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The text of the FCC’s decision on the attribution of Joint Sales Agreements for multiple ownership purposes, and the termination of the 2010 Quadrennial Review of the ownership rules and the start of the 2014 Quadrennial Review, has now been released by the FCC.  In a slim 211 pages of text, plus another 24 pages of concurring and dissenting opinions, there is more than enough for broadcasters, lawyers and regulators to digest for weeks.  The Order addresses in detail the matters that had already been made public – the attribution of TV JSAs, the further examination of TV shared Services Agreements, and tentative decisions to not fundamentally change any of the Commission’s other ownership rules (with the possible exception of a favorable inclination to look at elimination of the radio-newspaper cross-ownership)(see our summary here).  But there are many details to be examined as to how the Commission reached the decisions that it did and the nuances of the decisions that were made (e.g. the waiver policy that would allow some JSAs to remain in place – the Commission’s decision does not provide much detail – essentially saying that they will grant waivers to deserving JSAs that serve the public interest, but providing little detailed guidance as to what would make a good waiver case, except to say that temporary or short-term waivers were better than long-term ones, and that ones where there was little sharing of other services are better than ones where there is more sharing).  We will cover all of these areas in more detail over the next few days.

But there were some interesting and less expected nuggets that popped out in a first read of the Order, and have not been much covered elsewhere.  For TV, these include the tentative decision to replace the TV Grade B contour with the digital Noise Limited Service Contour for determining whether an individual or entity can own two TV stations in the same market.  Instead of allowing ownership where the Grade B contours do not overlap, the Commission proposes to allow that ownership where the NLSC do not overlap, and to grandfather any combinations that would be affected by this rule change.  Similar small but significant issues were also raised for radio.
Continue Reading The Text of the FCC’s Order on JSAs and Other Broadcast Ownership Issues is Released – Part One, Hidden Nuggets on TV and Radio Market Definitions

The FCC meeting yesterday proposed to attribute Joint Sales Agreements (making them “count” for multiple ownership purposes – meaning that one broadcaster can’t do a JSA with another station unless it can own the other station).  The Commission also apparently kicked the can down the road on all other multiple ownership matters – not changing the local TV ownership rules or amending the newspaper broadcast cross-ownership restrictions, instead deciding to further consider any modification of the rules.  No decision on these issues is expected until probably 2016.  See the FCC’s Public Notice of that action here.  Shared Services Agreements will also be examined – though new ones have effectively been put on hold during the course of the examination by an FCC processing policy released two weeks ago that requires that any party proposing any sort of sharing agreement in a transaction requiring FCC approval demonstrate how that sharing agreement serves the public interest.  Also at the meeting, the FCC took actions to ban joint negotiation of retransmission consent fees by any two of the top 4 rated stations in a TV market, and to reexamine the network nonduplication and syndicated exclusivity rules (see the FCC’s decision here).  While we will have more details on these decisions in the coming days, as we fully analyze the texts of the FCC decisions as they are released, for now it is interesting to look at these decisions with the perspective of history.

Having represented broadcasters in Washington for over 30 years, one sees many of the same issues debated over and over again.  Many of the issues that were thought to be settled years ago come to the fore after most of the participants at the FCC, and even those in industry, forget that these battles had already been fought and seemingly decided.  In introducing the FCC’s examination of Shared Services Agreements at yesterday’s meeting, the representative of the FCC’s Media Bureau talked about how the examination of each transaction will be important for the FCC to determine if there are too many interlocking ties between stations that are supposed to be competitors in a market.  Not mentioned was the fact that this same kind of review used to be done by the FCC under what was called the “cross-interest policy,” a policy that was repealed by the FCC in 1988.
Continue Reading FCC Attributes JSAs, to Examine SSAs and Network Nonduplication and Syndex Rules – A Return to the 1980s?

