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.
Smith: FCC Costing Broadcasters ‘Millions’
An FCC proposal to crack down on joint sales agreements has already “cost many millions of dollars of investment in the U.S. television broadcast industry,” will lead to “significant” job losses — and should be reconsidered, according to National Association of Broadcasters President-CEO Gordon Smith in a personal appeal to FCC Chairman Tom Wheeler.
“It’s time to take a step back and reevaluate,” says Smith, in a March 24 letter to Wheeler that was released to reporters today.
In his letter, Smith, who also said he met with Wheeler on March 21 to discuss the chairman’s proposed ban on JSAs, contends that a “particularly harmful” part of the chairman’s proposed crackdown — which has been scheduled for a March 31 vote by the FCC — would require existing JSAs to unwind within two years.
“These [JSA] agreements between businesses have already been blessed by the FCC itself for more than a decade,” Smith said in his letter, adding that the agency had approved 85 JSAs during FCC merger reviews since 2008.
“Small and medium-sized American businesses have relied detrimentally on the FCC’s determinations that those agreements were consistent with the public interest,” Smith continued. “Businesses must be able to trust the FCC — or any agency, for that matter — on matters that the agency has approved. Why would anyone invest in a regulated entity if they knew that the rules could change mid-stream and new rules would be applied retroactively?”
“The swift and negative reaction of investors has been stark and now the general emerging perception on Wall Street is that regulators, and not the women and men running broadcast companies, are going to diminish the broadcast television industry,” Smith continued.
BRAND CONNECTIONS
Smith also urged Wheeler to embrace a compromise recently proposed by the NAB that would allow some JSAs to continue.
Under the compromise proposal, the FCC would carve out an exemption from the blanket ban, protecting those that broadcasters can show provide public interest benefits and meet a series of tests intended to limit one station from using a sharing agreement to control one or more additional TV stations in the same market.
“This way forward will give investors confidence that the commission will not be a 1970s-style heavy-handed regulator, but one that responds to market forces and seeks to encourage broadcasters, as well as wireless and cable companies, to compete and drive the American economy,” Smith said in his letter.
“I have no doubt that you did not intend curtailed investment and fewer American jobs to be the practical effect of the proposed rules,” Smith continued. “Given your investment background, I am confident that you understand the importance of encouraging investment and innovation in each of the telecommunications sectors. I suspect, therefore, that you are also concerned with the business community backlash ….”
Wheeler could not immediately be reached for comment.
In a March 24 letter to FCC Commissioner Mignon Clyburn, the Free Press watchdog group urged the agency to reject NAB’s proposed compromise. The “so-called compromise is merely a regurgitation of the existing standards that have led to runaway consolidation,” Free Press said in its letter to Clyburn, who is widely perceived to be the FCC’s swing vote on the JSA issue.
Under one key test in the NAB compromise proposal, a brokered station in a JSA deal would be required to retain control of at least 85% of station programming and keep at least 70% of the brokered station’s net advertising revenue.
In addition, the NAB proposal would require the licensee of the brokered station to retain “ultimate” control over rates charged for advertising and retain an “option to hire its own advertising sales staff or retain other sales services.”
Wheeler has proposed barring immediately the formation of new JSAs in which the broker station sells 15% or more of the ad time of the brokered station. Broadcasters with existing JSAs would have two years to unwind, unless they can persuade the FCC to give them a waiver to continue a particular station combination, under the Wheeler plan.
Comments (17)
Angie McClimon says:
March 25, 2014 at 12:45 pm
NAB is going for spin. “Unwind JSAs and jobs will be cut”. Jobs are already cut when you hub master control and traffic operations. Unwinding JSAs will only serve to create more jobs.
Wagner Pereira says:
March 25, 2014 at 7:27 pm
The people who control the USA Monetary Policy, the Federal Reserve, has stated that the larger the Company, the more jobs are created, while smaller Companies cause Job destruction. As thus, unwinding JSA will cause more unemployement. http://macroblog.typepad.com/macroblog/2014/02/the-pattern-of-job-creation-and-destruction-by-firm-age-and-size.html
none none says:
March 25, 2014 at 2:55 pm
“Hubbing” master control and traffic has nothing to do with JSA’s, you can hub without a JSA.
