FCC Won't Loosen Crossownership in Quadrennial: Sources

Sources inside and outside the FCC are looking for the chairman to put a media ownership rule review item on the March agenda dealing primarily with making joint sales agreements (JSAs) for more than 15% of a stations ad inventory attributable as ownership under FCC local ownership limits.

But while it will tighten those regs, it will no longer loosen others on broadcast and newspaper crossownership, as new FCC chairman Tom Wheeler's predecessor had proposed.

Wheeler is widely expected to get the requisite votes for the change, most likely from his Democratic colleagues. Republican commissioner Ajit Pai, by contrast, has been vocal about the value of TV station sharing arrangements to save costs on services viewers want and broadcasters want to offer.

Loosening the newspaper-broadcast crossownership ban and lifting it on TV-radio and newspaper-radio combos, as former chairman Julius Genachowski proposed in his 2010 quadrennial media ownership item, would not be part of the order. Instead those would be put out for yet more comment in a further notice.

Pushing crossownership into a further notice would allow the FCC to collect even more input on the rule change's impact on diversity, an issue that prevented a vote on the Genachowski item. The FCC has yet to complete and vet a series of promised diversity studies, for example.

Current JSAs would not be grandfathered under the proposal. Multiple sources said that the order would give station owners two years—rather than a previously suggested 18 months—to unwind any deals that would run afoul of ownership limits. A group can't own more than two stations in a market in any case, and not even two if the combo is between two of the top-four billing stations or would leave fewer than eight independently owned stations in a market.

That means JSAs between two of the top four or in smaller markets where duopolies are not allowed would have to be unwound within two years.

FCC commissioner Mignon Clyburn said Friday in an interview on C-SPAN that she expected to see a media ownership item in the next few weeks, and so do broadcast lobbyists. One source said that in recent meetings that Wheeler was adamant about making the JSA move.

The March ownership item is not expected to include making shared services agreements (SSAs) or other joint agreements similarly attributable, something cable ops have been pushing. Instead, the commission will ask in the further notice for input on those other agreements and whether and how they should count toward ownership or be disclosed, perhaps in a station's online public file.

Wheeler had already signaled he was not a big fan of loosening crossownership rules. "One of the first things we did is to do away with the proposed rule change that eased the crossownership restriction so that companies could merge more," Wheeler told an applauding town hall meeting crowd in Oakland, Calif., last month in explaining what steps the FCC had taken to address consolidation

The chairman has also signaled via the FCC's merger reviews of the Tribune/Local TV and Gannett/Belo deals that the commission will be looking closely at the impact of various sharing agreements on public interest and competition grounds. The fact that they are not technically violations of the FCC's local ownership rules does not mean the FCC won't disallow them if it finds them to be anticompetitive, as it did in requiring a spin-off of KMOV in the Gannett/Belo deal.

Genachowski proposed loosening the crossownership rules, but ran into pushback over their impact on diversity. He also proposed changing the JSA rules to square with radio rules that had been changed over a decade ago. He also planned to seek comment on other types of sharing agreements and whether they should be attributable.

Wheeler pulled the Genachowski proposal off the table in December to put his own stamp on the congressionally mandated review. Genachowski's spirit lives on in JSAs and a deeper dive on other sharing arrangements.

In 2003, the FCC as part of the biennial—now quadrennial—ownership rule review, changed its radio attribution rules to include joint sales agreements where one station controlled the sale of at least 15% of the ad time of another station. In that case, the owner of the first station would also be said to hold an attributable interest in the second station.

Although a Philadelphia federal appeals court remanded most of the ownership rules for a rewrite—which is what the FCC is still trying to do ten years later—it left the radio JSA change intact. The FCC now wants to apply the same attribution to TV JSAs, something it has proposed as far back as 2004.  In fact, some of those opposed to the TV JSA move have suggested they were surprised the FCC had not already brought TV under the same regime given the radio precedent.

The March agenda item is said to include both the long-overdue 2010 item, the 2014 quadrennial review, as well as the FCC's inquiry into the impact of ownership on diversity.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.