If a majority of the commission supports his proposal, joint sales agreements and joint TV station retransmission consent negotiations will be banned, effective immediately.
Wheeler Moves To End Sharing Agreements
FCC Chairman Tom Wheeler will ask his fellow commissioner to vote March 31 on a proposal that will ban joint sales agreements and joint TV station retransmission consent negotiations, a senior FCC official told reporters Thursday.
The JSA and retransmission consent bans will become effective immediately, assuming a majority of the agency’s commissioners vote in support of the regulations, an FCC source says.
A senior FCC official also says the JSA crackdown will apply to pending station transactions at the FCC, and provide up to two years for existing JSAs to unwind.
The official also says Wheeler is proposing to adopt an expedited waiver review process under which broadcasters will be able to seek waivers for JSAs.
If a broadcaster can show that a particular JSA serves the public interest, it may be able to get a waiver to continue a joint sales sharing deal, the FCC said.
The JSA rule proposed will require the broker station in a JSA to attribute the ownership of the brokered station if the dominant station sells 15% or more of the ad time of a competing station in the same market.
As long expected, the FCC will also seek comment on what to do about other forms of station sharing agreements that don’t include JSAs, including what disclosure requirements the FCC should require for those.
The retransmission consent crackdown will prohibit two or more separately owned Top 4 broadcast stations in the same market from jointly negotiating retransmission consent, the FCC said.
The FCC order, assuming it’s approved March 31, will adopt “a rebuttable presumption that the costs of joint negotiation by non-Top 4 station combinations in the same market outweigh the benefits, and that joint negotiation among these combinations constitutes a failure to negotiate in good faith,” the FCC said in a background paper.
The FCC also plans to ask for additional comment on whether to “eliminate the commission’s network non-duplication and syndicated exclusivity rules governing carriage of out-of-market network and syndicated programming,” the FCC said in a background paper.
In a blog on the FCC’s website this afternoon, Wheeler alleged that JSAs are being used as a way to get around agency ownership regulations limiting how many stations can be owned in a market.
“At a time of unprecedented change in the video business, the FCC should deal with facts, not reality-obscuring legal fictions,” Wheeler said. “Making JSAs attributable is simply recognizing reality.”
Wheeler also said that joint retrans negotiations could lead to higher prices for consumers. “This action [his crackdown] will return retransmission consent to one-to-one negotiations as intended by Congress, rather than many against one — with potential consequences for the consumer as one who ultimately pays the price,” Wheeler said.
Rep. Greg Walden (R-Ore.) released a discussion draft of a satellite bill Thursday afternoon that includes a provision that would impede the ability of the FCC to attribute JSAs immediately. But the bill to reauthorize the Satellite Television Extension and Localism Act, or STELA, has yet to be officially introduced in the House and would have to be approved by both the House and Senate before becoming law.
Among those commenting on Wheeler’s move were:
- Gordon Smith, NAB President-CEO: “NAB is disappointed but not surprised by this proposal from Chairman Wheeler. Broadcast companies across America have demonstrated that sharing arrangements lead to more local news and provide robust competition to giant pay TV providers. The real loser will be local TV viewers, because this proposal will kill jobs, chill investment in broadcasting and reduce meaningful minority programming and ownership opportunities. Coincidentally, two industries would benefit from today’s proposal: Big Cable companies who want less competition for advertising in local markets, and wireless companies who support punitive FCC actions that drive more TV stations into spectrum auctions.”
- Rep. Henry Waxman: “I welcome the commission’s decision to consider changes to its broadcast ownership rules. In particular, I strongly support the chairman’s proposal to bring broadcast television’s attribution rules for joint services agreements in line with broadcast radio. I am also pleased with the chairman’s plan to examine shared services agreements. While there are many instances where broadcasters sharing resources is appropriate, such sharing arrangements should not be used to circumvent the FCC’s ownership rules and undermine localism, competition and diversity over the public airwaves.“
- Matthew M. Polka, American Cable Association president: “FCC Chairman Wheeler deserves high praise for addressing the broken retransmission consent market and moving to correct one of its most serious flaws — the collusion practiced by dozens of TV stations owners, who are supposed to be competing with one another. Adoption of Chairman Wheeler’s proposed order would represent a victory not only for fair competition, but also for millions of consumers who are being victimized by TV station conglomerates, which have the perverse idea that collusion is somehow consistent with their legal charter to bargain in good faith.”
- Andrew Jay Schwartzman of Georgetown University Law Center’s Institute for Public Representation: “We are disappointed with several aspects of what the chairman is putting out this afternoon. Among other things, and in particular, we think there is ample evidence to justify immediate action on SSAs rather than seeking more comment, and we especially believe that there is no need to ask questions before requiring immediate online disclosure of SSA agreements. Obviously, we are pleased with the overall thrust of what the commission is doing, but we expect to press the commissioners to beef up the orders.”
- John Bergmayer, senior staff attorney at Public Knowledge: “Chairman Wheeler’s announcement should be welcomed by all TV viewers. The FCC’s actions will represent a meaningful attempt to rein in programming costs, by ensuring that local broadcasters negotiate for carriage on pay TV systems on their own behalf, instead of banding together with their ostensible competitors to coordinate their activities and demand above-market rates for their programming.”
- Craig Aaron, Free Press president-CEO: “For too long, the FCC sat on its hands and watched television broadcast conglomerates like Sinclair use so-called sharing agreements to gobble up more television stations. These shady deals spurred the biggest wave of media consolidation in history — knocking independent local voices off the air, slashing newsroom jobs and killing media diversity. Today’s announcement begins the process of righting FCC mistakes on media ownership. The agency must close the loopholes in its rules and ensure corporations can’t use shell companies to hide the real owners of local stations and sneak through even more media consolidation. Viewers need competing sources of local news.”
- The National Cable & Telecommunications Association: “We are pleased that Chairman Wheeler intends to circulate an order that would rein in the anticompetitive practice which currently allows separately owned broadcast stations to jointly negotiate for retransmission consent payments. As Chairman Wheeler stated, this type of coordinated behavior has resulted in increased prices which are ultimately borne by consumers. We urge the commission to move forward in adopting the chairman’s proposal.”
- The Minority Media and Telecommunications Council: We “applaud Wheeler’s initiative — particularly with respect to shared services agreements, under which the ‘licensee’ often holds nothing but a bare FCC license and lacks any meaningful authority over financing, staffing or programming. The chairman’s announcement wisely leaves the door open for those instances in which the only way to save a struggling television station is with a ‘sidecar’ JSA or SSA arrangement. The commission should also consider the very thoughtful proposal of the National Association of Black Owned Broadcasters to authorize temporary JSAs and SSAs when used as incubators of minority and women entrepreneurs. Regulatory uncertainty has been a major cause of lack of access to capital for new entrants; thus MMTC hopes the commission will provide clear guidance on what it is looking for in waiver requests.”
- Sen. John D. (Jay) Rockefeller: “I thank FCC Chairman Wheeler for putting forth proposals that address many of the concerns I, and others, have expressed about the misuse of joint sales agreements and shared services agreements by broadcasters. I look forward to reviewing the details of his proposal, and considering other steps the FCC and Congress can take to foster a consumer-centric video marketplace.”