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.”