Rockefeller Suggests FCC Put Off SSA Approvals Until After GAO Study

"Various groups have raised concerns that some SSAs are used in broadcast sales to avoid violating the FCC’s media ownership rules,” Rockefeller said. He has asked the GAO to do a use-and-impact study of such agreements and other broadcaster coordination arrangements (CD May 15 p19). “While I am not taking a position on any particular transaction, I believe that the FCC should collect all information necessary to understand the scope and effect of the SSAs envisioned by the deals,” he wrote Wheeler. It may be wise for the commission “to wait to approve any pending transaction that involves SSAs or related arrangements until GAO has completed its study and issued its report,” he added. GAO didn’t respond to a request for comment on the status of the study.

Free Press backs the letter. “Fake owners shouldn’t hold real broadcast licenses,” Policy Director Matt Wood said in a statement (http://bit.ly/1gfFAtX). “It’s time for the FCC to ban the use of shell companies and covert consolidation ... It should close the many loopholes that have allowed these companies to dodge its rules, and it should stop the latest wave of consolidation."

NAB continues to support use of SSAs. The record shows that the agreements “result in more local news and stronger finances at struggling stations that otherwise might have gone out of business,” said a spokesman in a statement. “The pay-TV lobby has targeted SSAs for one reason only: to eliminate competition from a TV provider that provides a free and local service."

Rockefeller’s is a letter that any FCC chair would have to weigh, said David Honig, president of the Minority Media and Telecommunications Council. Rockefeller isn’t referencing particular deals, but “looking at this rather as a matter of national policy,” said Honig in an interview. Rockefeller isn’t calling Wheeler in for a hearing, said Honig. “This is the kind of language you'd use in writing to a colleague who you know and respect to give him the courtesy of knowing that he’s paying attention as well.” Waiting for the GAO study is critical, Honig said. The FCC has often been criticized by appeals courts “for rendering judgments for which there’s little empirical evidence,” he said. If a reviewing court has to review a decision that has GAO support, “then it’s more likely to give the FCC ... a benefit of the doubt and allow them to exercise their discretion,” Honig said. The GAO is drilling deep and being very impartial in the study, he added.

The FCC gets letters all the time and there are lots of congressmen wanting lots of different things and the commission can’t make everybody happy, a broadcast attorney said. However, this letter is coming from somebody at the top of the Commerce Committee, “so I don’t think you just blithely ignore him either,” he said. The attorney said he was concerned about Rockefeller’s suggestion that the FCC wait until the GAO’s study is complete. By saying this, the attorney said, “you've kind of taken a position on a transaction."

A GAO report isn’t binding, so to speak, the attorney said. “When people have transactions that comply with the FCC’s rules, the FCC needs to process them under the rules,” he said. The GAO doesn’t do field research, he said. “There isn’t any great scientific result that is likely to come out of this study.” It will be a summary of industry people’s opinions and “that’s not necessarily the greatest thing to base legal actions on,” said the lawyer.

Rockefeller’s views will likely be influential with the mostly Democratic FCC, wrote Guggenheim Partners analyst Paul Gallant to investors Tuesday. The letter “reinforces our cautious view for the future mergers and acquisitions headroom of companies like Sinclair, Gannett and Tribune that are likely to need JSAs (joint sales agreements) for at least some types of future acquisitions,” he said in a research note.