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

March is one of those few months on the FCC’s regulatory calendar where there are few routine filing deadlines.  While stations that filed their renewal applications in February need to continue to run their post-filing announcements, and those that are going to file renewals in April (the end of the renewal cycle for radio stations) should be running their pre-filing announcements, the month is otherwise a quiet one.  There are no regularly-scheduled renewal filing deadlines, no deadlines for annual EEO or ownership reports, and no quarterly issues programs lists or children’s television reports.  All of those deadlines return with a vengeance in early April.  To help keep track on those dates applicable to stations in your area, we prepared a Broadcasters Regulatory Calendar, available here, that tracks many routine FCC filing deadlines, as well as other deadlines of importance to broadcasters throughout the remainder of 2014 – including lowest unit rate windows for the political broadcasting season, dates for submission of SoundExchange royalties, and some of the other regularly recurring deadlines for broadcasters .

 There are some comment dates in FCC proceedings of interest to broadcasters that fall later this month.  We recently wrote about the extension of the reply comment deadline for the proceeding to look at Revitalizing the AM Band (see our summary of the issues raised in that proceeding here and here).  Those Reply Comments are due on March 20.  On that same date, Reply Comments are due in an FCC proceeding to Accessibility of User Interfaces and Video Programming Guides.  The next week, on March 25, Reply Comments are due in the proceeding looking to change the FCC’s Sports Blackout Rules.  And for those stations lucky enough to be selected for the FCC’s latest random EEO audit, the responses are due on March 31 (see our article here). 
Continue Reading 2014 Broadcasters’ Legal Calendar – and March FCC Regulatory Dates of Importance

While we hate to turn this into the JSA/SSA blog, it appears that events are moving quickly on that front, so there is seemingly some news almost every day.  The week before last, the big news was comments of the Department of Justice filed with the FCC, suggesting that Joint Sales Agreements be attributable (meaning that they should count for multiple ownership purposes. i.e. you can’t do a JSA with another station in your market unless you can own that station), and that the FCC review Shared Services Agreements and similar arrangements on a case-by-case basis.  This is pretty much the position that the FCC’s new Chairman was expected to take, based on rumors floating around Washington (see our article here).  The way that the trade press reacted to the filing of the DOJ’s comments was an expectation that the “fix is in,” so that the expected action at the March FCC meeting was now a foregone conclusion.  But this past week has been filled with stories about broadcasters making the case that there is more to consider here, and late last week came an public filing from NABOB (the National Association of Black Owned Broadcasters), summarizing positions it took in a meeting with FCC Commissioners last week, to, prehpas reluctantly, support at least some limited continuation of these agreements as they could be a force for promoting minority ownership of broadcast stations.

The DOJ’s comments certainly did say that they supported the attribution of JSAs, though the reasoning of that determination was not especially compelling or even internally consistent.  The DOJ recognized that some JSAs could actually be beneficial to competition.  Even though they recognized the potential benefits of JSAs, because they had supported the attribution of JSAs for radio, over 15 years ago, and as any agreements between competitors had the potential for impeding competition in a market, they contended that JSAs should be attributable.  As TV NewCheck put it in a very good article published on Friday, the DOJ’s reasoning is “so 1997.” But beyond that, had the DOJ’s brief not been signed by the DOJ, there would have been numerous reasons for the Commission to give it little weight in its consideration of JSAs and SSAs
Continue Reading TV Joint Sales and Shared Services Agreements – NABOB, The Public Interest Benefits, and Where the DOJ Went Wrong

Only two weeks ago, we were writing about the FCC’s consideration of TV Joint Sales and Shared Service Agreements (or “side-car arrangements” as some have called them) as being an issue that was just being reviewed at the FCC by the new Chairman and his staff.  Now, according to press reports (including this one), the exploration has quickly moved much further – so far that we apparently will see FCC action in the very near future on these very controversial subjects.  The rumors suggest that the FCC is ready to resolve many of the issues in the current Quadrennial Review of its multiple ownership rules (see our summary of the issues initially raised in that proceeding here) at its March open meeting. According to these rumors, the FCC will prohibit Joint Sales Agreements for television stations in situations where the two stations involved cannot be commonly owned under the FCC’s multiple ownership rules, and at the same time do nothing to relax the broadcast- newspaper cross-ownership restrictions.  This is much the same result on JSAs that was rumored in December 2012, but a harsher result on the cross-ownership issue than the previous FCC Chair was rumored to be ready to take.  In 2012, the proceeding was put on hold to take more comments on the effect of a change in the cross-interest policy on minority ownership (see our article here), and it has sat there since.  This week’s rumors suggest that, as part of the same action (or through a simultaneous action), the FCC will ask about the public interest benefits and harms of Shared Services Agreements in the TV industry.

