FCC re-whacks TV Max

If you’ve been wondering whatever happened to TV Max, wonder no more. As you may recall, TV Max is the MVPD in the Houston area that – in the FCC’s view – broke the television carriage rules by retransmitting over-the-air stations without getting their permission to do so. If that doesn’t ring a bell, how about $2.25 million, which is the amount of the fine the Commission proposed to dump on TV Max in a Notice of Apparent Liability for Forfeiture and Order (NAL).

As is customary, TV Max was given an opportunity to plead its case in response to the NAL, or at least argue that the forfeiture amount should be reduced. It did so, and  after giving TV Max’s the usual compassionate consideration you might expect, the Commission has now reaffirmed the $2.25 mil in a harsh Forfeiture Order.

The only real surprise here is that the Commission didn’t hammer TV Max for even more.

We won’t sift through all the background here. One thing you need to know to appreciate the Forfeiture Order is that, in the NAL, one important factual question involved when TV Max had supposedly completed installation of certain MATV facilities. Was it March 2012 (which would be good for TV Max) or July 2012 (not so good for TV Max)?

Unfortunately for TV Max, it had advised the Commission that July 2012 was the correct date, but only after TV Max’s CEO had initially said that March 2012 was the correct date. According to TV Max, the contradiction was the result of an error by their counsel. So in the NAL, the Commission assumed that July 2012 was the correct date.

But wouldn’t you know, in its response to the NAL in July 2013, TV Max returned to its original claim that all the necessary gear had been installed by March 2012. What about TV Max’s July 2012 statement? That, according to TV Max’s latest claim, was the result of another error by TV Max’s counsel!

The Commission wasn’t buying that retread excuse, particularly because it was contradicted by a long list of other TV Max submissions (a list that fills a footnote extending more than half a page). Not surprisingly, the FCC concluded that TV Max’s latest claim was “disingenuous” and intended “to obscure the egregiousness of [TV Max’s] misconduct.”

On another front, the Commission routinely allows NAL targets to try to demonstrate that a fine should be reduced because the target doesn’t have the financial ability to pay. It is well-established in such situations that the party pleading poverty has to produce reliable records (like tax returns, financial statements prepared according to generally accepted accounting principles, that kind of thing). TV Max did submit some financial materials. The Commission took a look and described them as a “hodge-podge of financial data . . . calculated to prevent the Commission from drawing any meaningful conclusions regarding TV Max’s inability to pay claim”.

There are more nuggets in the Forfeiture Order, but you get the idea. It seems like TV Max was doing everything it could to prompt the FCC to up the fine well beyond $2.25 million.

The Commission, however, declined to take the bait – it mercifully stuck with the already prodigious $2.25 million. And in another unexpected display of charity, the Commission addressed the Forfeiture Order only to the business entities related to TV Max, and not to their individual principals. The NAL had indicated that the individuals would be on the hook for the fine, but the Forfeiture Order takes that off the table, at least for now. (A footnote does leave open the possibility of personal liability somewhere down the line, though.)

Whether the case will stop here or continue on into some court remains to be seen. But it’s hard to imagine that this matter is likely to end well for TV Max.

Do you feel the TV Max fine was fair or should have been less/more? Let us know in the comments.

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