updated, 3 p.m. ET

FCC Puts Kibosh On New JSA Deals

The new rule bans new joint sales agreements in which one station sells 15% or more of the advertising time of another separately owned station in the same market. In addition, most existing JSAs will expire within two years unless the commission grants an exemption.

As anticipated, the FCC today ruled by a 3-2 vote that TV broadcasters generally may not form new joint sales agreements in which one station sells 15% or more of the advertising time of another separately owned station in the same market.

Some broadcasters have been using JSAs exceeding 15%, usually in concert with shared services agreements, to operate second TV stations in markets where outright ownership is prohibited by agency rules.

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Also under the new regulation, existing JSAs would generally be required to unwind within two years, unless the broadcasters involved can persuade the FCC that a particular arrangement genuinely serves the public interest.

The commission said the Media Bureau will consider waiver requests within 90 days of the closing of the record on the requests.

FCC Chairman Tom Wheeler said that the FCC has long imposed ownership limits to promote competition, diversity and localism. "Today, what we are doing is closing off what has been a growing end-run around" the limits.

In a related move, the FCC asked for comments on whether broadcasters should be required to fully disclose details about other forms of shared services agreements and whether additional regulations should be imposed on SSAs.

Brand Connections

The FCC's preexisting ownership rules prohibit TV stations in small and medium markets from owning more than one station. In large, they may own two as long as one of the stations in not among the market's top four rated. In most cases, that means not one of the Big Four network affiliates.

Under the FCC’s new JSA regs, the Media Bureau “should be able to move quickly” on waiver requests for station sharing deals where there’s no “change of effective ownership,” Bill Lake, Media Bureau chief, said at the FCC meeting.

The bureau may also be able to move relatively quickly on waiver requests where there has been an “effective acquisition” but no “acquisition-related financial entanglement” between the sharing stations “to compromise or impair the independence” of either station, Lake said.

But where effective control has passed from one station to another in the same market under a JSA deal, “one would imagine that the required showing of necessity and positive impact on the public interest [for a wavier request] would have to be very high to overcome the various forms of entanglement,” Lake said.

FCC Commissioner Ajit Pai, who opposed the JSA crackdown and voted against the agency’s order, said the waiver standard was “vague and inchoate” and leaves “unbridled discretion” for the Media Bureau to grant or deny waiver requests.

“While I very much hope I am wrong, I fear that the substantial majority of requests will not meet with a favorable response,” Pai said.

NAB EVP of Communications Dennis Wharton responded to the commission’s action: "For a decade, Republican and Democratically-controlled FCCs have approved JSAs, which allow free and local TV stations to survive in a hyper-competitive world dominated by pay TV giants. That model is now declared illegal, based on the arguments of pay TV companies whose collaborative interconnect advertising sales practices make JSAs seem pale by comparison. It's disappointing the FCC would take this action without first completing its 2010 statutorily mandated media ownership review. As the record before the commission clearly shows, the public interest will not be served by this arbitrary and capricious decision."

Senate Commerce Chairman John D. (Jay) Rockefeller IV said in a statement: “I thank the FCC for answering my call to rein in the misuse of broadcast television sharing agreements, which has threatened the integrity of the FCC’s media ownership rules. Today's action on joint sales agreements is a positive step forward, and I am pleased by the agency's further inquiry into how it can monitor the possible impact other sharing agreements could have on consumers.”

Free Press President Craig Aaron praised the FCC decision: "For years, a small handful of powerful conglomerates has used outsourcing agreements to dodge the FCC's ownership rules and grow their empires at the public's expense. And for too long the agency has looked the other way as these companies have dominated the airwaves. While today's vote focuses only on joint sales agreements, it signals that FCC Chairman Tom Wheeler is willing to break with the past and stop broadcasters from using shell companies to skirt the agency's ownership limits. We do have concerns about how the FCC will apply waiver standards. The agency must ensure that its efforts promote diverse ownership and do not prevent diverse owners from exercising real control over the stations licensed in their names. Bending the rules to keep sidecars in place would relegate these licenses to permanent second-class status. We need to ensure that this vote leads to real diversity on the public airwaves."

