FCC may soon limit TV stations banding on ad sales

At the end of the month the FCC will vote on new rules to prohibit broadcast companies from controlling more than two TV stations in a market

The Federal Communications Commission (FCC) is set to consider tougher rules for local TV stations that would prohibit some joint negotiations with cable companies and limit deals between broadcasters to jointly sell advertising while sharing services.

FCC Chairman Tom Wheeler is proposing brand new rules that would count a broadcaster as having an ownership interest in any station where the owner sells 15 percent or more of advertising time. Another rule would also ban two or more broadcasters that compete against each other in the same market from banding together negotiating retransmission agreements with cable and satellite companies.

"Chairman Wheeler is taking steps to protect consumers and preserve local broadcasting by preventing the erosion of competition in local broadcast markets," the FCC told the LA Times. "These steps will curtail practices that have put upward pressure on cable prices."

Currently, rules prohibit one broadcaster from owning two TV stations in one local market, but some companies have relied on workarounds that often give one broadcaster de facto control over another station's programming and finances.

Broadcasters have argued that such arrangements are necessary to help stations better cover local news and stay financially strong.  The Chicago Tribune reported that if adopted, the FCC rules could prompt divestitures from large TV station owners such as Sinclair Broadcast Group Inc.. The FCC said it would give broadcasters two years to divest or apply for waivers, which the FCC would consider on a case-by-case basis to see if they are in the public interest.

Decreasing advertising revenue and audience numbers have pushed broadcasters to acquire more TV stations that have multiple revenue streams, including retransmission fees from cable operators who pay to carry channels. Last year, Gannett Co Inc. bought television company Belo Corp for $1.5 billion, Tribune Co. bought Local TV Holdings LLC for $2.7 billion, and Sinclair agreed to buy eight TV stations from the Allbritton family for $985 million.

These new rules would change current media ownership regulations, which the FCC is required to review every four years. As the five-member FCC votes on the rules, it will also vote to launch the 2014 quadrennial media ownership review, merging the unfinished 2010 review into the new one.

“FCC Chairman Wheeler deserves high praise for addressing the broken retransmission consent market and moving to correct one of its most serious flaws -- the collusion practiced by dozens of TV station owners, who are supposed to be competing with one another," Matthew Polka, president of the American Cable Assn., told the LA Times.

 

For more news on advertising law, check out these articles:

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Inside: Examining the use of ‘real people’ appearing in digital commercial products

Italy passes ‘Google tax’ for Internet advertisers

9th Circuit upholds advertising ban on public TV/radio

Contributing Author

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Amanda Ciccatelli

Amanda G. Ciccatelli is a Contributing Writer for InsideCounsel, where she covers the patent litigation space. Amanda earned a B.A. in Communications and Journalism from...

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