargon: "Must-Carry" v. "Retransmission Consent"
The Federal Communications Commission ("FCC") regulates commercial television stations and cable companies. All commercial television stations in the United States must elect either "must-carry" status or "retransmission consent" status with cable companies in the station's DMA. See 47 C.F.R. § 76.64(f)(2) (2007) ().4 If a station is a "must-carry" station, the cable company is required to carry the station's signal. 47 U.S.C. § 534; 47 C.F.R. § 76.56(b); see also KCRG's Trial Brief (docket no. 8-2), at 1 (). If the station is a "retransmission consent" station, the cable company has received the station's permission to transmit the station's signal in exchange for some agreed-upon compensation from the cable company. 47 U.S.C. § 325(b); 47 C.F.R. § 76.64; see also KCRG's Trial Brief (docket no. 8-2), at 3 ().5 When retransmission consent status is in effect, the cable company cannot carry the local station's signal without the consent of the local station. 47 U.S.C. § 325(b)(1); 47 C.F.R. § 76.64(a). Retransmission consent is typically granted through a retransmission consent contract.
Each commercial television station must do this election every three years, and the cycle years are set by the Code of Federal Regulations. 47 U.S.C. § 325(b)(3)(B); 47 C.F.R. § 76.64(f)(2). Stations were required to elect by October 1, 2005, for the period of 2006, 2007 and 2008. The next election must be made by October 1, 2008. An election must be in writing and sent to the cable companies via certified United States mail. 47 C.F.R. § 76.64(h). If a station fails to send a notice of election, the default status is must-carry. Id. § 76.64(f)(3). However, a station may elect a must-carry status, that is, a station may send a notice to a cable company affirmatively seeking to be in a must-carry status.
In addition to the three-year election cycle, stations and cable systems may have retransmission consent contracts that cover all or part of the three-year election period. In other words, the retransmission consent contract's period need not coincide with the election cycle. Such contracts must be in writing and they must "specify the extent of the consent being granted." Id. § 76.64(j). The parties to the contract are free to choose the duration of the retransmission consent contract, and they are free to modify their contract during the period of effectiveness. Commercial television stations and cable companies are obligated, pursuant to federal regulations, to negotiate retransmission consent contracts in good faith. 47 U.S.C. § 325(b)(3)(C); 47 C.F.R. § 76.65(a).
If a commercial television station elects retransmission consent status with a particular cable company and then fails to enter into a retransmission consent contract with that company, the station's signal may not be broadcast on the cable network. In other words, the existence of a retransmission consent contract is the only way a station's signal will be broadcast on a cable system if the station has elected retransmission consent (instead of must-carry) for that particular cable company. See KCRG's Trial Brief (docket no. 8-2), at 3 ().
C. 1997 Retransmission Consent Agreement
On May 16, 1997, TCI Cable Management Corporation ("TCI") entered into a Retransmission Consent Agreement ("Agreement") with KCRG. TCI drafted the Agreement's terms. The Agreement provides in part:
5. Term. The term of this Agreement shall commence on the date hereof and shall expire on December 31, 2001 (the "Initial Term"). This Agreement and the election set forth in Paragraph 1 hereof shall automatically renew for successive six (6)-year periods after the expiration of the Initial Term (each a ...
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