TV Station News Sharing in Play in Media Ownership Review

The extent TV stations can share newsrooms and other functions without being considered commonly owned is at play in the FCC’s media ownership review. Some at the FCC are considering whether to seek changes to a draft notice of proposed rulemaking on the quadrennial review that would probe further into shared services agreements, local marketing agreements and other deals that let separately owned stations in the same market share some operations. SSAs and LMAs aren’t attributable for ownership reasons, so two Big Four broadcast network affiliates can share operations without running afoul of local ownership limits. That’s all according to agency and industry officials.

Multichannel video programming distributors are pressing the FCC to tackle head-on the issue of SSA, LMA and other deals that sometimes let stations jointly sell ads or negotiate retransmission consent deals with MVPDs. Cable, DBS and telco-TV companies held at least seven lobbying meetings with aides to Chairman Julius Genachowski and other FCC members and officials of the Media Bureau last week, filings in docket 09-182 show (http://xrl.us/bmi7qu). Genachowski on Nov. 4 circulated for a vote a bureau rulemaking that asked about SSAs and LMAs without reaching any conclusions about them (CD Nov 15 p5). It may take a week or more before the rulemaking is approved by commissioners and released, an agency official said.

One issue in play in FCC consideration of the item is whether to add to the section on attribution of SSAs, LMAs and other TV station sharing deals, FCC and industry officials said. Some at the agency want the item to ask more than the draft did about the deals, although no changes have yet been proposed, a commission official said. Some at the agency want to see the discussion of SSA-type deals broadened to ask more about their impact on competition, the official said. A bureau spokeswoman declined to comment.

MVPDs and nonprofit groups concerned about mergers and acquisitions among TV stations contend SSAs and other arrangements let the broadcasters skirt media ownership rules by giving one company de facto control over multiple stations in a market. The American TV Alliance, representing the major telco-TV and DBS providers and most large cable operators except for Comcast, proposed questions (http://xrl.us/bmi7rp) for the rulemaking notice to ask about such deals. “Are sharing and/or multicasting arrangements inconsistent with the purpose and intent of our media ownership rules? Does the use of such sharing and/or multicasting arrangements undermine the public interest goals of advancing competition, localism, and diversity?” the alliance said. There are at least 56 instances where affiliates of ABC, CBS, Fox or NBC have a sharing agreement, and 25 instances where two or more Big Four affiliates are on the same TV station via multicasting, another alliance filing said (http://xrl.us/bmi7rr).

It’s possible the draft quadrennial review rulemaking will be adjusted to ask specifically about MVPDs’ SSA concerns, or at least mention them, agency and industry officials said. The initial draft mentioned nonprofit groups’ concerns and broadcasters response to them, FCC officials said. Some nonprofit groups have been sounding the alarm on SSAs for several years, about as long as they've been in existence, but with little action from the FCC. “These recent filings confirm what we've been saying all along, that these are a serious problem,” said Professor Angela Campbell of Georgetown University’s Institute for Public Representation. It first raised the SSA issue with the FCC in 2009 with a deal involving Raycom Media in Hawaii. Such arrangements are “a problem, and it needs to be addressed,” Campbell said. “So not to address it at the same time you're reviewing the rules doesn’t make a lot of sense to me,” she said of reports (CD Nov 9 p1) the draft rulemaking doesn’t propose to attribute such arrangements. Campbell hasn’t seen the draft.

An SSA in Tucson involving Raycom and Belo Corp. will lead to more hours of news shows on the three stations involved than are currently aired, said Peter Diaz, president of Belo’s media operations. The American Cable Association had criticized the SSA between Raycom’s CBS affiliate KOLD and Belo’s Fox affiliate KMSB and MyNetworkTV station KTTU (CD Nov 18 p14). “We looked at all the rules,” before agreeing to the SSA, the first ever for any of Belo’s 20 TV stations in 15 markets, Diaz said. “We think it applies [to] and hits all the rules.” KMSB is adding a morning newscast at a different time than KOLD’s morning news show, and each will air evening news at different times and they won’t be simulcasts of each other, Diaz said. “There’s a real possibility that you could have news contraction” in Tucson and other cities “if a market doesn’t support” such news without an SSA, he said: “We were able to do news expansion in a depressed market,” where ad sales have fallen.