For investors in television companies and the general public, these rumored actions raise many questions.  How can the FCC take such a decision on the JSA/SSA issue when such agreements have become an integral part of the TV business over the last few years?  What is the difference between a JSA and an SSA?  How can the FCC not recognize that newspapers are in difficult economic times, and some degree of consolidation may well help these economics?  Does the FCC recognize that the media landscape in broadcasting has changed dramatically in the last few years?
Continue Reading TV Shared Service and Joint Sales Agreements Back in the News – Is the FCC Poised to Act Soon, and To Also Reject Relaxation of Broadcast-Newspaper Cross-Ownership?

TV Shared Services Agreements have been one of the targets of public interest groups since the start of the current Quadrennial Review of the FCC’s multiple ownership rules (see our articles here, here, here and here).  Public interest groups, in their zeal to stop any media consolidation (including newspaper/broadcast cross-ownership – even if that prohibition ends up outliving the newspaper itself, see our article here), have seen Shared Services Agreements as end-arounds on the FCC’s in-market television ownership caps, even though such deals may be necessary to preserve competitive, quality TV stations in smaller television markets.  Certain cable operators have also opposed these combinations (sometimes called “sidecar” arrangements), fearing that they will give TV station operators more power in retransmission consent negotiations.  There has recently been a flurry of activity, leaving the status of these deals somewhat confused under the review of the new FCC Chairman.

Before Christmas, two transactions involving shared services agreements were approved over objections.  While these transactions were approved, there was a lengthy analysis of the SSAs involved  in the decision approving Gannett’s acquisition of Belo.  In that discussion, the Commission’s staff carefully reviewed the attributes of the SSAs proposed as part of the transaction, and found them within the precedent established in prior transactions.  This included making sure that the licensee of the station receiving the services retained at least 70% of the proceeds from the sales of advertising time on the station, and that the party providing services programmed no more than 15% of the time on the other station.  But, in a paragraph that many thought was just a statement that Commission always retains the right to review transactions that are consistent with precedent, the Commission stated:

That is why applicants and interested parties should not forget that our public interest mandate encompasses giving careful attention to the economic effects of, and incentives created by, a proposed transaction taken as a whole and its consistency with the Commission’s policies under the Act, including our policies in favor of competition, diversity, and localism

But was this simply a statement of the obvious, or did it mean more?
Continue Reading What’s Up With TV Shared Services Agreements?

It is the beginning of another year – and a time to look ahead to look ahead at what broadcasters should expect from Washington in the coming year.  With so many issues on the table, we’ll divide the issues into two parts – talking about FCC issues today, and issues from Capitol Hill and elsewhere in Washington’s alphabet soup of regulatory agencies in the near future.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

Each January, we publish a list of issues for the coming year, and it is not always the case that these issues make it to the top of various piles (literal or figurative) that sit in various offices at the FCC.  As set forth below, there are a number of FCC proceedings that remain open, and could be resolved this year.  But just as often, a good number of these issues sit unresolved to be included, once again, on our list of issues for next year.  While some issues are almost guaranteed to be considered, others are a crap shoot as to whether they will in fact bubble up to the top of the FCC’s long list of pending items. So this list should not be seen as a definitive list of what will be considered by the FCC this year, but instead as an alert as to what might be coming your way this year. Issues unique to radio and TV, and those that could affect the broadcast industry generally, are addressed below.
Continue Reading What’s Up in Washington For Broadcasters in 2014? — Part 1, FCC Issues

