FCC bans local TV stations from forming advertising partnership

The Federal Communications Commission on Monday banned television stations in the same market from forming advertising partnerships in an effort to preserve diversity and competition in local media.

In a 3 to 2 vote along party lines, the FCC tightened restrictions on “joint sales agreements” that permit one station to buy advertising time from another. Current rules prohibit a firm from owning multiple stations in the same market. But big media companies have skirted that rule by keeping ownership of individual stations separate and permitting a single firm to handle the advertising.

Under the rules adopted Monday, stations that buy at least 15 percent of another station’s advertising will be considered to have an impermissable ownership interest in that station.

Too much power in the hands of a few “stacks the deck against small companies seeking to enter the broadcast business,” FCC Chairman Tom Wheeler said.

The two Republican commissioners protested the regulation, saying it would unfairly burden stations struggling to keep up with competition from cable, satellite and Internet video providers. The National Association of Broadcasters also criticized the new rules, arguing that cable firms can continue using advertising partnerships.

“For a decade, Republican and Democratically controlled FCCs have approved JSAs, which allow free and local TV stations to survive in a hyper-competitive world dominated by pay TV giants,” association spokesman Dennis Wharton said. “That model is now declared illegal, based on the arguments of pay TV companies whose collaborative, interconnected advertising sales practices make JSAs seem pale by comparison.”

Consumer advocates, however, hailed the move.

The FCC “should be commended for taking on the forces of monopoly and consolidation,” said Michael Copps, a former FCC chairman and adviser to Common Cause.

The FCC’s action will affect major broadcast holding companies such as Baltimore-based Sinclair Broadcasting and Nexstar Broadcasting, which have been snapping up local television stations in recent years. Last year, Sinclair bought eight television properties from Allbritton Communications for nearly $1 billion, including WJLA and NewsChannel 8.

In a separate vote, the FCC unanimously agreed to bar broadcasters from partnering in negotiations with cable firms on licensing fees. The agency voted to ban the biggest television stations in a local market from partnering in retransmission fee negotiations with cable firms, a tactic that has led to soaring licensing rates. When local broadcast firms band together, retransmission fees are typically 20 to 40 percent higher than deals between individual broadcast stations and cable firms, analysts say.

Retransmission fees are expected to double to more than $7 billion in 2019 from $3.3 billion last year, according to research firm SNL Kagan.

The rising fees have been passed along to consumers, the FCC commissioners said.

Follow The Post’s new tech blog, The Switch, where technology and policy connect.

Cecilia Kang is a staff writer covering the business of media and entertainment.
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