FCC Passes Limits on Advertising Deals

The Federal Communications Commission tightened regulation on a rapidly changing media landscape Monday by adding limits on retransmission consent deals and joint sales agreements for advertising, but it might take until 2016 for the commission to finalize updates of its media ownership rules.

The FCC's contentious 3-2 vote added limits on joint sales agreements (JSAs) that allow one station to purchase advertising time from another station. Current rules limit the ability of a company to own multiple stations and newspapers in the same market, which is an attempt to preserve the voice of local media and the ability for all stations to compete.

Stations that buy 15 percent of another station’s advertising now will be interpreted as having ownership interest in another station, FCC Chairman Tom Wheeler said.

“JSAs have been used, skirting the existing rules, to create market power that stacks the deck against small companies seeking to enter the broadcast business,” Wheeler said.

[READ: FCC to Vote on Media Ownership Rules This Month]

The commission’s Media Bureau can grant a waiver to allow a joint sales agreement between stations if it determines that deal is “in the public interest” within 90 days of a request, said Bill Lake, Media Bureau chief. When used improperly, joint sales agreements give stations the “ability and incentive to influence” another station’s programming, Lake said.

The commission also passed a rule that limits the top four stations in the same market from negotiating retransmission consent deals, in an effort to protect consumers from stations colluding to raise prices for cable providers that wish to rebroadcast programs.

The FCC again will be late reviewing its media ownership rules, which may factor in the changes to newspaper and broadcast industries brought by the Internet. The Media Bureau now has a deadline of June 2016 to submit final recommendations for cross-ownership of media properties. Rules on media ownership are supposed to be reviewed every four years, but the last review occurred in 2006. Updates have been delayed by disagreements, including a 2008 vote by members of Congress that blocked the FCC's proposed changes.

[ALSO: FCC Will Rewrite Net Neutrality Rules]

FCC Commissioner Ajit Pai said the existing media ownership rules are “not in the public interest,” as he and other Republicans have urged the commission to remove regulatory limits and enable more opportunities for broadcast stations to stay funded through deals with other stations.

The rules on cross-ownership of newspapers and broadcast stations in the same market were created in 1975 when “the information marketplace was nothing like it is now,” Pai said, arguing that newspapers could get more funding from investors if ownership limits were lowered.

“Cross-owned TV stations provide their viewers with more news than do other stations,” Pai said. “It doesn’t make sense to single out broadcasters and prevent them from operating newspapers.”

Merger moves during 2013 included plans by the Tribune Company – which publishes the Los Angeles Times and the Chicago Tribune – to purchase TV stations.

Stations in smaller markets must cut costs, and JSAs “are a vital mechanism” to help stations in smaller broadcast markets do so, Pai said. The waiver exemption in the order is “vague,” making it a “cold comfort” for stations that want to keep JSAs in place, he said.