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FCC doublespeak: Saying one thing and doing another

Armstrong Williams | 7/17/2014, 2:01 p.m.
The Telecommunications Act of 1996 specifies that the Federal Communications Commission “shall” review its broadcast ownership rules every four years, ...
Armstrong Williams

The Telecommunications Act of 1996 specifies that the Federal Communications Commission “shall” review its broadcast ownership rules every four years, “determine if” those rules are necessary in the public interest as the result of competition and “repeal or modify” any regulation determined to no longer be in the public interest. Despite these statutory obligations, in April the FCC failed to complete its required 2010 quadrennial review, which actually began in 2009, failed to determine if its existing broadcast ownership regulations serve the public interest or to “repeal or modify” any of those regulations. Instead, the FCC merged its prior quadrennial review into a new 2014 quadrennial review, avoiding its legal obligations.

This is one of the reasons why my company, Howard Stirk Holdings LLC, has sued the FCC. As an African-American licensee of two television stations, I believe that by refusing to complete its 2010 quadrennial review, the FCC has unlawfully avoided taking an action required by Congress and the law, and thus is arbitrarily and capriciously retaining burdensome regulations that are no longer in the public interest.

Further, the FCC not only failed to make any final determination about the need for its existing broadcast ownership rules after studying the matter for five years, it also adopted a new rule restricting joint sales agreements between television broadcasters in the same market. Contrary to its decade-long policy and practice, the FCC determined that joint sales agreements for more than 15 percent of a television station’s weekly advertising time will now be attributable for purposes of the FCC’s broadcast ownership rules.

This not only changes the rules in the middle of the game and without conclusion of the 2010 quadrennial review but also it effectively slams the door shut on an important gateway to enhancing localism, viewpoint diversity and opportunities in broadcast television ownership by minorities and underrepresented groups. Joint sales agreements were shaped by the FCC and its staff to comply with the broadcast ownership rules. They have been a ubiquitous facet of the marketplace, as they are used by scores of stations in numerous markets. Just this January, the FCC approved Gannett Co.’s $1.5 billion acquisition of Belo Corp., as well as Tribune Company’s $2.73 billion purchase of Local TV Holdings LLC. Both relied heavily on joint sales agreements and other sharing agreements. At the same time, the direct competitors of local television—cable, satellite and telecom companies—use their own joint sales agreement-like agreements, known as “interconnects,” to sell local advertising with no percentage limit.

The FCC’s only justification for this further limitation of broadcasters’ rights is its unsubstantiated assertion that certain television JSAs “convey the incentive and potential” for the broker to influence program selection and station operations. In stark contrast, the FCC expressly declined to adopt any regulation for all other shared service agreements—of which joint sales agreements are only a subset—on the ground that it lacked sufficient information to “formulate sound public policy.” In addition, despite a conspicuous lack of evidence of harm associated with television joint sales agreements, the FCC arbitrarily and capriciously declined to grandfather existing television joint sales agreements for more than 15 percent of the brokered station’s advertising time. Instead, all such joint sales agreements must be unwound over the next two years, even though the 2014 quadrennial review will still be ongoing and before the FCC can be expected to make a determination that its existing ownership rules do, in fact, serve the public interest.