A fierce battle is shaping up in DC about relationships into which same-market broadcasters may enter. In one corner are FCC Chairman Tom Wheeler, the cable industry, and several “public interest” groups (although, as noted below, some have accused Chairman Wheeler of not going far enough). In the other corner are the two Republican FCC Commissioners, the House Committee on Energy and Commerce (in part), the broadcast industry, and many of the entities that depend on these arrangements, such as historically black Tougaloo College.
The issue is whether the Commission should continue to permit broadcasters in the same market to enter into agreements to: share certain operational functions, such as engineering, weather satellites and forecasting systems, traffic, production, promotions, and accounting (Shared Services Agreements or SSAs); consolidate, in whole or part, their advertising sales (Joint Sales Agreements or JSAs); and jointly negotiate retransmission consent agreements with multichannel video programming providers (Joint Retransmission Negotiations).
In a March 6, 2014 blog post, Chairman Wheeler announced his intention to take on all three. Under Chairman Wheeler’s proposal, prior to the completion of the 2010 Quadrennial Review (which is now overdue), the FCC would modify its media ownership rules so that any agreement under which one broadcaster sells more than 15 percent of the advertising time for another broadcaster would be “attributable” under the local television ownership rule. As a result, these arrangements would be prohibited in television markets where the two stations could not be commonly owned (particularly in small and medium sized markets). The proposal expressly envisions the possibility of granting case-by-case waivers for JSAs that promote the public interest. Chairman Wheeler also proposed: (1) requiring participating broadcasters to disclose any SSAs “to inform the record on such practices”; and (2) prohibiting two or more top-four network affiliates from jointly negotiating retransmission consent agreements and establishing a rebuttable presumption that such joint negotiations violate the public interest even for other stations. Although the cable industry and many public interest groups generally applauded the Chairman’s announcement, some did not think the Commission is going far enough. Longtime public interest advocate Andrew Schwartzman said that he was “disappointed” that the Chairman was only seeking comment on SSAs and said that he will press the other commissioners to “beef up the orders.” Meanwhile, the National Association of Broadcasters said it was “disappointed but not surprised” by the Chairman’s proposal, which it said “will kill jobs, chill investment in broadcasting and reduce meaningful minority programming and ownership opportunities.”
Within hours of Chairman Wheeler’s announcement, the House Energy and Commerce Committee released its draft bill to extend the Satellite Television Extension and Localism Act of 2010 (STELA), which includes a provision prohibiting the FCC from modifying its rules to make SSAs, JSAs and local news service agreements (a form of SSAs) attributable outside of a single order that addresses all of the Commission’s ownership rules and closes the 2010 quadrennial ownership proceeding. As our Dick Wiley explained earlier this week, the Commission’s ownership rules and the JSA/SSA issues go hand-in-hand. The STELA reauthorization bill would prohibit television broadcast stations from engaging in joint negotiations for retransmission consent with another television broadcast station in the same market unless: (1) the stations are commonly owned; or (2) the MVPD consents to joint negotiations.
So where do we go from here? The FCC is expected to take up Chairman Wheeler’s proposal at its March 31, 2014 meeting. It is still unclear whether the Chairman currently has three votes for his proposal, although the inclusion of an expedited waiver process for JSAs makes it more likely that the two other Democrat commissioners will vote to approve it. Meanwhile, although the House Energy and Commerce Committee is scheduled to hold a hearing on STELA reauthorization next week, Congressional approval of STELA reauthorization likely is months away, meaning that the FCC almost certainly will be the first mover. Of course, broadcasters may challenge any Commission action in court, providing Congress with an opportunity to step in before the changes take effect.