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Wheeler’s Take (and Give) On Retrans, Ownership

WASHINGTON — Federal Communications Commission chairman Tom Wheeler appears to have signaled that he is not going to wade into retransmission-consent negotiations, which would be bad news for cable operators.

But he has also signaled that the FCC is going to drill down on joint sales and service agreements. That would be cause for celebration in cable quarters and arguably could hint at an ultimate victory for MSOs on that retrans front.

Those signals came in a pair of public appearances two weeks ago, one in a question-and-answer session with Consumer Electronics Association president Gary Shapiro at the International CES in Las Vegas, the other at a town hall meeting in Mountain View, Calif.

Paul Gallant, an analyst with Guggenheim Partners, said one comment in the Q&A was significant. Asked if the FCC would intervene in blackouts, Wheeler replied: “There’s been a lot of talk about this. The commission has looked at it repeatedly and not intervened. If somebody out there representing somebody has a portion of the law they think we think we’ve overlooked, we’d be happy to consider that. But, I mean, the commission has looked at that repeatedly.”

Gallant saw that as a sign the FCC was likely to stand down on retranmission consents, leaving the issue to Congress. If the Republicans retain control of the House, legislation altering the retrans regime isn’t likely to get anywhere.

The chairman’s office had no comment at press time.

As to Wheeler’s suggestion he would welcome new arguments, Gallant saw those as unlikely to be forthcoming. “We question whether that is likely given that the pay TV companies presumably have already put forth their best legal analysis for FCC authority to intervene during blackouts.”

But if the chairman was signaling his disinterest in wading into the retrans regime — rules that cable operators have been pushing the FCC to reform — he also fired a shot across the bow of TV station shared services agreements. Such a move would give cable ammunition in its parallel effort to get the FCC to crack down on those arrangements, which operators argue give stations undue leverage in retrans negotiations.

At a town hall meeting on media consolidation, Wheeler said the FCC planned to look “differently” at joint sales and operating agreements, which he was not averse to calling “shell companies.”

The Wheeler FCC has already signaled that change. As a condition of approving the Belo deal, it required Gannett to spin off KMOV St. Louis to an outside company and would not let it provide any services to the station, as it had planned. The chairman’s office had no comment beyond citing a pair of footnotes in the Gannett/Belo deal decision.

TAKEAWAY

FCC chairman Tom Wheeler has begun providing clues to what he may do on retransmission-consent and ownership issues.

Reading the Fine Print

The FCC under chairman Tom Wheeler used the following footnotes to signal that simply comporting with agency rules would not insulate station transactions involving shared-services agreements from being disallowed if they are found, on a case-by-case basis, not to be in the public interest.

29. Public Interest Petitioners stress that the Act requires a finding that a transaction serves the public interest, not merely that the transaction does not violate our rules and shares particular factual elements with other transactions previously approved relating to our attribution and control analysis. We find force to that contention. The parties to this transaction have relied on an expectation, generated by prior decisions in the broadcast context, that conformity of individual elements of the transaction to our rules and to other transactions previously approved would warrant approval here.

30. At the same time, of course, Congress’ express statutory command is that license transfers must satisfy the “public interest, convenience, and necessity,” a standard that is always informed by regulatory standards, but which necessarily involves, as our licensing decisions have long noted, the use of a “case-by-case” approach. [1] Nor is the public-interest standard limited to the goals established by the core antitrust laws. [2] That is why applicants and interested parties should not forget that our public interest mandate encompasses giving careful attention to the economic effects of, and incentives created by, a proposed transaction taken as a whole and its consistency with the Commission’s.

SOURCE: FCC