The practice of combining certain operational facets of local television stations via JSAs and SSAs has been increasing during the 2013 renaissance in TV station trading, and the American Cable Association has followed Sen. Jay Rockefeller (D-WV) in calling for a review.
ACA noted in a background notes tied to its letter to FCC Chairman Tom Wheeler on the topic that the combinations are perfectly permissible under FCC rules, despite the fact that many of these same stations could not be co-owned under the rules.
ACA explained its view of the practice:
* Large broadcaster acquires a Big Four station in a DMA.
* Nominally separate, but closely affiliated company of the large broadcaster (e.g., company controlled by family member, close business associate) – a “sidecar” company – acquires another Big Four station in that same DMA.
* The large broadcaster and sidecar enter into a JSA or SSA that, among other provisions, permits the large broadcaster to negotiate retransmission consent fees on behalf of the sidecar’s Big Four station.
* The large broadcaster can now extract greater retransmission consent fees from local cable operators because it can threaten to blackout two or more Big Four stations – its own and the sidecar’s station.
ACA notes that it has been a strong participant in the FCC’s review of retransmission consent, and that it has challenged television deals that bring together stations under the JSA/SSA technique that could not be owned by one entity.
RBR-TVBR observation: A few quick points:
* Two local television stations negotiating together is not on its face illegal, and it pales in comparison to a company like Disney negotiating fees for ESPN and who knows how many other channels at the same time. We think MVPDs suffer at the hands of multiple channel producers far more than they do at the hands of a two-station local TV combo.
* One station in a JSA with another is very similar to one station hiring a sales representative, and the FCC does not generally regulate ad sales.
* One station providing programming to another is very similar to one station affiliating with a network; and the FCC does not generally regulate programming.
* One station providing technical assistance to another is very similar to one station using the services of a consulting engineer, a practice we’ve never heard the FCC challenge.
* The practice of one station providing administrative services to another is very similar to one station hiring an office management firm, again not a matter subject to FCC review.
* For all these reasons, the FCC has allowed stations to agree to contracts for SSAs, TBAs, JSAs and other similar arrangements.
* A lot of businesses are now built on a foundation of SSAs, TBAs, JSAs, and to suddenly undo this practice would cause significant and unpredictable economic damage to private businesses that have simply been playing by the rules.
