Editorial: Runaway Train

A hornet's nest has nothing on the kind of backlash FCC chairman Tom Wheeler recently stirred up with his proposal to limit joint sales agreements (JSAs) and joint retransmission consent negotiations.

First of all, there’s the issue of commissioner Mignon Clyburn, one of the three votes Wheeler needs for that proposal. Clyburn is looking for a variation on the theme that takes into account sharing arrangements that benefit minority ownership, something lacking in the broadcast business by any measure. The chairman has said there will be a waiver process for sharing “in the public interest,” but Clyburn is no guarantee for a yes vote on the proposal as it currently stands.

Meanwhile, the National Association of Broadcasters is fighting back. Last week it asked the FCC to look into a cable interconnect that allows big cable operators, satellite companies and telco video operators to offer their platforms as a single buy in local markets. The NAB said that illustrates why JSAs are a way to keep up with competitors, but also that it’s collusion to sway the ad market toward multichannel video programming distributors.

The NAB isn’t pushing the auction angle, but plenty of broadcasters are asking whether the FCC is making it tough on their business in an effort to get them to take the incentive auction buyout and give up spectrum. Their concern is understandable.

Remember when three former FCC commissioners, Republicans and Democrats, conceded that some ownership regs—specifically the newspaper/ broadcast cross-ownership restrictions— had outlived their usefulness and were only still on the books because of political considerations? The FCC, under Julius Genachowski, proposed loosening those and other regs, but it never happened. New FCC chief Wheeler said it wasn’t going to happen and proceeded to propose tightening the rules on JSAs, preventing stations from coordinated retrans negotiations among major players and discouraging other sharing agreements that appear to be violating the spirit of the ownership rules—a spirit that’s like a zombie continually threatening the health of the broadcast business.

The FCC had an opportunity to eliminate the UHF discount or tighten JSAs, which it has been suggesting it was going to do for years. It did not do so, however. Perhaps that’s because it recognized that the competitive marketplace looks a lot different from when those changes were first proposed 10 years ago and, while they may have made some sense then, they have been overtaken by events. Perhaps…but not likely. Whatever the reason, to revive them now, combined with cracking down on coordinated retrans, could easily be mistaken for a not-so-gentle shove toward the auctions.

Have some broadcasters been trying to work within the rules to achieve more scale, even though outdated regs prevent them from doing so and the competition is not just the station down the block but cable operators, telcos and OTT providers? Yes, but that does not make them de facto bad actors.

The FCC should indeed take a case-by-case approach— not by branding station owners bad actors and pushing them to unwind sharing agreements, but by recognizing why they are doing it in the first place. That means recognizing that the video marketplace is a wildly competitive place, one the FCC seems to think broadcasters won’t be a big player in anyway. If that is the case, the FCC should be loosening restrictions to help broadcasters continue to serve their viewers, many of them poor, elderly and minority, but also cord-cutters in growing numbers. To do otherwise merely fuels speculation that it is the interests of auction bidders, not the public, that is driving this train.