Sometimes the FCC decisions come out in a flurry, often with little nuggets of importance in each one.  Rather than trying to write about each one, we’ll from time to time, just try to highlight those nuggets for your consideration.  At the end of last week, three decisions came out with just such nuggets – all dealing with different issues.  The first case involved the issue of divestiture trusts – trusts set up to hold broadcast assets when a buyer of broadcast properties, usually in connection with the acquisition of a broadcast group, needs to divest some stations so that the buyer remains in compliance with the multiple ownership rules (usually in radio where the attribution of LMAs and JSAs make impossible divestitures like those used in television, to parties with no connection to the buyer but operating with a Shared Services or Joint Sales agreement).  In the past, the FCC has not put any limit on how long the stations could remain in a divestiture trust, with some stations spending 5 or 6 years (or longer) in such trusts before they are finally sold.  This case involved an acquisition of a large number of radio stations by Townsquare Media from Cumulus.  Here, the Commission established a two year limit on period of time that the trust could hold the stations placed in its care.  Thus, the trustee needs to divest of those stations within that period.  We would not be surprised to see that limit imposed on any trusts created in the future – perhaps even on some longstanding trusts still in place when they are subject to renewal applications, where such trusts have been challenged from time to time.

In TV, often stations that cannot be owned by a broadcaster who is buying another station in the same market consistent with the multiple ownership rules are not sold through a trust, but instead they are sometime bought by an independent party who can support the station through some sort of Joint Sales or Shared Services Agreements with the buyer.  In one of those cases, the continuation of an existing Shared Services Agreement was challenged in connection with the sale of the brokering station held by Young Broadcasting to Media General.  The FCC again (as they have in many cases before, see for instance our article here), held that the sale was permissible and that the SSA could continue after the sale.  The brokering station did supply news to the brokered station, but it was under 15% of the program time, and thus not attributable.  The brokered station continued to have a financial incentive to operate the station successfully, keeping 70% of the cash flow of the station.  And the mere fact that the owner of the brokering station guaranteed the debt of the brokered station did not make that interest attributable to the broker.  Note, however, that the Commission did question the staffing of the brokered station but, as that station was not being transferred as part of the sale before the FCC, the Commission said that they would review that issue in connection with the license renewal of the brokered station.  Shared Service Agreements are also under consideration in the current Quadrennial review of the FCC’s multiple ownership rules (see our stories here and here ).  So some of these issues may be revisited again in the not too distant future, when the new FCC Chair decides to complete that review.
Continue Reading Odds and Ends – Divestiture Trusts, Shared Services Agreements and Determinations of Significantly Viewed Stations

Every year, about this time, I dust off the crystal ball to offer a look at the year ahead to see what Washington has in store for broadcasters. This year, like many in the recent past, Washington will consider important issues for both radio and TV, as well as issues affecting the growing on-line presence of broadcasters. The FCC, Congress, and other government agencies are never afraid to provide their views on what the industry should be doing but, unlike other members of the broadcasters’ audience, they can force broadcasters to pay attention to their views by way of new laws and regulations. And there is never a shortage of ideas from Washington as to how broadcasters should act. Some of the issues discussed below are perennials, coming back over and over again on my yearly list (often without resolution), while others are unique to this coming year.

Last week, we published a calendar of regulatory deadlines for broadcasters.  This article looks ahead, providing a preview of what other changes might be coming for broadcasters this year – but these are delivered with no guarantees that the issues listed will in fact bubble up to the top of the FCC’s long list of pending items, or that they will be resolved when we predict. But at least this gives you some warning of what might be coming your way this year. Issues unique to radio and TV, and those that could affect the broadcast industry generally, are addressed below.

General Broadcast Issues

 

There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years and are ripe for resolution, while others are raised in proceedings that are just beginning. These include:

 

Multiple Ownership Rules Review: The FCC is very close to resolving its Quadrennial review of its multiple ownership proceeding, officially begun in 2011 with a Notice of Proposed Rulemaking. The rumors were that the FCC was ready to issue an order at the end of 2012 relaxing the rules against the cross-ownership of broadcast stations and newspapers, as well as the radio-television cross-interest prohibitions, while leaving most other rules in place. TV Joint Sales Agreements were also rumored to be part of the FCC’s considerations – perhaps making some or all of these agreements attributable. But even these modest changes in the rules are now on hold, while parties submit comments on the impact of any relaxation of the ownership rules on minority ownership. Still, we would expect that some decision on changes to the ownership rules should be expected at some point this year – probably early in the year. Continue Reading Gazing Into the Crystal Ball – What Washington Has In Store For Broadcasters in 2013