Small TV Stations to FCC: We Need Shared Services Agreements

Say cable operators have plenty of retrans muscle, smaller-station profits have plummeted and sharing is necessary
Author:
Publish date:
Social count:
0

Small-market TV station representatives met with
commission staffers Monday (Dec. 19) to make their case for shared service
agreements and other similar arrangements, pointing out they can be a local
programming lifeline for stations whose pre-tax profit average plummeted by 95%
between 1999 and 2009.

That
is according to a copy of an ex parte filing with the FCC Wednesday, and comes
as the FCC is preparing to vote, as part of a combined rulemaking proposal and
inquiry, to look into whether those joint station arrangements, which can
include joint operations, sales and news, violate the FCC's local ownership
caps, which it plans to retain as part of the rulemaking portion of the item

In
their pitch to staffers with commissioners Robert McDowell and Mignon Clyburn,
representatives of the Coalition of Smaller-Market Television Stations, the
markets where FCC rules limit joint ownership, said that such agreements allow
stations to preserve local -programming. They also tried to put in context the
financial pressures on smaller stations that make such arrangements necessary.

According
to data submitted to the FCC and based on NAB TV financial Surveys,
the pre-tax profit average for markets 50-210 went from $908,462 in 1999 to
only $42,003 in 2009, the last year for which figures were shown. That is a
drop of 95.4%. The figures were only slightly better for Big Four network
affiliates, dropping from a $1,096,054 average pre-tax profit in 1999 to only
$131,863 in 2009, down 88%,

The
coalition cited what it said were "real-world" examples of where
SSA's has "saved and expanded local public service and diversity in news
operations."

Those
included in Wichita, where they said an SSA between Schurz and Entravision
enabled he latter to launch operations six months earlier on "the only
Spanish-language local television news operation in the entire state of
Kansas," and in Syracuse, where a Barrington SSA saved a local news
operation from being shuttered.

The
FCC is particularly concerned with the impact of the arrangements on local news
operations.

One
of the reasons cable operators have argued for bringing joint operating and
programming and sales and services agreements under the FCC's ownership rules
is that they argue joint retrans negotiations involving those arrangements give
the stations undue leverage.

The
coalition countered that in their experience, coalition members had only twice
had stations operating under a shared services agreement been asked by a cable
operator not to conduct joint negations, which request was honored and not
repeated by the operators the next time around.

They
also said a collective "Hah" to the suggestion broadcasters had the
leverage, even in pairs, over cable ops. "The major MVPDs are enormous
business entities whose financial resources and negotiating sophistication dwarf
those of the television stations and groups with whom they negotiate,"
they told the staffers.

They
challenged the claim by cable operators that joint negotiations boosted retrans
fees, saying that broadcasters "seek fair value for each station, based on
marketplace considerations, regardless of whether the negotiation process is
conducted jointly or separately." And besides, they said, cable operators
already undervalue broadcasting relative to the popularity of its programming.

"We
urge the Commission to take these realities into account in connection with the
ownership and retransmission consent rulemaking proceedings," they said.
The FCC's media ownership rule decision is expected sometime early next year,
but it is unclear when and what action it will take on retrans. It has proposed
clarifying what constitutes good-faith bargaining, but could address the issue
through the media ownership proceeding if it concludes shared service
agreements in similar markets should be disallowed under local ownership cap
rules.

Related