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FCC proposes tougher rules on joint ad sales at local TV stations

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WASHINGTON — Local television stations would face tougher rules prohibiting them from joining together to sell advertising and to negotiate with cable companies under a plan by the nation's top communications regulator.

The proposals on joint sales and joint negotiations were unveiled Thursday as the Federal Communications Commission prepared to start another broad review of its media ownership rules.

"Collectively, these actions will not only preserve values like competition, diversity and localism, they are simply the right thing to do," FCC Chairman Tom Wheeler said. "They would update our rules to reflect new realities, and they protect consumers from practices that can drive up their bills."

He wants his colleagues to approve the new restrictions at their March 31 meeting and begin the lengthy process of soliciting public comment on whether to make other changes to media ownership rules.

Wheeler, a Democrat, proposed keeping the major rules in place, including a ban on joint ownership of TV stations and newspapers in the same market.

The FCC often grants waivers to that prohibition, such as with Tribune Co.'s ownership of the Los Angeles Times and KTLA-TV Channel 5 in L.A. But Wheeler wants to tighten some restrictions on broadcasters.

One change states that the FCC would deem a broadcaster to have an ownership stake in any station for which it sells 15% or more of that station's advertising time.

Last month, the Justice Department told the FCC that joint sales agreements, under which stations formally team up to sell advertising, allowed broadcasters to circumvent rules limiting the number of stations they could own in a market.

In more than two-thirds of such agreements, one station sold all of the advertising time of the other, Wheeler said. That made it a "legal fiction" that the stations were independent, he said.

Counting such agreements against the FCC's ownership caps, as is done with radio stations, would severely limit the practice, though the agency has said it would consider waivers.

"The real loser will be local TV viewers because this proposal will kill jobs, chill investment in broadcasting and reduce meaningful minority programming and ownership opportunities," said Gordon Smith, president of the National Assn. of Broadcasters.

A spokesman for FCC Commissioner Ajit Pai, a Republican, called the plan "a dagger aimed at the heart of small-town broadcasters."

Stations would have two years to end the agreements or obtain waivers under Wheeler's plan.

The FCC chairman also wants to prohibit any of the top four TV stations in a market from joining together to negotiate with cable companies for fees to carry their broadcast signals, a process known as retransmission consent.

Congress intended such negotiations to be done one on one, he said. But increasingly large stations in the same market have banded together to bargain with cable TV providers, causing total retransmission fees to skyrocket from $28 million in 2005 to $2.4 billion in 2012, the FCC said.

There are signs that the higher fees are being passed on to cable TV customers through increased fees, the agency said.

"FCC Chairman Wheeler deserves high praise for addressing the broken retransmission consent market and moving to correct one of its most serious flaws — the collusion practiced by dozens of TV station owners, [which] are supposed to be competing with one another," said Matthew Polka, president of the American Cable Assn., an industry trade group.

Wheeler also wants the FCC to consider rules for deals known as shared services arrangements, which enable TV stations in the same market to share employees, administration and equipment such as news helicopters.

The agency will consider what types of arrangements TV stations must disclose.

jim.puzzanghera@latimes.com

Copyright © 2014, Los Angeles Times
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