Broadcasters Sue FCC Amid New Scrutiny of Shared Services Deals

Policy change called 'arbitrary and capricious'

Net neutrality isn't the only problem Tom Wheeler has: the Federal Communications Commission chairman also faces a new lawsuit from broadcasters.

As threatened earlier this month, the National Association of Broadcasters has sued the FCC in the U.S. Court of Appeals for the D.C. Circuit, for initiating new processing guidelines for local TV applications that involved shared service agreements.

The NAB charged that the FCC's public notice saying it would scrutinize shared service agreements was "arbitrary and capricious" because the agency failed to follow legally required procedures.

TV broadcasters in local markets have long depended on shared service agreements to cut costs by sharing traffic helicopters, facilities and administrative operations. Worried that such agreements may be a dodge around the FCC's ownership limits, the FCC vowed to study shared service agreements when it recently passed a new rule in March to limit joint sales agreements.

However in the processing guidelines adopted by the FCC media bureau in March, the FCC said it would "closely scrutinize" shared service agreements that appear to circumvent local ownership rules. 

Not only were broadcasters denied the opportunity to comment on the guidelines in advance, they appeared contrary to the FCC's previous statements that it would hold off on any new rules or regulations involving shared service agreements until the agency gathered sufficient information to "formulate public policy."

As a result of the rule change, the review of a number of TV deals has been held up at the FCC.

NAB warned the FCC in a May 1 letter to withdraw the public notice and to "cease and desist" applying new processing guidelines on shared service agreements. The FCC failed to respond.