Television broadcasters are applauding the decision of the Third Circuit Court of Appeals on Wednesday to vacate FCC rules that classify certain joint sales agreements (JSAs) among broadcasters as attributable ownership interests. In a March 2014 order that also launched the FCC’s most recent quadrennial review of the media ownership rules, the FCC classified as an attributable interest any JSA under which 15% or more of a TV station’s advertising time is sold to a competing local station. Rejecting broadcasters’ claims that JSAs promote competition by empowering financially-challenged owners of small stations to negotiate for favorable advertising terms, the FCC defended the JSA ruling as one that closes a loophole in the agency’s media ownership policy that has resulted in undue ownership concentration and has lessened competition and diversity. Affected broadcasters were given two years to unwind JSAs in existence at the time of the FCC’s order, although Congress later “grandfathered” such JSAs for a ten-year period in a rider attached to appropriations legislation last year.
Remanding the JSA rules, the three-judge panel declared the JSA rule to be invalid because the FCC had not fulfilled its statutory mandate to complete its quadrennial review of the media ownership rules, which were last revised in 2007. (Although the FCC launched a quadrennial review process in 2010, the agency later abandoned that effort and incorporated the record of the 2010 proceeding into the 2014 quadrennial review.) As it further decreed that the JSA rule violates statutory mandate “by expanding the reach of the ownership rules without first justifying their preexisting scope through a quadrennial review,” the appellate panel explained that, “before defining ownership more restrictively, as it does when it enacts an attribution rule, the Commission must at a bare minimum show that it is even in the public interest to regulate ownership in the first instance.” Although the court rejected broadcaster arguments that the media ownership rules should be thrown out altogether, it warned: “this remedy, while extreme, might be justified in the future if the Commission does not act quickly to carry out its legislative mandate.”
FCC Chairman Tom Wheeler told reporters that he intends to circulate a media ownership proposal among his fellow commissioners by June 30, noting that the court’s rationale for remand is procedural and leaves open the possibility that the JSA rule might be restored. Meanwhile, as he welcomed the court’s decision, National Association of Broadcasters executive vice president Dennis Wharton stressed that “JSAs are clearly in the public interest—as Congress has decided—and allow free and local broadcasters a chance to compete.” Observing, “this opinion directs the FCC to do its job and adopt broadcast ownership rules that reflect the modern world,” Wharton said: “NAB could not be more pleased.”