In Washington, D.C., a set of programmers are holding up two major corporate takeovers because they don’t want a few extra lawyers to become privy to the trade secrets in their retransmission consent agreements (RCAs). Meanwhile, in that other Washington on the other coast, a State Court of Appeals has just issued an opinion that there is no justification for claiming that the terms of RCAs are trade secrets.
There’s a whole mess – that’s the official legal term: “a whole mess” – there’s a whole mess of legal fine points involved, but what’s going on in Washington State could have some bearing on what’s happening in D.C. If this ruling holds up, and gets out of the state and jumps to the Federal level, this could affect every retransmission consent negotiation henceforth. People might actually find out why their cable bills are skyrocketing.
The City of Tacoma runs a cable company called Click! as a public utility. Click (we’re going to ditch the exclamation point henceforth) inadvertently published the details of its RCAs with several local broadcast stations in Tacoma’s on-line database of procurements, which came to the attention of the Tacoma News Tribune.
Click removed the information, in accordance with its contractual obligations to keep the information secret.
The Tacoma News Tribune sued the set of companies who own the local broadcasters, under a Public Records Act, to have the details of their RCAs with Click made public (more accurately, public once again). Cable prices were rising, the paper reported, and the public has the right to know why the city-owned cable operator was raising prices.
The first judge to hear the argument agreed with the broadcasters, against the paper.
The paper appealed, and won. That decision came down on Tuesday.
CED requested to see the RCAs, pursuant to that decision, but a Tacoma spokesman explained the broadcasters are expected to challenge the Appeals Court’s decision, and that Click intends to honor the terms of the agreement until the legal question is settled.
In fact, even though Click is listed as an appellant in the Appeals Court case along with the Tacoma News Tribune, Click would prefer to keep the terms of the RCAs secret, because revealing those terms could actually hurt its negotiating position (a point the paper itself has noted. See “City says unintended data release could cost Click.”)
Now back to D.C. The FCC wants to see the RCAs that several large programmers have with Comcast and Time Warner Cable and AT&T, as part of the process of reviewing the Comcast/Charter/Time Warner Cable deal, and AT&T’s acquisition of DirecTV.
The programmers are refusing to hand over the documents because they insist it is far too dangerous for a small handful of lawyers who work for outside counsel for some of the parties involved in the mergers to be privy to the trade secrets in the RCAs, even if those lawyers sign non-disclosure agreements, pinky-swear to not reveal any secrets, and cross their hearts and hope to die if they ever divulge how much the programmers are charging cable companies.
…Which shouldn’t be allowed to be considered trade secrets in the first place.
…And here’s an Appeals Court judge who agrees.
It is true that the Appeals Court decision may be interpreted to hold only in some very limited circumstances: only on the state level (Washington); only for public utilities (Click); perhaps only when the information has already been made public (oops).
But maybe not.
The State Appellate Court said the broadcasters failed to establish their prices are trade secrets under Federal law – specifically under the Uniform Trade Secrets Act (UTSA), a Federal legal framework adopted by the vast majority of U.S. states and the District of Columbia. The Appeals Court cited precedent for that decision. That might hold at the Federal level.
As a practical matter, the Click case will never get resolved any time soon, and so will never be established as a legal precedent that the FCC can use as it tries to review those two mergers.
But the knowledge that it’s out there should definitely affect the course of the argument the FCC is having with the programmers the Commission is dealing with. And if the legal argument that prices cannot be trade secrets under UTSA holds, well, that would change things.
Filed Under: Industry regulations