The National Association of Broadcasters on Monday asked the US Court of Appeals for the District of Columbia to overturn the interim processing policy statement adopted by the FCC’s Media Bureau requiring that the FCC scrutinize every new Shared Services Agreement. As we wrote last month, the FCC has decided that television Joint Sales Agreements should not be permitted unless the stations involved could be commonly owned. It also commenced a new rulemaking proceeding to review its multiple ownership rules, including specifically Shared Services Agreements. The rulemaking notice indicates that the FCC thinks that Shared Services Agreements should be limited, but it is asking for public comment as to what kind of sharing is in the public interest, and which should be prohibited. Any restrictions on SSAs are but a proposed FCC action, and not any sort of final rule. Nevertheless, the FCC’s Media Bureau, two weeks before the decision starting the rulemaking proceeding on SSAs, instituted an Interim Policy, effectively requiring a case-by-case analysis of all new agreements that involve sharing arrangements. It is that interim policy that the NAB is challenging.
What the NAB is saying is that this policy effectively creates new law without the Commission making any decisions in the rulemaking proceeding – effectively prejudging that proceeding even before the public comments have been received. And the policy does in fact change what had been permitted in the past, as many SSAs had been approved in various FCC proceedings. Even the standards applied to the evaluation of whether or not such agreements are in the public interest change established FCC policy, e.g. suggesting that any involvement in the financing of one station by another, including the guarantee of a loan, would be impermissible – contrary to explicit decisions by the FCC that loan guarantees were not an ownership attribution issue. Similarly, options and other potential future ownership rights, under the interim processing guidelines, give rise to a suggestion that the deal is not in the public interest – contrary to FCC decisions made after notice and comment rulemaking proceedings on the multiple ownership attribution policies – that contingent future ownership rights did not give rise to attribution for multiple ownership purposes unless such future interest rights were exercised.
What will happen next? We will have to wait to see, but we expect that the FCC will not just roll over and abandon its new interim policy. The NAB gave the FCC several chances to do so by writing letters stating its objections to the application of the policy, and all were ignored. So we will be watching as this proceeding plays out in Court – as will parties involved in SSAs and those with potential new SSAs pending before the FCC.