Based on my experience as Chairman of the Federal Communications Commission, and as a long-time Washington D.C. communications lawyer, I know something about media ownership regulations. It was under my stewardship that, in 1975, the agency adopted rules prohibiting the common ownership of a newspaper and radio or television stations in the same market – restrictions that, whatever their justification almost four decades ago, are today badly outmoded and counter-productive. Now, the current Commission is poised to make an extensive review of its broadcast ownership rules, something mandated by Congress, but it also appears to be considering near-term action to tighten one aspect of its oversight responsibilities – an action that would be both piecemeal and, I would suggest, harmful to the industry and consumers.
Under the 1996 Telecommunications Act, the FCC is required to consider its ownership rules every four years and to “repeal or modify any…that it deems no longer in the public interest”. Unfortunately, the Commission was unable to complete its 2010 review, and this year is expected to begin yet another “quadrennial review” (while possibly completing aspects of its 2010 proceeding). Such an overall rulemaking would be all to the good. However, the agency reportedly also plans to carve out a single issue for immediate change: specifically, sharing arrangements between two broadcasters and, in particular, joint sales agreements or “JSAs”.
In my view, there are two problems with this approach.
First, the arguments against sharing agreements are directly related to the current limits on local ownership – especially the longstanding, and judicially questioned, restriction on duopolies (or two stations in a market). By separating out sharing agreements, the Commission would be treating the symptoms of outdated regulation while ignoring the underlying cause. The reality is that the competitive landscape for local TV broadcasters has changed dramatically in recent years, and especially so in smaller and mid-sized markets. Numerous subscription-based providers and new streaming services have arisen to challenge the advertising-supported business model of over-the-air broadcasting. And these other media increasingly provide alternatives to local advertisers if they are dissatisfied with what broadcasters are offering. Thus, rather than considering just one issue in isolation, the Commission should consider aligning its entire ownership regimen with the realities of the current media marketplace.
Second, singling out JSAs for new restrictions that effectively might prohibit them (and also perhaps raising new questions about the legality of shared services agreements, or “SSAs”) would overlook the demonstrated value of these arrangements to viewers. The Commission’s record is replete with examples of public interest benefits inherent in sharing deals – e.g., enabling financially-challenged stations that are unable to afford news departments to provide their communities with live news and public affairs programming, including sometimes life-saving weather forecasts; and reducing operational costs of such stations in order to facilitate their economic viability and allow them to remain on the air. Thus, sharing agreements, by affording better content and more choices at the local level, can be very much in the public interest.
Nevertheless, if the FCC perceives that such arrangements are “designed to circumvent” the existing ownership rules, as one agency Member recently suggested, it should enact carefully targeted rules aimed at ensuring that relationships between sharing partners are arms-length and that the licensees of weaker stations maintain ownership direction and control. But, by imposing a blanket attribution restriction on all JSAs, the Commission would be wielding a hatchet where a surgical scalpel could suffice.
Finally, if the agency is determined to take restrictive action in this area, I believe it should “grandfather” existing agreements that no longer would comply with the new restrictions. As we recognized back in 1975, “unlike for prospective rules, divestiture introduces the possibility of disruption for the industry and hardship for individual owners”. Many broadcasters entered into legitimate sharing agreements that fully complied with the agency’s existing rules. Those who structured deals in reliance on the current regulations should not be penalized by a short window to unwind them. My guess is that such an onerous requirement would result in station failures, industry instability, investment freezes, and a serious loss of service to the public. Whatever benefit the FCC may see in its planned regulatory effort cannot possibly outweigh the burden of such catastrophic harms.