House Democratic leaders Frank Palone (D-N.J.) and Mike Doyle (D-Pa.) want the General Accountability Office to look into the impact of various local broadcaster sharing agreements on competition, localism and diversity. Hill Dems have been critical of Sinclair’s inclusion of such agreements with stations it is spinning off to secure government approval of its efforts to buy Tribune TV stations, suggesting it is using the agreements to continue to control stations it is supposed to be divesting.
On Friday, the FCC released a Public Notice announcing that the rules requiring the inclusion in the online public file of TV station “shared services agreements” is now effective after having been approved by the Office of Management and Budget pursuant to the Paperwork Reduction Act. This obligation for TV stations to put in their public file agreements between independently owned TV stations for shared broadcast services (including shared news operations, accounting staffs and other operational matters) became effective on March 23.
Chairman Pai says the Media Bureau is immediately ending the heightened scrutiny of joint sales and shared services agreements.
How far can a court go in ordering broadcasters to comply with the terms of a contract? By trying to get a court to enforce a contract signed with a broadcaster, is the suing party infringing on a licensee’s control over its broadcast station license? These questions are addressed in a letter that the FCC released this week, sent to a federal district court in connection with a dispute between two big TV companies over the termination of a joint sales agreement between TV stations in Georgia.
Media General has incurred the wrath of the FCC for continuing to operate Gray’s WAGT Augusta, Ga., under joint sales and shared services agreements. It’s one the wackier cases I’ve seen in a long time. Media General, it seems to me, is taking a big gamble, given it’s pending $4.6 billion merger with Nexstar, and I’m not sure why.
The Government Accountability Office dinged the FCC in report released Monday for failing to collect enough information to judge TV station joint-operation deals. The commission has “not collected data or completed a review to understand how broadcaster agreements are being used and the potential impacts with respect to its media ownership rules and the corresponding policy goals of competition, localism and diversity,” the GAO says.
Over the past few weeks, we have begun to see how the FCC’s decision in March to curtail the use of joint sales and shared services agreements is impacting the business.Three groups have proposal three different plans to come into compliance with the new rules. Of them, Nexstar’s arrangement with Pluria Marshall is the potential win-win.
It asks the appeals court in Washington to overturn the FCC’s new “processing guidelines” for TV station applications proposing sharing arrangements and contingent financial interests, calling their adoption “arbitrary [and] capricious.”
The Sinclair CEO says the uncertainty surrounding the regulatory environment is making it tough on broadcasters. Congress and the courts need to supply some answers to disputes over shared service agreements and the FCC’s ownership cap. Also on the top of his to-do list is creating a next-generation broadcast TV standard that will let stations “be everywhere 24 hours a day, 365 on every device.”
As part of a House telecom committee proposal for STELA legislation, broadcasters with JSAs who applied for a waiver from the FCC would be able to keep the sharing arrangements intact for 18 months after the agency ultimately rejected a waiver request, or Dec. 31, 2016, whichever is later. The compromise JSA language is expected to be included in the STELA reauthorization bill that is scheduled for a House Energy and Commerce Committee vote tomorrow.
The news that the association has given the FCC a week to reverse its tough new SSA stance reflects mounting frustration among broadcasters who are seeking FCC approval of deals that involve the alphabet soup of ownership rule work-arounds. I’ll be watching next week in hopes its May 8 cease-and-desist deadline is more than bluster.
The trade group tells the commission that its new approach to service agreements is “arbitrary and capricious” and it should stop by May 8.
The FCC chairman’s contention that eliminating joint sales agreements will open up new opportunities for minority and women to become TV station owners ignores the fact that TV broadcasting is no longer a business for small operators, regardless of their gender or color. It’s a business for behemoths with negotiating clout. On the other hand, if Wheeler called off the incentive auction tomorrow, there would be all kinds of TV stations available for all kinds of buyers, including minorities and women.
NAB President Gordon Smith tells FCC Chairman Wheeler that his proposed crackdown on JSAs has already financially damaged the industry and could eventually cost jobs. “It’s time to take a step back and reevaluate,” says Smith in a letter to the chairman.
Instead of prohibiting new JSAs and forcing current ones to unwind in two years unless they can get a waiver, the NAB said the commission should set conditions for legitimate station sharing deals, including requiring the brokered licensee to retain control over at least 85% of the station’s programming; keep at least 70% of ad sales revenue and “maintain at least 20% of station value in the license itself.
In a public notice, the FCC’s Media Bureau says it’s particularly concerned about same-market sharing deals that include contingent financial interests. Commissioners Ajit Pai and Michael O’Rielly say they’re opposed to the such a move.
The agenda is out, and the FCC’s likely action on its Quadrennial Review of the multiple ownership rules now seems to be much clearer. And the decision seems likely to follow the rumors circulating in Washington for weeks, with new regulatory wrinkles added to those previously suggested. Among the hot topics: JSAs, SSAs and retransmission consent agreements.
Disregarding all the changes that have roiled the television industry over the four decades since the FCC adopted its ban on owning two TV stations in the same market, FCC Chairman Tom Wheeler now believes that it is absolutely imperative that the FCC buck up the old rule by closing loopholes that broadcasters have been using to get around it.
The National Association of Black Owned Broadcasters suggests that rather than outlawing all JSAs and SSA, the FCC should let stations restructure them to guarantee that the operated stations would eventually be transferred to a minority owner or otherwise serve the public interest. If so, they would be given a waiver to operate for some longer period of time, say five years.
Despite speed bumps from the FCC (plans to kill JSAs and SSAs) and Aereo, many industry observers think the station trading market will heat up, with speculation that possible players include not only the usual suspects (Sinclair and Nexstar) but also Post-Newsweek, LIN, Meredith, Media General, Raycom and Sunbeam.
In ex parte remarks, it suggests any changes should be made in concert with a broader consideration of broadcast ownership rules.
FCC Commissioner Michael O’Rielly on JSAs and SSAs: “I think it is fair to say that the media marketplace is far more competitive than it was decades ago when the FCC’s media ownership rules were established, or in 2002 … or 2006 when they were last reviewed. That is why I would be perplexed and deeply concerned by a push to abruptly switch gears and tighten the rules as part of a media ownership proceeding. Such a move would conflict with the spirit, intent and wording of the statute. It would also likely harm the public interest if fewer stations could offer local news, especially in smaller communities.”
TV shared services agreements have been one of the targets of public interest groups since the start of the current Quadrennial Review of the FCC’s multiple ownership rules. There has recently been a flurry of activity, leaving the status of these deals somewhat confused under the review of the new FCC chairman.
In a move that could be trouble for Sinclair’s previously announced purchase of Allbritton Communications, the Media Bureau says Sinclair’s plans to spin off stations in Charleston, Birmingham and Harrisburg to sidecar operators would violate commission rules.
The cable trade group tells FCC Chairman Wheeler that the commission should review all station sales in which licensees have or plan to enter into coordination agreements such as shared services agreements to avoid violating the commission’s media ownership rule.
Senator Jay Rockefeller asks the FCC to “collect all information necessary to understand the scope and effect” of any SSAs included in pending station sales.