David Siegler says:
March 25, 2014 at 3:47 pm
And an automated master control can run unattended.
Tim Pardis says:
March 25, 2014 at 3:47 pm
Last time I checked, the United States broadcast system was not created for the benefit of Wall Street investors or to guarantee profits for broadcast/communication corporations.
Terry Dreher says:
March 25, 2014 at 4:09 pm
Was the FCC created to prevent profits?
Tim Pardis says:
March 25, 2014 at 4:34 pm
No, the FCC was created to regulate the airwaves (electromagnetic spectrum) which is the common property of the citizenry.
John McElfresh says:
March 25, 2014 at 3:49 pm
JSAs COST JOBS. PERIOD!
Wagner Pereira says:
March 25, 2014 at 7:27 pm
100% incorrect, according to the Federal Reserve. http://macroblog.typepad.com/macroblog/2014/02/the-pattern-of-job-creation-and-destruction-by-firm-age-and-size.html
Teri Green says:
March 25, 2014 at 11:33 pm
According to this you can destroy on $100,000 a year job and create three $20,000 a year jobs. Thus you’ve created two new jobs. Yeah that is totally accurate picture. You’re still costing $40,000 which winds up sitting in a bank that is afraid to loan it out. Thus the $40,000 in lost job money, that could be spent stimulating the economy is lost.
Jay Miller says:
March 25, 2014 at 3:53 pm
Its what the government does..Cost us all $$.Keep them the H…. away from business and we will al flourish
Brian Bussey says:
March 25, 2014 at 4:14 pm
JSAs have one roll. that is to conccentrate income above the working stiffs in the station. Wall Street wants to see steady profits. Wall Street does not care if its 50 people make 50 grand or 2 people making 1.25 million each. Meanwhile 48 people got laid off due to consolidation, and automation. ADOnt stop at JSAs TV groups are also to big by a factor of 3. Radio is worse. Look at Clear Channel and the distribution for their right wing propaganda. No progressive media has clear channel’s distributiion across America. They should also be broken up.
Wagner Pereira says:
March 25, 2014 at 7:28 pm
Again, the Federal Reserve documents you being incorrect about JSAs. http://macroblog.typepad.com/macroblog/2014/02/the-pattern-of-job-creation-and-destruction-by-firm-age-and-size.html
Brad Dann says:
March 25, 2014 at 4:15 pm
These new rules will get thrown out by the courts. Sinclair and Nexstar won’t just sit back and let the Fcc destroy their business model without a fight. The FCC will have to justify their regs and courts have not bought the scarcity argument for 20+ years.
Ellen Samrock says:
March 25, 2014 at 5:30 pm
The fact that the organization Free Press is attached to any proposal to do away with JSAs/SSAs says it all. Robert McChesney, the founder of Free Press, is a self-described Marxist who hates any form of capitalism in broadcasting. When the late Hugo Chavez confiscated TV stations for criticizing him and his policies, McChesney applauded the action. Free Press has been with Obama from the beginning, crafting his media policies. They are absolutely not interested in the loss of jobs in broadcasting. If anything, Free Press would love to see the end of broadcasting as we know it–the end of networks, media groups, advertising, retrans, JSAs/SSAs–anything that could possibly sustain the broadcast industry financially. From the name, they may not seem like it, but Free Press is a dangerous organization.
Teri Green says:
March 25, 2014 at 11:35 pm
The real solution, though no one will like it, is to simply change the method of network distribution. No more affiliates. Just have one central station for each network and let them just run repeaters and translators across the nation. Then let the now de-affiliated stations go independent or die and return their spectrum. Not a job creating method for sure, but alas the affiliate model is old and outdated.
Grace PARK says:
March 26, 2014 at 1:18 pm
Hmm. Let’s see. Pew comes out with its annual “State of the News Media” containing this relevant gem: “…One measurable impact has been fewer stations originating local news content. That number has dropped by 8% since 2005. Fully a quarter of the 952 U.S. television stations that currently air local newscasts do not produce the programs themselves; another station provides them…” So, right, Mr. Smith, the damned infernal FCC may cost jobs but not the hundreds that you and your cronies have already lost.