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) - On March 31, 2014, the FCC voted to slam the door shut on an important gateway to enhancing localism, viewpoint diversity and opportunities in broadcast television ownership. It did so by ruling for the first time that when a TV station provides sales and marketing support for another station in the same market under a Joint Sales Agreement ("JSA"), that station will be deemed the "owner" of the other station for regulatory purposes.
JSAs have been approved by the FCC for more than a decade and were in fact shaped by the FCC and its staff to comply with the ownership (duopoly) rules. JSAs have been an almost ubiquitous facet of the marketplace, as they are used by scores of stations in numerous markets. In fact, just two months prior to its latest ruling, in January 2014 the FCC approved Gannett Co.'s $1.5 billion acquisition of Belo Corp., and Tribune Company's $2.73 billion purchase of Local TV Holdings LLC. Both of these deals rely heavily on JSAs and other sharing agreements. At the same time, direct competitors of local television -- cable, satellite and telecom companies -- use their own JSA-like agreements, called "interconnects," to sell local advertising with no percentage limit.
I am the sole owner of Howard Stirk Holdings, which holds the licenses for two broadcast television stations: WEYI-TV in Saginaw, Michigan, and WWMB-TV, in Florence, South Carolina. Without the help of JSAs my company has entered into with Sinclair Television Group, Inc., I would not have been able to fulfill my lifelong dream of being a TV station owner. These agreements allowed me to obtain access to capital that would have otherwise been unavailable to me.
Access to capital and financing are without question the single biggest obstacles to new entrant and minority broadcast ownership. Single buyers of a TV station, especially in small- and medium-size markets, simply cannot get financing without JSAs and similar types of shared services agreements. In my experience, JSAs and shared services arrangements provided the only means over that obstacle, and are thus a critical avenue for addressing the FCC's goals of serving the public interest in fostering competition, diversity, local programming and minority ownership.
Therefore, the FCC's statement that its recent action banning JSAs is designed to "enhance broadcast diversity and minority ownership" rings hollow. Nevertheless, the FCC also invited parties to seek waivers of this new rule, promised a prompt review and stated it had "an obligation to take a hard look at whether enforcement of a rule in a particular case serves the rule's purpose or instead frustrates the public interest." I immediately filed for such a waiver -- which costs thousands of dollars in legal fees and costs -- to acquire three more station licenses in the hope of doubling from three to six the total number of full-power TV stations in the country owned by African-Americans.
My formal request for a waiver of the new JSA attribution rule in connection with the acquisition of the three additional stations was prompted by intense time sensitivity. Sinclair's acquisition of Allbritton Communications, which would require divesting three stations I intend to acquire, will close by mid-July of this year. Therefore, we requested a ruling on the waivers by the FCC before the end of May.
Contrary to its statement that it would act expeditiously with regards to waiver rulings, the FCC has done exactly nothing with my request -- essentially letting the clock run out on the opportunity. So much for its self-designated "obligation to take a hard look" at a rule that may in fact "frustrate the public interest."
Juan Williams hit the nail on the head about the FCC's doublespeak in a recent Wall Street Journal article when he wrote, "Liberals at the FCC who claim to be interested in promoting diverse broadcast ownership lose interest if the owner is a conservative like Armstrong Williams." Armstrong Williams
is the sole owner of Howard Stirk Holdings and Executive Editor of American Currentsee.