limits of court enforcement of broadcast contracts

How far can a court go in ordering broadcasters to comply with the terms of a contract?  By trying to get a court to enforce a contract signed with a broadcaster, is the suing party infringing on a licensee’s control over its broadcast station license? These questions are addressed in a letter that the FCC released this week, sent to a federal district court in connection with a dispute between two big TV companies over the termination of a Joint Sales Agreement between TV stations in Georgia.  In the case, Media General is seeking to enforce a JSA against a TV station in Augusta that had been owned by Schurz Communications, which was recently acquired by Gray Television.  As a condition of the sale of Schurz to Gray, to obtain FCC approval, the parties agreed to terminate the Augusta JSA.  Media General sued, and on February 26 it obtained an injunction from a Georgia state court barring Gray from operating the station or selling the station’s spectrum in the upcoming incentive auction.  The FCC’s letter states that it believes that the courts cannot order the relief that Media General seeks without infringing on the licensee’s rights to control the station.

While there have been procedural developments in the underlying dispute dealing with the court that will hear the case, it is the substance of the FCC’s letter that is important.  The FCC’s conclusion was based on two findings.  First, it found that Media General could not enforce the JSA because its termination was a requirement of the FCC in connection with the sale of Schurz – so a court cannot order the station to violate the FCC’s own order.  But more fundamentally, the FCC determined that Media General’s efforts infringed on the obligation under Section 310 of the Communications Act that the licensee (now Gray) maintain control over its station unless the FCC has approved a transfer of that control.  In the FCC’s eyes, control includes control over the programming of the station – which would be infringed by the JSA.  It also includes control over the ultimate disposition of the station, which would be infringed by any order forbidding its participation in the incentive auction.  According to the FCC, an element of control of a station is being able to decide whether or not to sell it.  While the FCC acknowledged that Gray and/or Shurz might be liable to Media General for monetary damages and penalties for any breach of the contract provisions, Media General could not get a court to make the station comply with these alleged obligations.  This is not the first time that the FCC has made such a pronouncement.
Continue Reading FCC Says No to Court’s Enforcement of Contractual Rights that Limit Broadcast Licensee’s Control Rights – What Does this Mean for Broadcast Contracts?