The Case in Defense of JSAs

2 D.C. insiders take on the FCC’s tightening restrictions on stations’ joint sales deals
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In this exclusive commentary, House Energy & Commerce Committee member Rep. Billy Long (R-Mo.) and FCC commissioner Ajit Pai, who grew up in Parsons, Kan., make their case for why TV station joint sales agreements are in the interest of the public, particularly rural people, and why the FCC should rethink its decision to limit them.

Few in Southwest Missouri will ever forget the tornado that tore through Joplin on May 22, 2011, destroying one-third of the city and claiming 161 lives. Local broadcast stations played a critical role providing information to the public on that terrible day. However, the Federal Communications Commission (FCC) is threatening broadcasters’ ability to serve local communities during future disasters with its recent decision on joint sales agreements (JSAs).

Before the tornado hit, television stations KSNF and KODE used a Doppler radar system to provide people in the path of the storm with life-saving information. The money for upgrading that system came from a JSA between the two stations, which produced savings of nearly $3.5 million.

A JSA is an agreement between two separate stations that allows one station to sell advertising on behalf of another. Permitting two stations to share a single sales force cuts costs and enhances their ability to compete in the local advertising market.

The FCC had permitted JSAs with appropriate safeguards to ensure that the two stations in question were managed independently. But in March, the FCC dramatically tightened restrictions on JSAs. The commission decided that any station selling over 15% of the advertising time on another station would be counted as owning the second station. Because current rules prohibit one company from owning more than one television station in most markets, the FCC’s new regulations effectively prohibit JSAs in all but the largest U.S. markets. Moreover, they require companies to terminate existing JSAs in most cities over the next two years.

The FCC’s decision flies in the face of overwhelming evidence that JSAs improve local television stations’ ability to serve their viewers’ needs. In Springfield, Mo., for example, KYTV and KSPR entered into a JSA. Before that agreement, KSPR provided limited news and had outdated facilities. But afterwards, KSPR was able to invest over $11 million in capital improvements and produced the first-ever HD local news broadcast in the Springfield market. Last year, because of its independent investigative reporting, KSPR was awarded the prestigious Edward R. Murrow Award for best television station newscast in a market outside the top 50. And its closed-captioning techniques, which are critical to the deaf and hard-of-hearing viewers, have become the model for the FCC’s best practices in this area.

Moreover, the FCC’s new policy is unnecessary in today’s media marketplace. Broadcasters face intense competition for local advertising from other video distributors, such as cable operators, satellite companies like Dish Network and DirecTV, and new entrants such as Google Fiber, not to mention Internet sites. That might explain why not one advertiser in the country has complained to the FCC about JSAs.

JSAs are especially critical to television stations in smaller markets because revenues are much harder to come by compared to bigger cities. In the nation’s 100thlargest market, Fort Smith, Ark., the average revenue per television station is less than one-tenth that of the average station in New York City. In the nation’s 200th-largest market, Ottumwa, Iowa, the average revenue per station is less than one-thirtieth that of the average station in New York City. Finding efficiencies isn’t a luxury for small-market television stations. It’s a matter of survival.

When the FCC launched its crackdown against JSAs, we predicted the decision would drive many stations in smaller markets out of business. Regrettably, that prediction is coming true. Three stations in South Carolina and Alabama will go dark due to the JSA restrictions.

As a direct result of the FCC’s policy, there’s less video choice in smaller markets across America. And this recent string of closings is just the tip of the iceberg.

States such as Missouri stand to lose the most. JSAs have allowed television stations in Springfield and Joplin to thrive and deliver quality news and weather information. Without those JSAs, the end result will be fewer television stations and less news and weather programming for residents of Southwest Missouri— especially during emergencies, when it counts. That’s why it’s time for the FCC to reverse course on JSAs.

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