Delrahim Doesn't Clear Up DOJ Stance on Sharing Agreements

LAS VEGAS -- Antitrust Division Chief Makan Delrahim said DOJ's view of broadcaster sharing agreements hadn't changed. He indicated such arrangements are being investigated, in a Q&A at the NAB Show Monday with NAB CEO Gordon Smith. The FCC Media Bureau meantime will "hopefully" release a form to allow broadcasters to transition to ATSC 3.0 before June, Chief Michelle Carey told us. Broadcasters have been waiting for that paperwork (see 1904070001).

Broadcasters and their lawyers told us Delrahim did little to clarify DOJ's stance toward broadcast competition and sharing arrangements “Our investigations don't mean we've condemned anything yet,” Delrahim said. Both with Delrahim and in a speech Monday, Smith cited competitive imbalance between broadcasters and tech companies.

Uncertainty about department views puts increasing pressure on a planned May 2-3 DOJ workshop on sharing agreements, said broadcasters and broadcast attorneys. It will provide a unique chance for broadcasters to publicly advocate for the arrangements to DOJ officials, the industry officials said. Joint sales agreements “are back as permissible at the FCC, so there really shouldn't be an issue with putting them in front of DOJ,” said Sinclair CEO Chris Ripley in an interview. Delrahim said the workshop will let Justice take a better look as this practice.

“We certainly don't want to discourage them,” Delrahim said of JSAs and shared service agreements, but DOJ is investigating collaborative arrangements between horizontal competitors in every industry. He later said he wouldn't confirm or deny that the investigation extended to broadcasters. Numerous broadcasters and broadcast attorneys have said for months they've been receiving inquiry letters from DOJ about existing JSAs, unconnected with any merger. DOJ is investigating whether there's a problem but hasn't reached any conclusions, he said.

Delrahim said Justice and the FCC have different views of when companies should be considered separate entities, and it's a “problem” when two companies claiming to be separate engage in price collaboration. Delrahim's focus on price could provide room for some sharing deals, said former FCC Commissioner Robert McDowell, now with Cooley.

Delrahim several times stopped short of agreeing with Smith that tech companies compete with broadcasters for advertising dollars. Twice he said broadcasters offer “a unique product” which several broadcast industry officials interpreted as a signal that Delrahim doesn't see Facebook or Google as competitors for broadcasting. Broadcasters' competing with large tech companies is frequently used as the basis for arguments for broadcast deregulation and for allowing sharing arrangements. "We're up against giants now,” Smith told Delrahim. "We're saying, 'Help.'”

Tech companies may also be using their power to prevent broadcast chips that would allow phones to receive FM radio or ATSC 3.0 transmissions from being included in handsets, Smith said in a keynote before his talk with Delrahim. “We may be on the cusp of a new era of manufacturing that should and could include broadcast reception in devices,” Smith said. “Manufacturers, Apple being one, refuse to enable broadcast chips in their devices.”

The regulatory imbalance between tech companies and broadcasters is a serious problem, Tegna CEO Dave Lougee said in an interview. Lougee seconded Smith's call for increased regulation of tech giants.

During his speech, Smith held up a smartphone attached to a white rectangular ATSC 3.0 device slightly larger than a pack of gum. The device allows the phone to receive 3.0 transmissions, he said. “While this attachment is great, what we would really love to see is a chip built into mobile devices to give consumers this technology.” Tech companies allowing ATSC 3.0 into phones is a major concern for broadcasters (see 1904040075).

ATSC 3.0 on phones is the best way for tech companies to provide local content to their consumers, said Hearst Television President Jordan Wertlieb in an interview. “It's in everybody's best interests to embrace localism."