An examination of Local Market Agreements


Dave SeylerFCC Commissioner Ajit Pai (R) and Rep. Billy Long (R-MO) collaborated in an editorial published in Broadcasting and Cable defending the practice of local television stations entering into JSAs and criticizing the FCC’s sudden decision to undo them. RBR-TVBR takes a look at their history.

JSAs, or joint sales agreements, are a type of LMA, or local market agreement. Another commonly used term these days is SSA, or shared services agreement.

LMAs came into popular use in the radio sector in the early 1990s, when the industry was reeling from a rough economy and the sudden infusion of small rimshot FM stations brought about by the infamous FCC Docket 80-90 that encouraged their birth.

At the time, stations were allowed to have but one AM and one FM in a market.

The use of LMAs allowed strong stations to assist weaker ones, usually in the form of providing programing services, selling ads and providing back office operational assistance.

As long as the licensee of the station receiving assistance remained in clear control of the station, and in particular assumed responsibility for all events associated with it, and handled all FCC business, the FCC had no problem with these arrangements.

The kind of LMA involving the provision of programming is commonly called a TBA or time brokerage agreement. When you think about it, it really is the same thing as paying a network to supply programming, the difference being that the programming is tailored to the needs of the one station. But if networks are allowed, why not TBAs?

A JSA is the same thing as hiring a sales representative firm. An outside company with its own employees selling advertising is OK according to the FCC. What real difference does it make if it’s a firm in New York or Chicago, or a local company that knows the market like the back of its hand?

An SSA basically involves administrative and technical services. It is akin to hiring a company to provide office help and on the tech side, engaging the services of a consulting engineer.

While all of these things are true, we can see that it can appear using a form of LMA is a way to control more stations than would be possible under local ownership caps, regardless of the fact that on many occasions, their existence may be the only thing keeping a weak station afloat.

Two television stations can be co-owned only in the largest markets – there must be a minimum of eight independent “voices” or owners in a DMA before stations can legally pair up.

The paradox is that it is in the smaller markets where paired stations are most needed. With limited advertising dollars, it is harder to make ends meet, and the chances of a station needing a helping hand from a stronger one are much greater the smaller the market. But co-ownership is impossible – usually there aren’t even eight stations, let alone eight independent voices.

LMAs, JSAs and SSAs can provide a lifeline for stations in small DMAs.

The problem is that the FCC has allowed the practice since the early 1990s, to the extent that it is now a commonly accepted way of doing business.
The sudden change in approach initiated by FCC Chairman Tom Wheeler last summer was damaging and unfair.

The NAB is vigorously challenging these rules, and we think it has an excellent chance. This is especially true given a GAO report that the FCC had not one shred of evidence to back up its sudden policy change. We suspect that the NAB legal staff will have a field day with that little piece of information.

We believe there can be problems with the practice. In a small market, the station that gets a partner will have an edge over others that cannot. But there is only so much that can be done to craft rules that will apply perfectly to each individual market situation.

The bottom line is that a station broadcasting local programming to a local audience is preferable to a station that is dark and out of business. So go get ‘em, NAB!