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FCC Proposes to Tighten Media Ownership Rules

The agency proposes to close a loophole that allows broadcasters to control multiple stations in smaller markets.


Ignoring broadcaster complaints, Federal Communications Commission Chairman Tom Wheeler is moving forward with plans to heavily restrict TV station owners’ ability to jointly manage multiple stations in smaller markets.

Regulators are expected to approve new rules later this month that would sharply curtail the use of “joint sales agreements,” which have become a popular broadcaster method of skirting national ownership limits, that restrict companies from owning more than one major station in a market.

Broadcasters currently operating stations under the sales agreements would be required to unwind those deals within two years, FCC officials said Thursday. Stations could ask for waivers, but those would be considered on a case-by-case basis.

The proposal represents a reversal of the FCC’s almost decade-long effort to slightly loosen media ownership rules during a time in which an increasing number of consumers get their information on the Internet instead of dead trees or via TV antennas. Three previous FCC chairmen — Democrat Julius Genachowski and Republicans Kevin Martin and Michael Powell — all endorsed various proposals to loosen those rules.

Wheeler, a former cable lobbyist, has reversed course and suggested keeping current limits in place while restricting practices that TV station owners have used to cut costs and get more leverage in negotiations on fees that cable providers pay for the right to air local channels.

The agency will also propose limits to prevent local station owners from jointly renegotiating deals with pay-TV providers. That would help stop the rise in such fees, which are often passed along to consumers in the form of higher monthly cable bills, FCC officials said Thursday. Justice Department lawyers argued the broadcaster deals are anticompetitive and should be eliminated.

“FCC Chairman Wheeler deserves high praise for addressing the broken retransmission consent market and moving to correct one of its most serious flaws — the collusion practiced by dozens of TV stations owners, who are supposed to be competing with one another,” said Matthew Polka, president of the American Cable Association, which represents smaller cable providers, in a statement.

Cable lobbyists worked with consumer advocates to convince Democratic FCC officials to restrict the use of joint sales agreements. The agency’s two Republican members have both said they disagree with the proposed new restrictions.

Broadcasters argue that sales agreements provide operating efficiencies in smaller markets by allowing station owners to cut costs by using the same administrative staff and ad salespeople for multiple stations. They use similar agreements on the content side — called shared service agreements — which the FCC is also examining but hasn’t proposed action on yet.

“By imposing a blanket attribution restriction on all [joint sales agreements], the Commission would be wielding a hatchet where a surgical scalpel could suffice,” said Richard Wiley, a former FCC chairman whose law firm represents several broadcasters, in a blog post Wednesday.

Baltimore-based Sinclair Broadcast Group would likely be hardest hit by the change since it has embraced the practice of using joint sales agreements to control multiple stations in smaller markets. It is believed to have more joint sales agreements than any other media company. But the practice is widespread and broadcasters have been heavily lobbying the agency to reconsider.

The FCC began looking at the issue of station owners in smaller markets cutting deals to share sales and news staff at local TV stations, also called sidecar deals, more than 10 years ago. Consumer advocates have complained about the practice for more than a decade, but the agency didn’t do much to stop the proliferation of such agreements.

Wheeler’s proposal is part of a broader periodic review of the nation’s media laws. Those laws restrict the ability of media companies to own a newspaper and TV station in the same cities and impose other limits on radio and television ownership. The agency is required to review the rules every four years to see if they need to be changed.

The FCC has a terrible record of defending proposed changes to its media ownership rules. There are still pending lawsuits about rules proposed years ago. Federal courts have struck down the agency’s previous efforts to loosen ownership rules several times because of various issues in how the FCC crafted them.

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