The FCC chairman says that the FCC will be giving closer scrutiny to shared services agreements that allow broadasters to skirt local ownership caps. “We’re going to do things differently,” he tells media consolidation foes in California.
Shared services agreements that allow broadcasters to use sidecar companies to control key aspects of multiple TV stations in the same market will be coming under closer scrutiny at the FCC, Tom Wheeler, the agency’s new chairman, said late Thursday.
“We’re going to look at that differently,” he said during a town hall meeting in Oakland, Calif.
Also during the latenight session, Wheeler said that his Dec. 6 decision to pull a draft FCC rule change that would have made it easier for broadcasters to combine with daily newspapers in the top-20 markets was similarly intended to signal a change in FCC direction.
The draft change had been proposed by Wheeler’s agency predecessor, former Chairman Julius Genachowski, but was attacked by watchdog groups and other critics of industry consolidation.
“One of the first things we did in the new commission is to do away with the proposed rule change that eased the crossownership restriction so that companies could merge,” Wheeler told the Oakland community members at the meeting.
Wheeler did not spell out precisely what sorts of changes he has in mind for shared services agreements, which have been slammed by consolidation critics as ways for broadcasters to get around agency regulations intended to limit how many media properties a company can own in a market.
But Wheeler said the FCC had signaled that a change could be coming.
“In an arcane way that only the lawyers could understand — but stay tuned — there were a couple of references in a couple of recent decisions in which we’ve said that we’re going to do things differently going forward on what were called these shell corporations,” Wheeler said.
Communications industry attorneys said Wheeler was referring to language included in the recent FCC decisions approving Gannett’s purchase of Belo and Tribune’s acquisition of the Local TV stations. In both of those deals, the FCC approved the formation of new SSAs.
But broadcast industry attorneys said language included in the FCC orders approving the transactions warns that SSAs, though routinely approved by the agency in the past, may not be not rubberstamped in the future.
In approving the Gannett-Belo merger, the FCC says that it has an affirmative obligation to insure than every deal serves the public interest.
“That is why applicants … should not forget that our public interest mandate encompasses giving careful attention to the economic effects of, and incentives created by, a proposed transaction taken as a whole and its consistency with the commission’s policies under the [Communications] Act, including our policies in favor of competition, diversity and localism.”
Wheeler’s remarks drew the applause of Oakland community members attending the session, with some activists hailing him publicly as “Brother Wheeler.”
“This is welcome news that the FCC is taking a closer and tougher look at these [SSA] transactions,” said Matt Wood, policy director of the watchdog Free Press, one of the Oakland session’s sponsors.
“The fact that he had this meeting is as significant as what he said,” added Andrew Schwartzman, a long-time watchdog media attorney in Washington. “He has signaled that he is going to be much more responsive to the public and be much less of a back-room kind of guy than some of his predecessors.”
Dennis Wharton, a spokesman for the National Association of Broadcasters, said the record shows that SSAs have led to more local news and more diversity of programming in many markets.
“In this day and age, do we really need a rule from the government saying a broadcaster can’t own a newspaper?” Wharton asked. “If a broadcaster can preserve journalism jobs at a local newspaper, wouldn’t that be a good thing?”
The Oakland event was hosted by Voices for Internet Freedom Coalition, Center for Media Justice, Free Press, ColorOfChange and the National Hispanic Media Coalition.