Media Bureau To Update Transaction Guidance After Holidays

“The FCC’s draconian JSA rule has been put on ice for nearly a decade,” Fletcher Heald broadcast attorney Harry Cole said in a blog post. Though some broadcast industry officials had told us they expect the narrow language of the law's JSA provision not to have much of an effect on how the commission looks at transactions involving sharing arrangements, the guidance will be updated after the holidays, the spokeswoman said. The congressional action shouldn't soften the impact of any other aspect of the FCC's JSA rules, said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman, who favors making JSAs attributable.

As the attribution rules were being considered in 2014, the bureau issued guidance that deals involving sharing arrangements and ownership options between stations would have a higher bar for approval, and this policy was seen as being behind the Media Bureau's long delay in approving the Sinclair/Allbritton deal. Since the law's language is narrowly focused on JSAs that existed before March 2014, it wasn't expected that it would change the Media Bureau's increased scrutiny of deals involving JSAs, Schwartzman and several broadcast industry officials said. The planned updating of the rules after the holidays suggests that might not be the case, they said. There's some question of what the law's language might mean for transactions that take place before 2025 involving existing JSAs, Wilkinson Barker broadcast attorney David Oxenford said in a blog post. “The new legislation says that, with respect to such grandfathered agreements, the rules that were in effect the day prior to the FCC’s ruling will remain in effect. How this will affect the transfer of stations that are involved in such agreements remains to be seen,” he said.

The appropriations law is unlikely to lead to the NAB backing off its challenge of the commission's JSA rules in the 3rd U.S. Circuit Court of Appeals, a broadcast executive told us. Since the rules will still apply in 2025, broadcasters still have a reason to want to get rid of them, and the longer deadline doesn't change the broadcaster argument that the FCC violated administrative procedure in approving the attribution rules, the executive said. The NAB wouldn't comment on the court case, but a spokesman praised the JSA provision in the appropriations law. “It is time for the FCC to recognize that the media landscape has changed dramatically since three networks were the dominant news and entertainment source in the 1970s. The world has changed, and it’s long past time for the FCC to change with it.”

The delayed unwinding should have a positive effect on the market's perception of broadcast groups that have a lot of sharing agreements, BIA/Kelsey Chief Economist Mark Fratrik said. Unwinding such agreements would likely have been costly and difficult, and those companies are now spared that expense, he said. The long deadline means they could be spared it indefinitely, he said. “By 2025 the media landscape will be completely different,” Fratrik said. Broadcast ownership rules may no longer apply, or cord cutting or mobile viewing may dominate the market by then, he said, saying 2025 is so far in the future that the prospect of having to unwind those agreements then doesn't affect their current balance sheets much.