With FCC JSA Rules Facing Challenges, Broadcasters Don't Need To Unwind
With the fate of the FCC policy on grandfathered joint sales agreements uncertain, broadcasters involved in such deals haven’t done much to unwind them yet, industry officials told us. The deadline to unwind existing JSAs is December 2016. The proposed bill to allow grandfathering, an ongoing appeal in the U.S. Court of Appeals for the D.C. Circuit and the possibility of a change in administration make that date far from certain, broadcast attorneys said. “We don’t know who a President [Donald] Trump would put on the FCC,” said Drinker Biddle broadcast lawyer Howard Liberman.
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The approaching incentive auction, which may reduce the number of stations involved in such agreements, also injects uncertainty for broadcasters contemplating unwinding their stations, industry insiders said. “They have the regulatory and the judicial and the legislative process, they are waiting for those to conclude” before reaching plans on how to unwind or dispose of JSAs, said BIA/Kelsey Chief Economist Mark Fratrik. The appeal from NAB and Howard Stirk Holdings is awaiting a date for oral argument, while a hearing on media ownership and the JSA bill was held Friday by the House Communications Subcommittee (see 1509240063).
With the rule's future up in the air, broadcasters have few reasons to commit themselves to unwinding their agreements, a broadcast attorney said. The extension of the original June 2016 deadline by the Satellite Television Extension and Localism Act Reauthorization exacerbated this, he said.
The one thing that has spurred broadcasters to jettison their JSAs is if they have a transaction, Fratrik and broadcast attorneys said. Many recent proposed deals have included divestitures because the Media Bureau is perceived as being hostile to such arrangements, they said. In a deal approved Sept. 15, the Media Bureau required Quincy Newspapers to unwind its JSAs within nine months as part of its transaction to buy stations from Granite Broadcasting and Malara. That means that because it was involved in a transaction, Quincy has to unwind its JSAs long before the deadline for other companies, broadcast attorneys said. The bureau didn’t comment. If a broadcaster doesn’t have a transaction pending, it’s worth it to wait and see, they said.
Allowing grandfathered JSAs to survive would be good for broadcasting because licensees could be sure where they stand, Fratrik said. “Anything that removes uncertainty would be a good thing." Though it's possible some stations formerly involved in JSAs would go up for sale if broadcasters are forced to unwind them, Fratrik and broadcast attorneys said that was unlikely. The kinds of stations dependent on JSAs are generally not attractive purchases on their own, Fratrik said. Such stations are also unlikely to be in places where their spectrum would be attractive to wireless carriers in the incentive auction, broadcast attorney Jack Goodman said.
Letting companies keep their grandfathered JSAs would be a harm to the public interest, said Common Cause Media and Democracy Reform Initiative Program Director Todd O’Boyle. He also testified against the proposal Friday. Grandfathering existing agreements would allow companies “to continue skirting the rules,” he told us. Allowing the grandfathered agreements would be “rewarding bad behavior,” he said. It’s also unnecessary because the broadcast business is “booming,” O'Boyle said.