Comm. Pai releases broadcast ownership diversity research


Ajit PaiRepublican FCC Commissioner Ajit Pai has concluded Joint Sales Agreements disproportionately benefit women and African-Americans and that changing that would harm diversity in broadcast ownership—something that Jim Winston at NABOB has been championing in recent statements via JSA compromises offered to the Commission.

Said Pai: “On March 31, the FCC is scheduled to vote on a proposal to restrict television broadcasters’ use of joint sales agreements (JSAs). But the Commission currently doesn’t have the basic facts about JSAs.

For example, last week the Office of Commissioner Ajit Pai (Office) asked how many JSAs there are in the United States among television stations and how many television stations owned by women and minorities participate in JSAs. Today, we still don’t have the answers to either of these fundamental questions.

To partially fill this gap, the Office investigated whether there is a link between joint sales agreements and ownership diversity. Using publicly available sources, we estimate that:

— 43% of female-owned full-power commercial television stations currently are parties to JSAs.

— 75% of African-American-owned full-power commercial television stations currently are parties to JSAs.

“These findings raise serious questions,” Commissioner Pai said. “Why is the FCC targeting pro-competitive sharing arrangements that appear to disproportionately benefit female and African-American broadcasters? If the Commission forces broadcasters to terminate JSAs, how will that affect

diversity? Why is the FCC rushing to a vote rather than taking the time to gather basic facts and study the effect of its proposal on ownership diversity? The Commission should not accelerate the troubling trend of declining minority ownership.”

Because the FCC has not systematically collected data on joint sales agreements, the statistics set forth above are estimates. Commissioner Pai commented, “Before we vote to restrict the use of JSAs, the Commission should conduct a formal study to evaluate whether these figures are accurate and how any action on our part would impact diversity in broadcast ownership. Last year, we delayed a vote on changing our newspaper-broadcast cross-ownership rule so that a study of the proposal’s impact on minority ownership could be completed. The current proposal regarding JSAs should be held to the same standard.”

In recent meetings with the FCC, NABOB proposed a potential policy shift that might help address the abysmal state of African American commercial television station ownership. In an ex parte notice in the FCC’s Ownership proceeding, NABOB summarized a proposal that would encourage companies using JSAs and SSAs to use these agreements to promote full minority operation of television stations.

In the ex parte notice, NABOB stated the following:

–The continuing decline in minority broadcast ownership needs to be addressed in the Commission’s Quadrennial Review. Less than ten years ago there were 21 full power commercial television stations licensed to African American controlled companies in the United States, and today there are only three. Moreover, of those three stations, two were just recently acquired and are being operated pursuant to JSAs and SSAs. Therefore, there is only one full power commercial television completely operated by an African American owned licensee.

–The fact that there are so few African American owned television stations is a sad commentary on the state of diversity in the broadcast industry and calls for action on the part of the Commission to improve this abysmal ownership situation.

–The situation has caused NABOB to reconsider its previous position on JSAs and SSAs. NABOB has always opposed JSAs and SSAs, because they appeared to be mere gimmicks for group licensees to avoid the intent of the local ownership rules. However, NABOB and the Commission are faced with an unfortunate fact. Two of the three full power television stations licensed to African Americans are being operated under JSA and SSA agreements. In addition, given the precipitous fall-off of African American television ownership in the past few years, and the accelerating pace of consolidation that has roiled the television industry in recent months, there is no reason to be optimistic that the number of African American owned television stations is going to appreciably increase in the near future without some serious rethinking of the Commission’s policies.

–The Commission has indicated that it might treat all JSAs and SSAs as attributable and require that existing JSAs and SSAs be dissolved over some fairly short time period. However, if the use of JSAs and SSAs is the most likely opportunity for short term growth in the minority ownership of full power television stations, the Commission should consider waivers of the attribution policy to allow JSAs and SSAs that are designed to promote the Commission’s long term goal of creating meaningful minority ownership opportunities in the broadcast industry.

–NABOB proposed that the Commission look at JSAs and SSAs on a case-by-case basis to see if they have the potential to promote diversity of ownership. If so, the Commission could place conditions on such JSAs and SSAs such that these agreements would be structured to enable the licensee of the station to eventually operate the station without the need for a JSA or SSA. In other words, the JSA or SSA would have clear steps in place that turned over full operation of the station to the licensee over time. For example, the JSA or SSA might be structured such that at predetermined periods, perhaps annually, the licensee and the JSA or SSA operator would file a progress report with the Commission reporting on the operational changes that have occurred in the reporting period that have turned over specific responsibilities to the licensee, and the licensee would identify the personnel and other enhancements it has made to the station to take over these responsibilities.

–In this arrangement, the JSA or SSA operator would be required to turn over full control to the licensee in a set period, perhaps five years. The annual reporting to the Commission should demonstrate that the licensee was making progress toward taking control. If the annual reporting failed to demonstrate that the licensee was making progress toward operating the station, the Commission could order an early termination of the JSA or SSA. In any event, regardless of whether the licensee had fully obtained the ability to operate the station over the five year period, the JSA or SSA would terminate at the end of that period.

–This proposal would not have to replace the Commission’s plan to treat JSAs and SSAs as attributable, but would work to obtain a waiver of the attribution rule for the JSA or SSA operator. Existing JSAs and SSAs that are not amended to contain the required structured turnover of operation to the licensee would be subjected to the Commission’s contemplated attribution rule and be dissolved over a much shorter period of time. Future JSAs and SSAs that did not have the structured turnover in place would be denied at the outset.”