FCC Keeps Most Broadcast Ownership Restrictions

Will reimpose JSA attribution, with grandfathering, per Congress
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WASHINGTON — Federal Communications Commission chairman Tom Wheeler has circulated a quadrennial media ownership review item that retains, with some tweaks, most of the current restrictions on dual station and newspaper/station ownership and even adds some.

Broadcasters had been hoping for some relief, given what they said was major competition from multichannel video programming distributors (MVPDs) and the Web.

As expected, the item resubmits the rule tightening up shared service agreements between station owners, known as joint sales agreements (JSAs) — remanded recently by the U.S. Court of Appeals for the 3rd Circuit — with the change that grandfathered JSAs can be sold without triggering ownership issues, as Congress directed it to do. So, any JSA of over 15% of sales still counts as ownership interest, but those in existence before March 2014 don’t have to be unwound, as Congress has already signaled in legislation.

The FCC also has defined shared services agreements and will require them to be filed with the agency, but it does not make them attributable as ownership interests — yet. The definition is: "[A]ny agreement in which (1) a station provides another station, not commonly owned, with any station-related services, including administrative, technical, sales, and/or programming support; or (2) stations not commonly owned collaborate to provide station-related services, including administrative, technical, sales, and/or programming support."

"Our analysis indicates that the ownership restrictions remain necessary in the public interest, though the realities of the media marketplace require some targeted modifications of a number of the rules," the item concludes," the FCC said.

The item has been circulated to the other commissioners for a vote, though no timetable on when that might happen.

According to a summary of the item, it will:

• Carry out the 3rd Circuit’s remand of diversity issues, readopt the small business revenue-based eligible entity standard, address proposals submitted by MMTC, and decline to adopt race- or gender-based measures.

• Readopt the TV JSA attribution rule consistent with the court’s guidance in the Prometheus III decision and Congress’s guidance on grandfathering.

• Adopt a definition of shared services agreements; require that these agreements be filed with the Commission and made publicly available; and do not attribute any such agreements, other than JSAs, at this time.

The item retains the existing local ownership rules, including local TV ownership.

It extends the ban on co-ownership of two of the top-four rated TV stations in a market to network affiliation swaps, as well to prevent using those to evade the restrictions.

It retains the radio/TV crossownership rule and the newspaper/broadcast crossownership rule, but in the latter case adds a failing station exemption, as it has in TV purchases that would otherwise create duopolies that violate the limits.

In March 2014, Wheeler officially combined the 2010 and 2014 quadrennial media ownership reviews. At the time, the FCC did not loosen most broadcast ownership rules while continuing to ask whether they should be lifted in the future. The item also made TV joint sales agreements (JSAs) of over 15% of ad sales attributable as ownership interests.

The U.S. Court of Appeals for the 3rd Circuit recently threw out the JSA tightening, primarily because the FCC changed the ownership reg before completing the reasoned analysis for the underlying rules that is supposed to happen in the quadrennial review.

The court "reminded" the FCC of its obligation to complete the Congressionally ordered quadrennial review, but did not give it a deadline (one judge, Anthony Scirica, said he would have ordered a resolution).

Wheeler had already said he would circulate the quadrennial review item by the end of June, and signaled that it could include a return of the JSA rule-tightening, or at least setting the groundwork for the return.

"The court didn't say the JSA rule doesn't make sense," said Wheeler . "They said it needs to be based on rules that themselves haven't been reviewed. So, you review those rules [which he said will be completed, at least in draft form, by June 30] and that sets up a predicate on any decision on JSAs."

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