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FCC Move Could Force TV Station Sales

FCC Chairman Tom Wheeler calls vote to tighten media ownership rules ”a win for common sense“

A divided Federal Communications Commission on Monday voted to require television station owners to start counting as their own any stations they sell ads for and program.

The FCC’s 3 to 2 party-line vote could force the sell-off of TV stations by several big major media companies and prompt a court challenge by broadcasters. Republicans in Congress have already offered legislation to block the FCC’s change.

FCC Chairman Tom Wheeler and FCC Democrats said that the move would prevent station owners from using joint sales agreements (JSAs) to evade FCC rules meant to ensure that local viewers have diverse choices for news, information and programming — not the exact same news and programming from different stations.

Also read: FCC Republicans Rip Effort to Limit TV Station Ownership

Republican FCC commissioners said the joint sales agreements allow stations to cut costs and can boost — not hurt — coverage of local news and questioned the need for a change. They said especially in smaller markets, the agreements help to make possible the availability of news programming on weaker stations.

FCC media ownership rules prevent TV station owners from owning stations reaching more than 39 percent of the national TV audience, owning more than a single top-four network station in a market and owning more than two TV stations in a market. They also prevent a local newspaper from buying a local TV station.

Some broadcasters have used the joint sales agreements to circumvent those rules. While broadcasters don’t technically “own” a rival station’s license, they sign agreements then sell a “rival” station’s ads and often decide its programs. As part of the JSAs, the stations often share studio and engineering facilities. The practice has been denounced by consumers groups and by the Writers Guild of America-West.

Also read: FCC Proposes New Limits on Broadcasters: If You Run It, You Own It

Wheeler said Monday the agreements violate FCC rules.

“The commission has long imposed limits on the use of public airwaves,” he said at the meeting. “Today what we are doing is closing off a growing end run around those rules.”

“We are closing a loophole. It’s a win for competition … a win for common sense.”

Under the new FCC rules, a media company that sells more than 15 percent of a rival’s station advertising is considered as “owning” the rival station.

While the stations can seek waivers, the new rule could force a number of media companies to divest stations. Both Gannett and Tribune have recently completed station deals that would violate the new rules and so have a number of smaller broadcasters.

Republican commissioners said the change was unnecessary. They suggested joint service agreements are needed to ensure broadcasters get access to capital and prosper in challenging times.

“If stations in these smaller markets are to survive and provide many of the same services as television stations in larger markets, they must cut costs,” said Commissioner Ajit Pai. “JSAs are a vital mechanism for doing that.”

The FCC action came as the agency opened a formal review of all its media ownership rules and proposed one change. While it kept the current ban on newspapers and TV stations buying each other, the agency proposed allowing newspapers to buy local radio stations.

The commission on Monday unanimously voted to ban major local network TV stations from banding together in retransmission negotiations with local cable systems. Wheeler said the move would ensure that negotiations take place individually, as Congress intended, and that viewers wouldn’t see all their network TV stations going black at once.