To the disappointment of broadcasters, FCC Chairman Tom Wheeler circulated a draft media ownership order among his fellow commissioners on Monday that would preserve current FCC restrictions against newspaper-television and radio-TV cross-ownership and would also reinstate rules, struck down last month by the Third Circuit Court, that classify joint sales agreements (JSAs) encompassing sales of 15% or more of a TV station’s ad time to a competing local station as attributable ownership interests. The FCC is expected to vote on the draft rules later this month.
The draft order is the fruit of efforts to combine the Congressionally-mandated 2010 and 2014 quadrennial review of the FCC’s media ownership rules. Overturning the JSA rule, the Third Circuit decreed that, because the FCC has not fulfilled its statutory quadrennial review requirement since 2007, the FCC improperly expanded “the reach of the ownership rules without first justifying their preexisting scope.” In circulating the draft order, FCC Chairman Tom Wheeler emphasized that the Third Circuit “didn’t say the JSA rule doesn’t make sense” but instead “said it needs to be based on rules that themselves haven’t been reviewed.” As such, Wheeler explained that the draft quadrennial review order “sets up a predicate on any decision on JSAs.”
As specified in an FCC fact sheet, the draft order readopts the JSA attribution rule “consistent with the court’s guidance” and in compliance with a Congressional mandate that grandfathers for ten years any JSA in existence at the time the FCC adopted the JSA rule in March 2014. Additionally, the draft rules would implement a definition for shared services agreements (SSAs) under which a TV station “provides another station, not commonly owned, with any station-related services, including administrative, technical sales, and/or programming support.” While broadcasters would be required to file SSAs with the FCC, the agency said it had no plans at this time to classify such agreements as attributable.
Retaining current rules on cross-ownership, the FCC said “our analysis indicates that the ownership restrictions remain necessary in the public interest, though the realities of the media marketplace require some targeted modifications.” The FCC also signaled that it would carefully assess the results of the incentive auction in considering future media ownership rule changes, admitting: “the auction’s effect on the marketplace is not yet clear.” Lamenting that the draft order “continues to ignore the will of both the courts and Congress by proposing to retain broadcast ownership rules that long ago outlived their usefulness,” a spokesman for the National Association of Broadcasters called for “meaningful ownership reform” that would benefit “the millions of Americans reliant on free and local broadcasting.”