Washington

Wheeler Proposing to Ban Coordinated Retrans Among Top Stations

Also plans to make JSAs above 15% attributable 3/06/2014 02:00:00 PM Eastern

FCC chairman Tom Wheeler is proposing to prevent joint retransmission consent negotiations between two of the top four separately owned stations in a local market, and adopt a "rebuttable presumption" that coordinated negotiations by any two stations in a market are not in the public interest.

The chairman plans to vote on that retransmission consent proposal at the March 31 meeting, according to senior FCC officials speaking on background. He will circulate the item on March 10, the customary 21 days before the meeting. Those officials made it clear the move was a way to try to stem rising cable prices. The officials cited what they called skyrocketing costs of retrans, from $28 million in 2005 to $2.4 billion in 2012.

The chairman wants immediate action on retrans and JSAs (see below), but is also seeking comment on other issues, including local ownership rules and continuing to ban the merger of two of the top four broadcast networks.

If the chairman gets three votes, then coordinated retrans among top-market stations would be disallowed as soon as the rule was published in the Federal Register, so long as there were no Paperwork Reduction Act implications, which require a separate OMB review.

Also as part of the retrans item, the FCC is proposing to extend the cable prohibition on dropping TV station programming during sweeps to satellite operators—House Republicans have actually been considering dropping that prohibition for cable—and asks whether to eliminate the network non-duplication and syndication exclusivity rules, which prevent cable and satellite operators from importing out-of-market network and syndicated programming. That question was already teed up in the open retrans proceeding.

They said preventing joint retrans would require those deals to be hammered out one-on-one rather than by collaborations among stations supposed to be competing with one another, and presumably that will lead to lower costs to consumers.

“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 station owners, who are supposed to be competing with one another," said American Cable Association president Matt Polka of the planned order and notice. "Adoption of Chairman Wheeler’s proposed order would represent a victory not only for fair competition, but also for millions of consumers who are being victimized by TV station conglomerates, which have the perverse idea that collusion is somehow consistent with their legal charter to bargain in good faith."

As expected the chairman also plans to vote on a proposal dating back to 2004 to make joint sales agreements (JSAs) above 15% of a station's ad time attributable as ownership interest.

The FCC will provide a waiver process to allow stations, on an individual basis, to persuade the commission a JSA is in the public interest.

Existing JSAs that violate ownership limits would have two years to unwind or apply for a waiver.

FCC Commissioner Ajit Pai, who has been stumping for the public interest value of JSA's, was not pleased with the chairman's announcement. “This JSA proposal is a dagger aimed at the heart of small-town broadcasters. It’s a job-killer that would result in less news programming, less diversity, and more stations going dark," he said, 

The FCC signaled the moves were to prevent broadcasters from exploiting a loophole to circumvent ownership rules (the JSA limits) and prevent broadcasters from banding together to negotiate retrans and drive up prices. But the officials said use of sharing agreements to promote the public interest would not be prevented.

Also as expected, the chairman will at least tee up whether the FCC should take the same approach to SSAs, which is that if they are to circumvent ownership rules, they should be disallowed, but if they have some public interest benefit, they should be allowed. But in any event, it should be a case-by-case review.

In addition to retrans, the parts of the item that would become rules as soon as they are published in the Federal Register (the others are proposals being put out for comment and would need further FCC action) are the rebuttable presumption that coordination among any two separately owned stations is not in the public interest; amending the sweeps prohibition; making JSAs attributable over 15%; and providing the expedited waiver process for public interest waivers of that prohibition.

The chairman is rolling the 2010 quadrennial into the 2014 review, so the March vote will launch the 2014 review, now combined with the 2010 review.

There is a further notice of proposed rulemaking (FNPRM), which is essentially a request for comment on questions and proposals. Those include some of the questions his predecessor Julius Genachowski was hoping to answer in his 2010 quadrennial review item. Genachowski was proposing to loosen some crossownership rules, but Wheeler very publicly tabled that deregulatory—though not as deregulatory as broadcasters wanted—proposal to put his own stamp on the review, which he is now doing.

In the FNPRM, the commission is now asking for more comment on whether to modify ownership rules given the changing marketplace, and whether to eliminate the crossownership restrictions on newspaper-radio and radio-TV combos. It is tentatively proposing to retain the current dual network rule (the ban on a merger between two or the four major networks) and tentatively concluding that the newspaper-TV crossownership restrictions should remain.

The FNPRM will also propose defining sharing agreements that TV stations must disclose to the FCC, and seek comment on what that definition should be and how they should be disclosed. It also asks whether the FCC's media ownership rules have been in flux for over a decade, with court remands, overdue reviews and congressional reports, and attendant issues like whether to get rid of the UHF discount or apply radio joint sales agreement (JSA) restrictions to TV.

"We are disappointed with several aspects of what the chairman is putting out this afternoon," said veteran public interest attorney Andrew Schwartzman, now with the Georgetown University Law Center. "Among other things, and in particular, we think there is ample evidence to justify immediate action on SSAs rather than seeking more comment, and we especially believe that there is no need to ask questions before requiring immediate online disclosure of SSA agreements."

"Obviously, we are pleased with the overall thrust of what the Commission is doing," he said. "But we expect to press the commissioners to beef up the orders." Commissioners often make suggested edits after an item is circulated.

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