Martyn Griffen, government affairs associate at Public Knowledge, commented: "The commission's JSA order will make it harder for broadcast stations to circumvent media ownership rules in small and medium-sized markets. The FCC's actions are also a meaningful attempt to rein in programming costs. Instead of banding together with competitors to demand increased rates for their programming, local broadcasters should negotiate for carriage on pay TV systems on their own behalf. We applaud the FCC for closing this loophole in the media ownership rules."


Comments (26) -

Seenitallb4 Nickname posted over 2 years ago
Great news for the industry..... maybe this will force some of the "bankers" out of the business and we can get back to operating stations effectively instead of to squeeze blood out of them and their people.
AIMTV Nickname posted over 2 years ago
I couldn't agree more..
FederalGuy Nickname posted over 2 years ago
Let the lawsuits begin!
Roger Thornhill Nickname posted over 2 years ago
Right. The FCC just hired another litigator to handle the anticipated legal fallout from the new JSA rules as well as the incentive auction. Plus we had recent calls to the Commission from legislators on Capitol Hill to postpone the vote until the issue of JSAs/SSAs is throughly studied, which the FCC completely ignored. So this isn't over yet.
AIMTV Nickname posted over 2 years ago
Not sure the fall out of all this yet but the TV business MUST get back to broadcasting if it is to survive. Many of the ills plaguing our industry today is a direct result of a lack of competition and bankers calling the shots. Asking 1 person to do 3 or 4 jobs is not efficient.. it's short sighted and intellectually lazy.
Insider Nickname posted over 2 years ago
1 person is not doing the job of 3 or 4. Robotics and Computers are doing a large number. And it is going to get worse IN EVERY INDUSTRY according to people such as Bill Gates who expect another 20%+ of the total jobs in the USA over the next 10 years to be eliminated because of technology.
MobileVortex Nickname posted over 2 years ago
I dont see why robots cant perform the job of all McDonald's employees.
SalesGal Nickname posted over 2 years ago
I love how computer geeks who never grew up with friends and being around people are developing technology to eliminate the human interaction part of business'. There is a little thing called customer service that most business' need to thrive and succeed! The geeks will not inherit the Earth ....
MobileVortex Nickname posted over 2 years ago
Wow, what a horrible post... Never grew up with friends, i have friends from all over the world, some if met in real life, some i havent. You can have just as genuine human interaction via the internet as face to face. Probably the worst part of a lot of customer service is the person on the other side of the phone who knows less about he product then you do. Sorry to burst your bubble but the geeks have already taken over and are just waiting for the people who don't get it to either adapt or stay in their small circles until the ultimately disappear. I'm glad a "geek" that never had any friends gave you the ability to make that worthless post, god knows you wouldn't be able to do it.
PlasmaMan Nickname posted over 2 years ago
All of these 'bankers calling the shots above"....Let's pretend YOU wanted to buy a television station...Don't you need a banker who wants to see their loan repaid? Who has 30 plus million dollars to pay cash for a television station. The television business is just that - A BUSINESS and it needs investors who hope to make a return on their investment for it to continue.
jdshaw Nickname posted over 2 years ago
Yes, TV stations are just a business - nothing more. A business that is fat and happy, lazy, cheap, and treats its customers like dirt.
Insider Nickname posted over 2 years ago
Not everyone operated stations as badly as you.
Dog Bert Nickname posted over 2 years ago
TV like any business is all about customer service. Not sure what you mean by saying TV stations treat their "customers like dirt" if they did that rating would fall, and thus revenu..
JamesV Nickname posted over 2 years ago
Broadcasters' "customers" are advertisers. The product they are selling is the eyes and ears of viewers. So, treating "customers like dirt" would presumably involve gouging them for higher advertising fees than the audience would justify, or something similar. Broadcasters use programming in order to deliver the product to the customer.
nefnet Nickname posted over 2 years ago
That is true, but unlike many other industries, broadcasters have the additional obligation to serve their communities as well. Some of that is done cynically, but quite a bit of it is not; there's always a bottom line, but most broadcasters out there still try to be good stewards of those public resources. Will the MSOs and telcos feel the same way, I wonder? They will be all that's left if these guys get their way.
