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?
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