TV Sharing Agreements, Focus of Lobbying, Getting Attention at FCC

Deals where separately owned TV stations in a market share responsibilities for ad sales, pay-TV carriage and other functions are getting more attention inside the FCC and among those lobbying on upcoming media ownership rules, officials inside and outside the agency said this week. Multichannel video programming distributors and nonprofits opposed to pacts such as shared services agreements, joint sales agreements and joint retransmission consent negotiation deals are lobbying to expand a draft order from only issuing new rules on JSAs, said industry and public interest officials and ex parte filings. Broadcasters got a late start on such lobbying, and are expected to visit the agency next week, industry officials said.

The agency’s two Republican members could potentially decide they have concerns on attributing the TV stations in JSAs under ownership limits, while there’s the potential for two Democratic commissioners to decide they want disclosure and attribution of other types of sharing arrangements, industry and commission officials said. They said it’s uncertain what stance the members will take, because the office of Chairman Julius Genachowski didn’t share many details of the Media Bureau draft order before it circulated Nov. 14 for a vote (CD Nov 15 p1). That also meant industry and public interest groups didn’t get advance word, officials in those industries said. Particularly broadcasters, to whom the JSA attribution came as a surprise, had to come up with a lobbying message, its lawyers said.

Bureau staff decided they couldn’t address other sharing deals beyond TV JSAs in the draft, said a cable lawyer and public-interest group official. They said there may have been concerns the record in docket 09-182 (http://xrl.us/bn2uxo) wouldn’t permit additional rules, although some outside the agency say now that documentation was adequate, should staff be instructed by Genachowski to expand the order. The draft order said that retrans deals, which MVPDs wanted addressed in the forthcoming rules, are subject of another proceeding, agency officials said. An FCC spokesman declined to comment for this story.

The initial draft would require a station with 15 percent or more of ad time sold by another station attribute that second broadcaster under ownership rules, FCC officials said. They said that would start two years after the order became effective. That would mean that some JSAs, unless the portion of spots that were brokered was reduced below 15 percent, would be impermissible under ownership rules, broadcast lawyers said. They said the broadcast industry was caught off guard by the draft, because the commission gave scant attention to JSAs in the December rulemaking notice on which the order is based. No question in last year’s document (http://xrl.us/bnuqfz) sought comment only on the issue of JSAs, a lawyer with TV station clients noted.

The JSA clause is causing worry among smaller TV stations that have come to increasingly rely on such arrangements, industry lawyers said. Other companies that own daily newspapers, and would like to buy radio stations in their market, or vice versa, would be able to do so under the draft because it ends a cross-ownership ban on those properties, agency officials have said. That prospective help for the broadcasting industry as a whole is reduced -- and perhaps outdone by -- the negative effect of having to unwind or change JSA TV deals to avoid having them attributed, industry lawyers said. They said that for individual broadcast companies, most either will be helped by the radio rule and won’t be much affected by the JSA attribution, or they're not looking to expand in radio or dailies and do have JSAs that would be affected.

The JSA TV attribution was an “unexpected surprise, since obviously the commission had not moved on this in many years” after seeking comment on it in 2004, said broadcast lawyer Scott Flick of Pillsbury Winthrop, with clients that have such arrangements. “The presumption was the commission really didn’t create an attributable interest.” Such a shift in policy “hurts mostly the small guy,” he said of TV JSAs, which “have gotten pretty widespread.” The deals “produce economic efficiencies that allow broadcasters to better serve their local communities,” NAB executives reported telling Commissioner Robert McDowell (http://xrl.us/bn2uoc). The commission had previously deemed attributable radio JSAs when more than 15 percent of a station’s time was sold by another broadcaster, and some at the commission weren’t surprised when the draft order extended that to TV, an agency official said. There are “several important distinctions between television and radio JSAs,” NAB said. TV stations “compete for advertising revenue against cable operators that frequently use joint sales agreements themselves,” it said.

Public interest and cable officials are hopeful other deals beyond JSAs will be addressed by the FCC, and the draft will change to include them, they said. But they noted there are rarely significant differences between what first circulates for a vote and what’s adopted, and some said such change is unlikely to occur this time. It would be unbalanced for the order to address joint sales of ads without also addressing coordinated negotiating among several stations for pay-TV contracts to carry the programming, since ads and retransmission fees make up the two major broadcast revenue sources, said American Cable Association Vice President Ross Lieberman. Such an asymmetric tack “sends the message to the broadcasters that it’s OK,” he said of joint retrans deals. “Banning one side of the equation may end up increasing the occurrence of it on the other side,” with for instance more joint retrans deals if only TV JSAs become attributable, Lieberman said.

ACA, Dish Network and Time Warner Cable jointly lobbied the commission this week to make retrans deals between stations attributable. Such practices are “widespread and increasing,” a filing said executives for those entities told Chief Bill Lake and others in the bureau and separately an aide to McDowell (http://xrl.us/bn2u2p). “The Commission should attribute agreements that replace competition with collusion among separately owned, same market broadcasters.” Nonprofits may increase their lobbying to also achieve similar ends, said Georgetown University Professor Angela Campbell, co-director of the Institute for Public Representation. “That’s one of the few times we actually have some industry interests all with some of the same similar concerns” as nonprofit advocates for consumers, she said. Campbell said she met this week with the bureau and Office of General Counsel to advance such a stance, on behalf of groups including the Benton Foundation, Common Cause, National Organization for Women Foundation and others listed in another ex parte filing (http://xrl.us/bn2u2v). She plans to file a disclosure on the more recent meeting.

MVPDs oppose TV JSAs because “national pay TV companies would benefit greatly if the competitive threat from free and local TV stations is reduced or eliminated,” an NAB spokesman said. The association will tell officials that JSAs are “an important component in preserving the financial underpinnings” of broadcast TV, “and allow struggling stations to add local news and public affairs” shows, he said. “We anticipate that many broadcast companies will be making the same argument.”