Broadcasters Want FCC To Change JSA Merger Policy
Broadcasters have concerns about and may soon begin a lobbying push in Congress and at the FCC over the commission's policy on broadcast transactions that contain joint sales agreements, broadcast attorneys and industry officials told us. The FCC needs to fall in line with the congressional adjustments to the JSA attribution rules, some broadcast attorneys told us. In a provision of the FY 2016 omnibus appropriations law, the deadline to unwind existing JSAs was moved from June 2016 to Oct. 1, 2025 (see 1512210050). The deadline also was raised by some on Capitol Hill, who mentioned concern the commission is trying to get around the JSA law change (see 1602230070).
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In the recent approval of the Gray Television's buy of Schurz TV stations (see 1602120061), the Media Bureau required an existing JSA in the deal to be unwound. The bureau declined a request from Gray for a waiver that would have allowed the JSA to stay in existence until the 2025 unwinding deadline. That makes it clear that the bureau's 2014 guidance announcing that deals involving sharing arrangements and ownership options would have a tougher road to approval is still in effect, broadcast attorneys told us. In a January public notice announcing the changed grandfathering deadline, the bureau said in a footnote that the congressional action would have no effect on the transaction guidance.
The way bureau guidelines were applied to Gray/Schurz runs counter to Congress' intent, a broadcast industry official told us. The bureau forced an existing JSA to be unwound years before it otherwise would have been, the broadcast official said. The FCC should adjust its policy to reflect the changes to the attribution rules Congress made in December, NAB CEO Gordon Smith said on C-SPAN's The Communicators Saturday (see 1602100066). The bureau declined to comment Thursday.
A transaction that involves a JSA means there are new parties to that JSA, and that makes it a new arrangement, not an existing one, said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman. He has supported JSA's attribution rules. “The commission has to weigh every transaction individually as to its effect on the public interest,” Schwartzman said. If Congress had wanted its changes to the JSA attribution rules to affect JSAs in transactions, it would have made the statute do so. Schwartzman said.
The bureau's treatment of JSAs in Gray/Schurz was consistent with how it has treated JSAs in deals since the 2014 guidance was announced, a broadcast attorney connected to the deal told us. The parties to the deal weren't surprised by the bureau's actions, the attorney said. Gray/Schurz included a JSA in Wichita, Kansas, that involved the only station serving Spanish-speaking viewers in a wide area. The JSA didn't involve the financial entanglements the bureau has flagged in other deals, but the bureau still didn't grant the JSA a waiver in the order approving the transaction, one broadcast attorney pointed out. If the bureau won't grant a waiver for a JSA that has a strong public interest argument, it's unlikely to grant any such waivers, or change its policy on JSAs, the lawyer said.
With the FCC seen as unlikely to change, Congress is probably the most likely point of attack for broadcasters looking for the commission's transaction policy to change, broadcast attorneys told us. However, it can be difficult to lobby Congress and see quick results in a presidential election year, and the current FCC will exist for only another 10 months, a broadcast lawyer noted. Waiting to see the stance of a new FCC toward JSAs might be more effective, the attorney said. Even sooner, oral argument in NAB's challenge of the JSA attribution rules in the 3rd U.S. Circuit Court of Appeals is set for April. That case could make the matter moot, attorneys told us.