Media Bureau’s SSA Order Disappoints Both Sides
Both sides of the debate on shared services agreements were disappointed in the timing of release of a Media Bureau order on a Honolulu SSA, and by what it said. Lawyers who filed the petition asking the commission to bar the deal said its release the day after Thanksgiving seemed designed to avoid attention. Foes of separately owned stations sharing news and other assets said the bureau should have found the SSA involving a major TV broadcaster and an investment firm violated rules barring two top-four rated stations from having common ownership within any market. Lawyers representing other TV stations said they worry that when licenses come up for renewal, broadcasters in SSAs could face questions because of what the order said about the Honolulu pact.
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The FCC shouldn’t have waited until Friday (CD Nov 28 p4) to release the order (http://xrl.us/bmjp5j) on an emergency petition filed in October 2009, said officials representing the Media Council Hawaii. It sought to block the SSA between two Raycom Media TV stations and one owned by MCG Capital Corp., but the deal took effect later that month. “It seemed like the old [Chairman Kevin] Martin FCC, when they released decisions at like midnight,” said council President Chris Conybeare, who works at the University of Hawaii and like all other members of the nonprofit isn’t paid for his work. “I was troubled” that it took two years to make the decision, and that “the order was released on the Friday morning after Thanksgiving,” he said. “I just felt that was playing too fast and loose.” A bureau spokeswoman declined to comment.
The order left industry lawyers concerned, because it said the SSA could be reviewed when the licenses of the stations involved come up for renewal. The stations are: Raycom’s NBC affiliate KHNL, its KGMB whose affiliation changed to CBS from MyNetworkTV as part of the SSA, and MCG’s KFVE, whose affiliation changed to MyNetworkTV. KFVE and KHNL also swapped call letters in the deal, in which Raycom agreed to pay $22 million, while getting $208,333 monthly to manage the station now called KFVE. Representatives of MCG and Raycom had no comment.
The bureau said several times in the order that it could look at the impact of deals such as SSAs on competition and diversity in considering whether to renew a TV stations’ licenses. Industry lawyers worry that SSAs, which the commission has previously assented to, could haunt licensees. “TV Shared Services Agreements: Danger Ahead!” read the title of a Sunday post by Fletcher Heald communications lawyer Steve Lovelady on the broadcast law firm’s blog (http://xrl.us/bmjp6x). “Sure, says the Bureau with its regulatory eyebrow raised to new heights, what you're doing may be legal and all, but that doesn’t mean we won’t try to find a way to whack you anyway.”
The order makes “clear that the FCC now recognizes there are serious issues associated with these practices” of SSAs, said a spokesman for the American TV Alliance. It represents most major pay-TV companies other than Comcast and seeks changes to retransmission consent rules. “We're hopeful that the commission will take steps to curb abusive practices in either the media ownership or retrans proceedings,” the spokesman said. Alliance member American Cable Association is “pleased the FCC will take into account the duopoly rule issues the Raycom arrangement raises, and also consider within the context of individual licensing proceedings whether coordinated practices are consistent with the public interest,” ACA President Matt Polka said Monday. “ACA will be encouraging its members to take detailed notes about their dealings with the station owners in markets where separately owned broadcast stations coordinate their retransmission consent negotiations."
The council will consider filing comments on retrans, a proceeding it hasn’t much participated in, and will participate in the media ownership review to press its SSA quest, said Conybeare and Professor Angela Campbell of Georgetown University’s Institute for Public Representation. It represented the council and is almost certain to file an application for review by the full commission of the bureau’s order, they said. A draft rulemaking notice for the quadrennial review of media ownership asks about SSAs, without drawing any conclusions about them and similar news-sharing deals (CD Nov 22 p8).
SSAs and similar pacts date to at least 2004, when a footnote in Friday’s order notes the bureau approved a similar agreement involving Malara Broadcast Group, said industry attorney Jack Goodman. He said the bureau at least ought to say that it won’t challenge in renewals any instance where the commission previously knew about and approved an SSA when a license was assigned to another company as part of the deal. “The tenor is unpleasant” in the order, Goodman said: “There is an element of `I'm shocked to find out there’s gambling going on here.'” That small and mid-size markets can’t have more than one TV station jointly owned, no matter the station’s size, shows why the commission ought to redo the duopoly rules in its current ownership review, said Goodman.
SSA foes don’t want to wait until Jan. 2, 2015, when objections to any renewal of a Hawaii TV station are due (http://xrl.us/bmjp6i), to have their specific objections to the Raycom-MCG deal dealt with. “If we waited for three years to file a petition to deny, they will have been together for five years,” Campbell said of the three Honolulu stations: “We just know the commission is not going to require them to divest then” during the renewal. Still, she said the order’s language on license renewals will generally give broadcasters “some pause, since it left a crack open” to find SSAs aren’t OK.