FCC To Scrutinize Station Sales With SSAs

The FCC Media Bureau announced Wednesday evening that it will be looking more closely at TV station deals that include same-market sharing agreements and emphasized that it is up to broadcasters to demonstrate in their transaction applications why a deal would be in the public interest.

In a public notice, the bureau said it was particularly concerned about same-market sharing deals that include contingent financial interests (see here).

“An assignable option to purchase a station at less than fair market value may counter any incentive the licensee has to increase the value of the station, since the licensee may be unlikely to realize that increased value,” the bureau said in the notice.

“Also,” it continued, “the compensation provisions of agreements to share facilities and employees, to jointly sell advertising, and to jointly acquire programming, can be structured such that the licensee of the station bears little or none of the risks and reaps little or none of the of the rewards for the performance of the station.”

The bureau also said that it is up to broadcasters to demonstrate in their transaction applications why a deal would be in the public interest.

In addition, the bureau said a broadcaster “must provide sufficient information and documentation to fully describe its proposed transaction, including any side agreements, and establish that it is an arm’s-length transaction and would not impair the existing licensee’s control over station operations and programming, result in attribution of the relationship, or be otherwise contrary to the public interest.”

“Parties with pending applications proposing these types of combinations will have the opportunity to amend those applications, if they wish, to simplify the review process,” said Bill Lake, Media Bureau chief, in a statement.

“Where such a combination exists, we see a need to apply careful scrutiny to ensure that the transaction does not give one station an undue degree of operational and financial control over the second station.”

In separate statements, the FCC’s two Republican commissioners — Ajit Pai and Michael O’Rielly — said they opposed the bureau’s notice, at least partly on procedural grounds.

In a statement, Dennis Wharton, a spokesman for the National Association of Broadcasters, said: “NAB will carefully review this public notice, but on first blush it raises very serious procedural and substantive concerns. We would also note that in a world of massive consolidation by pay TV behemoths, the FCC seems unduly focused on sharing arrangements by two TV stations offering programming for free in markets like Topeka and Tupelo. We appreciate the strong statements from both Commissioners Pai and O’Rielly and will continue to make the case that broadcaster sharing arrangements are in the public interest.”

The FCC is slated to vote on Chairman Tom Wheeler’s proposal to crack down on joint sales agreements and other station sharing deals on March 31. Wheeler’s proposal would block the formation of new JSAs and give broadcasters two years to unwind existing ones — unless they can somehow persuade the FCC that the joint combos warrant a special waiver on public interest grounds.