More than a year ago, a Pierce County Superior Court judge said the public could not know how much money a city-owned cable network pays broadcasters because the charges are trade secrets.
Despite the court order stemming from that ruling, the city of Tacoma inadvertently released the details of Click’s payments to those broadcasters to a for-profit Florida company three times during the past year.
City leaders, told by The News Tribune earlier this month that the records existed on SmartProcure’s website, expressed surprise and moved to remove them. They said the release of the records puts Click at the mercy of broadcasters who might remove their signals or use the information to negotiate even higher fees.
The information was in the city’s purchasing database, which SmartProcure requested to include in an online trove of government purchasing records that it sells to potential government vendors.
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Every time the city buys something, that purchase is recorded as a line in a database. The database tracks what was bought and what it cost, which department bought it and when. It records the purchase order number and the vendor.
Within the database are amounts the city paid to the broadcasters. They total more than $4.3 million in retransmission consent fees paid to the five broadcasters from 2009-2013. Before 2006, Click paid nothing to retransmit the signals.
In early 2013, The News Tribune requested copies of broadcaster contracts from the city-owned cable network. Pierce County Superior Court Judge Ronald Culpepper blocked the release of financial details after five broadcasters objected.
Since then, the city has allowed broadcasters to redact any requested record that relates to the fees Click pays for over-the-air stations KOMO, KING, KIRO, KCPQ and KSTW, among others. Redacted records have included hundreds of pages of invoices and more than 1,100 purchasing database entries.
“Since the monthly fees are protected trade secrets, both the gross amounts paid and the number of subscribers cannot be disclosed simultaneously, because that would compromise the monthly fees,” wrote one broadcaster’s attorney to a Tacoma city attorney in July.
The city released the purchasing database, which included the uncensored broadcaster payment data, to SmartProcure three times, starting Sept. 12, 2013, SmartProcure spokesman Craig Calvert said. Each time, the data included information the city had told The News Tribune the court order prevented it from releasing.
On its Twitter account, SmartProcure says that “the only place you can find more government procurement data is at the NSA.” More than 2,600 government agencies nationwide supply data to SmartProcure, Calvert said.
That group includes other municipalities that own cable systems, including at least one city that also contracts with Seattle broadcasters and has given the amounts of its broadcast payments.
Governments provide data for free to SmartProcure. In exchange, the governments get access to the entire database, which allows agencies to compare prices for things such as pencils and computer printers to try to find better deals.
SmartProcure makes money by charging vendors interested in doing business with government agencies a fee to access the data. A company that knows what its competitors charge a city can make money by offering a slightly lower bid on a similar service or product, Calvert said.
In September, SmartProcure gave journalists free access to its database. More than 100 journalists across the country now have access, Calvert said recently.
Tacoma city attorney Elizabeth Pauli said she does not know what the data release means for the injunction. Pauli said the data SmartProcure requested was released without redactions because the database was not flagged as a record requiring special protection.
Duane Swinton, a Spokane attorney for broadcasters Belo, Tribune and Cox, said he doesn’t know what the city released, but he believes it breaks the injunction if dollar amounts were revealed.
An attorney for Fisher Communications, Judy Endejan, said it is now “up to the city to get (the information) back and take corrective measures.”
“I just want the court to have a legitimate, fair shot at resolving the issue of whether these fees qualify as trade secrets,” she said.
Tacoma City Manager T.C. Broadnax and Tacoma Public Utilities Director Bill Gaines made separate requests to the newspaper to not publish the information the city inadvertently gave to SmartProcure. They say the city is at risk of being sued for millions of dollars.
“We have a contractual relationships with the broadcasters, and we have a court order that we are obligated to honor,” Pauli said Thursday. “We are concerned about both.”
Most of those broadcaster agreements prevent the city from releasing the terms of its retransmission contracts in most instances. One exception to confidentiality generally recognized in the agreements is, as the Fisher contract states, “to the extent necessary to comply with law or valid order of a court.”
City attorneys say the contracts are public under state’s open records law. Click executives also argue the release would hurt Click’s bargaining position by allowing all broadcasters to know what the others are charging. In any case, Superior Court Judge Culpepper has blocked their release because broadcasters convinced him the fees are closely held trade secrets.
Toby Nixon, president of the Washington Coalition for Open Government, said public agencies cannot sign away the public’s right to know with a contract.
“We are not talking about the NSA black ops budgets here, or trying to keep the Soviets from knowing how much money we are spending on spy satellites. This is not a national security issue,” Nixon said. “For them to think they can spend millions of dollars and keep it completely secret from the public in how much they spent is totally inconsistent with the basic principles that the people are sovereign and have a right to know what their government is doing.”
With confidentiality agreements a standard in the industry and few cable systems subject to open government laws, retransmission fees remain largely a mystery for consumers who end up paying them.
In 2010, after 3 million New York-area households lost access to World Series games because of a dispute between Cablevision and Fox, then-Sen. John Kerry told a Senate panel that consumers needed more protections and that disclosure could help.
“At issue in these disputes are the fees that broadcasters charge distributors for retransmitting the broadcast signal that’s sent over the public airwaves. Now, too often the negotiations over those fees lead to both sides putting up websites and ads calling each other greedy, urging consumers to take a side, and warning those consumers about the loss of service,” Kerry said at a 2010 Senate committee hearing.
“That’s typically followed by tense last-minute negotiations and, in some cases, the pulling of the signal and continued recriminations until one side or the other bends or breaks, as the case may be. At the end of the process, after that period of consumer uncertainty, there is no transparency in the price reached or the nature of the agreement.”
In Tacoma’s case, SmartProcure removed the city’s records from its database at the city’s request about a week ago. Calvert said the city supplied a version of the database that does not contain the enjoined records and hopes to have that information online soon.
The company has no way to tell how many people saw the Click retransmission records in the months they were on the website, he said. But city officials say The News Tribune will be to blame if the release of the records ends up harming the city or Click.
“Could (a story) not result in us being sued?” Broadnax said.
They say the threat to the city and its cable customers is twofold: Tacoma could either end up paying out a large sum for releasing information it was barred from disclosing, or the city could lose the broadcasters’ signals.
A city attorney told Culpepper last year that at least one broadcaster alleges the release of information about fees would amount to a breach of Click’s contract to carry the channel and could lead to termination of service.
Networks are not likely to renew contracts with Click if the financial details of its contracts are released, said Mitch Robinson, a former marketing and business operations manager for Click.
“They don’t need the 20,000 to 25,000 subscribers that are in this market,” Robinson said. And if broadcasters and other programmers withhold their signals, Click could cease operations — leaving Comcast the only cable provider in Click’s service area, which includes Tacoma, University Place, Fircrest, Fife, a third of Lakewood and a small part of Pierce County.
“When you take choice away in the market, prices are going to rise,” Robinson said. “They are going to go up 40 to 50 percent.”
Gaines said even Comcast customers like him will feel the pinch if Click is no longer there to provide the competitive pressure to keep all cable rates in its service area low.
For the standard Click package with 88 channels, customers pay $48.29. A Comcast customer inside the Click service area pays $52.99 for a similar package. But outside of the Click service area, Comcast charges $69.49 for a similar package containing 88 channels, according to an analysis of rates by Click.
Click, like all cable systems, has struggled for years with rising costs and a declining subscriber base.
The National Cable Television Cooperative reported that 793 small cable systems have gone out of business in the last five years, said Click boss Tenzin Gyaltsen during a recent study session with the Tacoma City Council. Click has lost about 15 percent of its subscribers since 2009.
The News Tribune has appealed Culpepper’s ruling to the Court of Appeals. Oral arguments could happen in May.