• by David Goetzl  @dgoetzl, August 2, 2012

Local station groups should thank Time Warner Cable for the wake-up call. It’s unlikely that station owners will ever again craft a contract without explicit, inarguable language saying their stations cannot be imported into a faraway market.

The alarm clock is an outgrowth of the recent standoff between Time Warner Cable (TWC) and Hearst Television, where TWC may have taken advantage of a slumber. The cable operator has another two years to potentially capitalize, presuming a court doesn’t intervene. After that, station lawyers will be on guard when negotiating with it or any other distributor.

In July, TWC and Hearst reached a standoff in negotiations about how much TWC would pay Hearst to carry many of its stations. With no deal, the stations went dark.

But during the blackout, TWC imported feeds of several Nexstar Broadcasting stations into six distant markets, hoping to reduce customer complaints. So, while the Wilkes-Barre, Pa. local news may have been weird in Greensboro, N.C., viewers could still watch NBC in prime time.

TWC was looking to put some pressure on Hearst to settle. TWC had employed the importation tactic once before (in late 2010 and early 2011) using Nexstar stations.

As the Hearst dispute continued, Nexstar filed suit against TWC in Texas federal court, seeking an injunction to stop its signals from being transported distantly.

TWC and Hearst have since reached an agreement. But Nexstar is continuing with its litigation, fearing TWC would employ the tactic again. In court papers, Nexstar says TWC could use Nexstar -- “a mere innocent bystander” -- as a “bargaining tool” in future carriage disputes.

In court documents, Nexstar and TWC sling a slew of allegations against each other. Nexstar alleges that TWC has engaged in copyright infringement, while TWC suggests Nexstar has taken a lazy approach to the long-distance importation issue until this summer.

At the heart of the dispute, however, is that TWC believes it has rights under a 2009 contract with Nexstar (and two other station owners) to deliver signals outside home markets.

Nexstar says no way.

Within the multi-layered contract is a single sentence at the heart of the battle, which says Nexstar allows TWC rights to the “nonexclusive retransmission of the entire broadcast signal of each (Nexstar) station … over each (TWC) system.”

TWC argues that gives it “Nexstar’s express and unambiguous consent” to deliver stations over “each cable system owned by TWC -- all around the country, unlimited by geographic restriction.”

Nexstar also uses the term “unambiguous” in its court papers, saying the contract makes it clear that distant retransmission is prohibited. Furthermore, it argues that TWC has rights to offer stations only on systems operating in specific markets, not across a wide TWC footprint. (TWC disagrees.)

Broadcast networks have not sat on the sidelines in TWC-Nexstar relations. As the Hearst matter moved on, NBC wrote a letter to TWC claiming that the long-distance retransmission is “unlawful.” Nexstar’s affiliation agreements limit the markets where its signals can be carried.

TWC’s deal with Nexstar runs until June 30, 2014. On one level, it might benefit TWC to have as many carriage deals up for renegotiation over the next two years as possible. If the Texas court moves slowly or rules in TWC's favor, the cable operator could use Nexstar station importation as attempted leverage during that span.

After that, there's little doubt that stations and their lawyers will ensure that contracts have clauses blocking distant retransmission, which are as clear as a top-notch HD feed. That goes for deals not just with TWC, but every other cable operator or distributor.

Even if stations believe Nexstar got a little lax, it has done them a favor.