Nexstar: $1.8 Million NAL Unlawful and Unconstitutional

The FCC’s proposed $1.8 million forfeiture against Nexstar and Mission Broadcasting over allegations that the companies misrepresented Nexstar’s control over WPIX New York (see 2403220067) is an unlawful attempt to overturn a previous FCC’s decision, violates the Constitution and changes rules without prior notice, Nexstar said in a response filing Monday. “The NAL is unlawful and the proposed forfeiture, divestiture obligations, and other requirements must be canceled and the NAL vacated in its entirety,” it said.

The FCC’s notice of apparent liability is an illegal workaround seeking to overturn the 2020 FCC’s approval of Mission’s purchase of WPIX from Scripps, Nexstar said. That application included the terms of Nexstar’s local programming agreement to operate WPIX and drew no objections or petitions to deny, said Nexstar. The FCC “unlawfully seeks to penalize Nexstar for implementing agreements that the FCC expressly approved,” said the filing. “The NAL’s conclusion that Mission has ceded control over WPIX’s programming rests almost exclusively on a recitation of contractual rights covered, word for word,” in the submitted agreement, Nexstar said. The FCC “is not exempt” from Administrative Procedures Act-required processes that “prohibit administrative agencies from saying one thing,” ignoring companies relying on that, and “pulling a surprise switcheroo,” Nexstar said.

The NAL also reinterprets FCC rules in ways that should require notice and comment, Nexstar said. In the NAL, the FCC cites the low number of Mission employees at WPIX as a sign that the company doesn’t control the station, but after the elimination of the main studio rule, there is no minimum employee requirement. The NAL also points to Mission never preempting programming at the station as a similar indicator, but there’s no FCC rule establishing such criteria for attributable ownership, Nexstar said. The FCC “has never before held that a station owner must exercise its preemption authority, or maintain specific procedures to exercise this right, to retain de facto control of its programming,” Nexstar said.

The NAL also creates policies governing retransmission consent negotiation and station financing, Nexstar said. The NAL points to Mission’s delegation of WPIX’s retransmission consent negotiations to Nexstar, but such delegation is “expressly permissible under the FCC’s good faith negotiation rules” and the law restricts only joint negotiations between same-market stations, Nexstar said. The NAL also creates a distinction when it argues that Nexstar’s guarantee of Mission’s debt means Nexstar controls WPIX, Nexstar said. Under FCC rules, anyone holding more than 33% of equity and debt interests in a station is an attributable owner, and the NAL said Nexstar crossed that line through the guarantee. “It has long been understood that a loan guarantee does not constitute an equity interest or a debt interest and is not otherwise attributable pursuant to FCC rules,” Nexstar said. The FCC’s position “is a complete surprise” and impacts “not only Nexstar and Mission, but other broadcasters as well,” Nexstar said.

Nexstar also objected to the NAL's proposed penalties, including the requirement that Mission divest WPIX. “To Nexstar’s knowledge, the Commission has never before required divestitures as part of an NAL proceeding,” the filing said. Before this NAL, the largest penalty the FCC imposed under similar circumstances was $40,000, Nexstar said. “The Commission’s treatment of Nexstar is wildly punitive and inconsistent with the purported violations and the Commission’s precedent,” the filings said.

Forcing divestiture would violate the U.S. Constitution’s 5th amendment takings clause and Nexstar’s free speech rights, the filing said. Changing rules without notice and comment proceedings and then targeting broadcasters for unknowingly breaking them also violates the due process clause of the 5th amendment, Nexstar said. The broadcaster also challenged the FCC’s authority to issue forfeitures, citing the nondelegation doctrine from the 5th U.S. Circuit Court of Appeals case Jarkesy v. SEC (see 2311290028), currently awaiting a U.S. Supreme Court opinion. Since the statute doesn’t expressly tell the FCC how to decide between a NAL and a hearing, it violates constitutional limits on what authority Congress can delegate, Nexstar said.