FCC’s Pai Warns Agency Against Strong-Arming Broadcasters in Auction

FCC came close to order to eliminate shared service agreements

Did the Federal Communications Commission come close to changing its media ownership rules regarding joint sales agreements and shared service agreements?

According to sources, as late as Tuesday, chairman Tom Wheeler was ready to circulate an order that would have eliminated JSAs and SSAs, which have become a target of cable and public interest groups who see SSAs as end-runs around the ownership rules, and as a way to drive up retransmission fees.

While the order would have pleased those groups, it may have mortally wounded the FCC's chances of convincing TV broadcasters they should voluntarily give up some or all of their spectrum.

The spectrum auction intended to get more spectrum in the hands of wireless companies, will either turn out to be Wheeler's signature accomplishment or an embarrassing dud.

But so far, broadcasters aren't embracing it, and Wheeler knows it, publicly pitching to broadcasters that the auction is a once in a lifetime opportunity.  Until a lot of details emerge, like how much money broadcasters can expect to get for their spectrum, and what will happen to the rest of the stations that remain in business, broadcasters are holding back.

And an order to eliminate a business practice that is keeping a number of broadcasting stations afloat in highly competitive and fragmented media environment would have been regarded by broadcasters as a deliberate ploy to force them into the auction.

Although the order was pulled, Commissioner Ajit Pai (R) warned the commissioners during an FCC report on the timeline and plan for the auctions that ploy would have been a fatal mistake.

"I strongly oppose regulatory ratchets designed to pressure broadcasters into participating in the incentive auction," Pai said. "Targeting JSAs and SSAs would poison the FCC's relationship with broadcasters at the very time that we need their cooperation to make the incentive auction a success."

Pai went on to give two examples of JSAs in his home state of Kansas that enabled a Hispanic station to offer the only Spanish-language local news in Kansas, and another agreement that led to expanded news programming and money to buy a Doppler Radar system "which probably saved lives when a devastating tornado destroyed much of Joplin in 2011," Pai said.

The order would have given stations that have SSAs and JSAs 18 months to untangle arrangements that have made it possible for some stations to offer news or others to stay financially afloat. But sometime between Tuesday and Thursday's meeting, the order, was pulled back.

An FCC spokesman had no comment. 

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