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FCC March 31 Agenda to Consider TV JSAs and Retransmission Consent Issues – Lots of Controversy for TV Broadcasters

The agenda is out, and the FCC’s likely action on their Quadrennial Review of the multiple ownership rules now seems to be much clearer.  And the decision seems likely to follow the rumors circulating in Washington for weeks (about which we have written here and here), with new regulatory wrinkles added to those previously suggested.  According to a blog post by the FCC Chairman, the plans are for the FCC to attribute JSAs where one TV broadcaster sells more than 15% of the ad time on another station in its market (meaning that such a JSA is only permissible if the stations can be commonly owned).  In addition, the Commission will prohibit TV non-commonly owned TV stations from jointly negotiating retransmission consent agreements with cable and satellite TV providers.  A further review of Shared Services Agreement is apparently in the works as well.  The Commission will apparently do nothing about the FCC’s cross-ownership rules, leaving in place rules prohibiting joint newspaper-broadcast cross ownership and even radio-TV cross-ownership rules, asking for comments on a proposal to actually retain those rules in a new Quadrennial Review that it will start on March 31. 

Retransmission consent is also on the agenda.  The agenda indicates that not only will the Commission ban joint negotiation of retransmission consent fees by stations involved in a JSA, but it will seek more information on other issues involved in the relationship between broadcasters and MVPDs (cable and satellite TV providers).  Specifically, the Commission will look at whether to repeal the network nonduplication and syndicated exclusivity rules which prohibit MVPDs from importing TV signals that infringe on the exclusive rights held by a local station to network and syndicated programming.  Were these rules to be abolished, to the extent that retransmission agreements permit it, distant signals might be imported by an MVPD when the MVPD and local television station were having a retransmission dispute, lessening the leverage of the local station from its ability to withhold its programming. 

The JSA issues are obviously the most controversial ones in the short term, as we wrote last week, it is an issue that is bound to be debated between now and the March 31 meeting.  In fact, Republican Commissioner O’Rielly issued a statement indicating that he thought that the decision was a step backward, not an attempt to evaluate the current media marketplace.  NAB General Counsel Jane Mago published her own blog post, arguing that the Chairman’s article used the wrong legal standard – that the Quadrennial reviews are deregulatory in nature, and the FCC should be looking to abolish old rules that are no longer necessary, not to adopt new, stricter ownership regulations.  In short, these rebuttals to the Chairman argue that the rules should be adopting to recognize new competition in the media marketplace, not further tightening rules that were adopted in another media era.

We note that the Chairman’s own blog post recognizes that “At a time of unprecedented change in the video business, the FCC should deal with facts, not reality-obscuring legal fictions.”  But the Chairman concludes that the “fiction” that needs to be dealt with is lack of attribution for JSAs, rather than the fundamental issue with the FCC’s limitations on combinations of stations in smaller television markets.  While the question of whether to amend the ownership rules in smaller media markets has been specified as an issue for consideration in earlier reviews of the FCC multiple ownership rules (see our summary of a 2008 decision rejecting any change in small market TV duopoly rules in an earlier proceeding), small market duopoly was not even teed up as a question to be reviewed in the 2010 Quadrennial Review that is about to conclude.  It does not appear to be an issue that the Chairman raises as something to be reviewed in the 2014 review that he is about to start with the issues left over from the 2010 review.  In a time of “unprecedented change,” how can the FCC not even look at whether the local ownership rules in small and midsized markets still makes sense? 

Perhaps, it’s for the same reason that the FCC seems to be starting the next Quadrennial review with the presumption that the broadcast-newspaper cross-ownership rules should stay in place.  While newspapers in many markets are ceasing publication, and where the physical newspaper may well be phased out over the coming years, it appears that the FCC is starting from the presumption that it is still 1997 and these publications rules the media marketplace.  As we have written before, it seems more and more likely that the broadcast-newspaper cross-ownership rules may outlive the newspaper.  That rule, and the rule on TV duopolies, are both rules that need to be examined in light of the fundamental change in the broadcast industry – but the FCC seems to be moving in the opposite direction.

While these issues will continue to be debated, and the Commerce Committee in the House of Representatives may review these issues at a hearing later this week, the realities of today’s marketplace seem more and more likely to be ignored in the upcoming FCC proceeding.  And new controversies may arise with the retransmission consent issues that are being raised.