FCC To Apply Public Interest Standard To TV JSAs, LMAs, SSAs; Pai, O'Rielly Incensed At 'New Policy'
March 12, 2014 at 4:38 PM (PT)
It's not about radio, but the FCC MEDIA BUREAU's new guidance on joint sales agreements and shared services arrangements for television may shed some light on, and raise some concern from station owners about, the COMMISSION's thinking as the 2014 quadrennial ownership rules review approaches.
TODAY (3/12), the BUREAU said that it will require all parties to any proposed television transactions proposing a JSA, SSA, or LMA plus an option, right of first refusal, put/call arrangement, or other similar contingent interest, or a loan guarantee, to show "that approval of its proposed transaction will be consistent with the public interest, convenience, and necessity."
Applicants will need to submit "sufficient information and documentation to fully describe its proposed transaction, including any side agreements, and establish that it is an arm’s-length transaction and would not impair the existing licensee’s control over station operations and programming, result in attribution of the relationship, or be otherwise contrary to the public interest."
Lake: 'Not A Change'
MEDIA BUREAU Chief WILLIAM LAKE said, "In the interest of transparency, we hope
that all interested entities will find it helpful for us to identify publicly a concern that has arisen in our review of proposed transactions in recent months and years and that will enter into our future transaction reviews. That concern relates to the combination in a transaction of operational agreements of various types along with contingent financial interests or financing relationships.
"Where such a combination exists, we see a need to apply careful scrutiny to ensure that the transaction does not give one station an undue degree of operational and financial influence over the second station. We will need to ensure that the economic effects of, and incentives created by, the transaction are consistent with the public interest and our COMMISSION policies. This is not a change in our underlying rules or the policies on which they are based.
"But we owe it to the interested public to share our concern that such a combination of operational and financial relationships raises issues of consistency with our rules and policies, which will have to be considered carefully in our public interest review. Parties interested in simplifying the review of their transactions should be benefited by knowing of this concern as they structure their deals. Similarly, parties with pending applications proposing these types of combinations will have the opportunity to amend those applications, if they wish, to simplify the review process."
Pai: 'That's Not The Way We Should Do Business'
But Commissioner AJIT PAI protested that he was told that the BUREAU's close scrutiny standard "merely clarified existing COMMISSION policy. It does not." He noted that the BUREAU's explanation cites no precedent justifying its increased scrutiny of cases combining a sharing agreement and a contingent interest, especially since "the BUREAU has issued numerous orders approving such transfers ... It is impossible to square what was said then with what is being said now."
PAI added, "So make no mistake about it: Today’s Public Notice announces a new policy. This abuse of delegated authority is all the more unfortunate because it is entirely unnecessary. At our MARCH 31st meeting, the COMMISSION will vote on an item addressing sharing agreements. If the majority of the COMMISSION wanted to turn the screws still further on broadcasters, the substance of today’s Public Notice easily could have been included in that item. Instead, our policy has been changed without a COMMISSION vote. That’s not the way we should do business."
O'Rielly: 'Should Have Been Voted By The Commission'
And Commissioner MIKE O'RIELLY added, “I must disagree with the MEDIA BUREAU’s Public Notice issued today on both process and substance. On process, the item appears to set forth a new policy and, therefore, should have been voted by the COMMISSION, rather than on delegated authority. Moreover, the issue of delegation is a recurring and troubling one. On substance, this guidance presupposes the media ownership item to be voted later this month and may deter future transactions that could increase local news and other beneficial diverse programming for communities.”