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Nexstar files antitrust lawsuit against Granite

July 26, 2011 |  2:38 pm

While local television stations compete against each other for ratings and advertising dollars, their fights don't usually end up in court.

But a battle between two broadcasters that own and operate properties in Fort Wayne, Ind., is getting particularly nasty. Nexstar Broadcasting Group Inc., an Irving, Texas, broadcaster and parent of WFFT-TV in Fort Wayne, has filed an antitrust lawsuit in an Indiana federal court against Granite Broadcasting Corp., a New York company that owns WISE-TV in Fort Wayne.

Nexstar alleges that Granite has an unfair advantage in Fort Wayne and is engaging in anti-competitive behavior because besides owning NBC and MyNetwork TV affiliate WISE-TV, it also handles advertising sales for Malara Broadcasting's WPTA-TV, the ABC and CW affiliate, and starting next month will use one of WISE's digital channels to broadcast programming from the Fox network. Nexstar's WFFT had been the home of Fox in the market, but it could not come to terms on a new deal to remain affiliated with the network.

By owning or handling advertising sales for affiliates of three major networks as well as CW, Granite has an unfair advantage and is using its leverage to squeeze advertisers and to harm Nexstar, the suit said. The suit also said that Granite has been trying to poach employees from Nexstar and has been bad-mouthing WFFT, which will operate as an independent station starting next month.

Nextstar said that Granite controls about 45% of all broadcast television ad revenues. Throw the Fox station into the mix and Granite will have the ability to "foreclose competition through its contracts for five of the six exclusive national network affiliations" in town. 

The end result, according to Nexstar, is that advertisers will be forced to pay inflated rates for commercials and Indiana consumers will have to shell out more for goods and services.

Nexstar asked the court to rule that Granite give up control of ad sales for at least one of the network affiliates and that it not try to hire any more of its employees.

Granite Chairman Peter Markham declined to comment on the suit.

Nextsar got support for its suit from an unusual source: the American Cable Assn., a lobbying outfit for small cable operators that is also concerned about consolidation among local broadcasters because of fears that one company controlling multiple outlets will drive up rates that distributors pay to carry their channels.

“Cable companies have documented for the FCC that they pay from 21% to 161% more for retransmission consent when they are required to negotiate with a single entity representing two network affiliated stations in the same market," ACA President Matthew Polka said. "When two stations in a market are involved, it’s real bad; but when it’s three, it’s outrageous."

This month, Nexstar announced that it was considering a possible sale of the company. It owns and operates 63 stations in mostly small and mid-size markets.

-- Joe Flint