PlasmaMan Nickname posted over 2 years ago
JD - I hope you no longer work at a television station
Sammy Nickname posted over 2 years ago
Bad order. Simply invites litigation and will just force broadcasters to find a work around (which they will). In a time where the industry is going through tons of change this is a backwards moving decision. I bet all the guys who recently sold their companies filled with JSAs and counting their blessings. Timing. Timing. Timing.
Upwind Nickname posted over 2 years ago
I think jdshaw was trying to express what Hunter S. Thompson stated in 1988 (it has changed very little since then); "The TV business is uglier than most things. It is normally perceived as some kind of cruel and shallow money trench through the heart of the journalism industry, a long plastic hallway where thieves and pimps run free and good men die like dogs, for no good reason. Which is more or less true. For the most part, they are dirty little animals with huge brains and no pulse."
Ron Stitt Nickname posted over 2 years ago
This sure seems like the unfolding of the Reed Hundt plan for broadcasting, which he was good enough to articulate once out of office. Basically, "regulate them to the point where they give up". All the broadband suppliers with FCC connections trying to get their hands on the spectrum so they can charge consumers for content delivery are just adding fuel to the fire.
Roger Thornhill Nickname posted over 2 years ago
This is just a foretaste of the ham-handed, iron-fisted approach the Democrat-lead FCC will take against broadcasters come incentive auction time. I hope the NAB has a big enough war chest and the stomach for a fight going forward because they're going to need both.
TVMN Nickname posted over 2 years ago
This is a way to make license holders more accountable for their stations. Far too many hold the license and collect money from the JSA. Will there be another work around? Eventually, but it will take time to find.
newsbot Nickname posted over 2 years ago
When, pray tell, is localism and diversity coming to cable?
Bobd Nickname posted over 2 years ago
How to kill a great industry in one easy lesson! Hire Wheeler... Come on guys, it's another regulatory body with an agenda to redistribute what a lot us have built. Its called free enterprise and its a good thing. The FCC is dead wrong and jobs will be lost!
MediaBigData Nickname posted over 2 years ago
Animal House (1978): What? Over? Did you say "over"? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Now we could do it with conventional weapons, but that could take years and cost millions of lives. No, I think we have to go all out. I think that this situation absolutely requires a really futile and stupid gesture be done on somebody's part. We're just the guys to do it.
commonsenseTV Nickname posted over 2 years ago
This is not a black and white issue at all. Some markets would have lost one or two stations by now if not for JSA's and SSA's. There has been some abuse, Sinclair in particular pushed the limits and pissed off a lot of the people currently in power. However, these arrangements have their place. No one, not even a "greedy banker" is going to take the thousands of hours a year needed to manage a station that loses money. Don't know many idealistic high integrity broadcasters that would do that either. Some of this is legislating (without having actual written rules) 1980's thinking 30 years too late. Want to whine about jobs lost, how about stations going completely dark? There is some abuse and downsizing that goes on for pure profit, but it is the TV "business", not PBS. The last time I checked no one who loans money wants to hear about altruistic reasons for running stations at a loss. But hey, this is our government, losing money is something they have taken to an art form.
CreativeIL Nickname posted over 2 years ago
I can understand the reasoning behind the ruling but it feels very heavy-handed. There are many stations that are just not viable as a stand alone station/business especially in smaller markets. And imagine having to work for a station that isn't one of the top two earners in a market, wondering when your station is going to fold; watching your co-workers and talent jump ship. I agree with commonsenseTV. Stations will be going dark but I feel the effect will be far greater than many would expect. Most of these smaller stations rely heavily on syndicated shows to provide content throughout their day.
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Overnights, adults 18-49 for September 22, 2016
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