Some buyers of financially struggling TV stations with little viewership seek to “opt for the SSA/JSA model,” broadcast lawyer Howard Liberman of Drinker Biddle said of joint sales agreements. That’s rather than seek failing station waivers from the commission, which rarely are requested or granted, he said. “They are quite rare -- perhaps for this reason: The buyer now can own both stations, but if the buyer later wants to sell them both to a single buyer, they will have to seek/obtain a new waiver. And if buyer No. 1 does a good job, to the point where the station’s ratings are over the threshold in the FCC’s standards -- 4 percent all-day audience share, negative cash flow -- then they won’t be able to obtain a waiver for buyer No. 2.” The FCC on Monday approved Local TV owning two stations in one market, waiving duopoly rules under a failing station exemption. (See separate notebook in this issue.)

Owners of TV stations and daily newspapers backing overturning the FCC’s bar on common ownership of such properties in the same city have also been lobbying the agency, filings in the docket show. Executives at Media General and the Newspaper Association of America, which wants the cross-ownership ban ended entirely (CD Nov 16 p8), also met with FCC officials last week. Media General had no comment. The draft rulemaking notice proposes to allow companies to seek cross-ownership waivers, with a presumption for them in the top-20 markets, in a rule that would be similar to what the FCC approved in 2007 and remanded by a court this year.

That’s not enough, said NAA Senior Vice President Paul Boyle. “It seems illogical to put forward a change in the rules that is similar to what was done in 2007 -- the world has changed since then.” Keeping cross-ownership rules is “kind of inconsistent” with the report on the future of the media industry that was done under Genachowski’s auspices and issued in June, Boyle said. The current rules are “frustrating to our members” because while Comcast was allowed to buy control in NBCUniversal and Internet companies like Microsoft and Yahoo can jointly sell ad inventory, “local newspapers can’t potentially buy a local radio station that doesn’t do any news and produce local news and public affairs programming,” Boyle said. “There is example after example where there are grandfathered properties that go back to the ‘40s and 50s, and studies from the FCC support that newspaper-owned broadcast stations do better and [have] more local news than stations that are not owned by local newspapers."

Part of the purpose of recent lobbying visits to the FCC by the newspaper and MVPD industries has been to educate agency officials on media ownership rules, Boyle and ACA Vice President Ross Lieberman said. The point is to “really convince them that now is the time to really recalibrate this 36-year-old regulation to the market realities that newspapers and broadcasters face,” Boyle said of cross ownership. MVPDs “have been spending a lot of time educating the commission, particularly in the last few weeks, about some of the broadcasters’ practices that have become more popular in the last six years,” Lieberman said. That includes coordinated retrans negotiations by separately owned stations. The Belo-Raycom deal in Tucson, which takes effect in February, doesn’t include negotiating retrans deals or selling ads, Diaz said.

"Despite a misinformation campaign by the pay-TV giants, the record shows there is now more local news than at any time in the history of television broadcasting,” an NAB spokesman said. “TV stations that partner with another station historically add news and public affairs on the second station.” It’s “ironic that behemoth companies” like Time Warner Cable, DirecTV and Dish Network, which are alliance members, “are now showing such interest in localism when these companies have little if any community-originated programming themselves,” the NAB spokesman said. “DirecTV’s interest in localism rings particularly hollow, since it has abandoned a pledge to carry local TV stations in all 210 TV markets.”

"The involvement of MVPDs in the media ownership proceeding is making a difference,” Lieberman said. He noted that the 2010 notice of inquiry on the proceeding mentioned LMAs once, and retrans never came up. “In contrast, today we expect the NPRM to seek comment on a number of matters related to the coordinated practices of broadcasters whether pursuant to an LMA or otherwise, including the coordinated negotiation of retransmission consent,” Lieberman said. “The more that the commission learns about the harms to competition and consumers of coordinated bargaining and other practices, which will occur through the NPRM, the more likely the commission is to adopt rules prohibiting these activities in the final order. The days left that broadcasters can engage in these anticompetitive practices might be numbered.”