Pai’s JSA Post Is Message to Democratic Commissioners, Attorneys Say

Pai’s highlighting of WLOO Vicksburg, Miss., will show the Democratic majority that possible rule changes to make JSAs attributable could have effects beyond large broadcasters, said industry lawyers. Since the offices of Pai and fellow Republican Commissioner Mike O'Rielly haven’t been included in the effort to change the rules, Pai’s statement on the FCC website (http://fcc.us/NVeAHb) may be an attempt to influence the rulemaking process, the attorneys said. “One sympathetic story can’t mask the fact that companies like Sinclair and its shell companies use these sharing arrangements to evade the FCC’s rules,” said Free Press President Craig Aaron in a statement.

"The JSA has permitted WLOO to become a real success story, enabling a new, minority station owner to reinvigorate this station and expand its local services,” said Pai about his meeting last week with the general manager of WLOO. It’s owned by historically black Tougaloo College, and involved in a JSA with WDBD Jackson (CD Feb 25 p14), Pai said. Without the sharing arrangement, WLOO would have to stop creating locally produced programming to redirect money to hiring a sales staff, and might stop existing, Pai said. “As the Commission considers proposals to restrict the use of JSAs, I hope that we will look past the rhetoric and base our decision on the facts,” he said. “Tougaloo College, for example, is no shell corporation."

A series of ex parte filings on the JSA issue indicates a large lobbying effort at the FCC on the matter by broadcasters, and several industry attorneys said ironing out the JSA item is believed to be the reason for the delay of the commission’s March meeting. It had been scheduled for earlier in March. FCC Chairman Tom Wheeler has gone out on a limb on the issue by making several statements against sharing arrangements, the attorneys said, but Commissioner Mignon Clyburn is perceived to be on the fence on the matter. Clyburn said last week that JSA rule changes are a “quandary” because she wants to preserve a diversity of voices in the market. Painting changes to JSA rules as a threat to a station owned by historically black colleges may be a message specifically designed to play on Clyburn’s concerns, the broadcast attorneys said. Pai “wants the Democrats to know this isn’t going to be easy,” said one broadcast attorney who has worked extensively on sharing arrangements. A spokesman for Pai’s office said the statement is intended to highlight an example of a positive situation involving a JSA.

Clyburn’s diversity concerns were also highlighted in a recent presentation to her and her staff from the National Association of Black Owned Broadcasters, asking the commission to allow waivers on a case-by-case basis of any new attribution rules involving minority owners. A waiver would be conditional on the applicants demonstrating that the JSA was progressing to the minority party eventually taking full ownership of the station, said NABOB Executive Director Jim Winston in an interview. The other eighth-floor offices have all requested meetings with him on the proposal, he said.

Winston’s proposal would still involve JSAs being phased out. But industry lawyers said it was possible broadcasters could support the idea because it would leave room for some JSAs to continue under the old rules, rather than making them broadly attributable as the commission is reportedly contemplating. “A fuzzy rule is better than a hard line,” said one broadcast attorney. “That’s the space where we live.” Winston said that he would hope any such rule would not be a fuzzy one.

A case-by-case review process similar to what Winston is suggesting might allow the commission to restrict the use of JSAs by large broadcasters but allow situations like the one highlighted by Pai to survive, said a broadcast attorney. “On the rare occasions that sharing arrangements do not serve as de facto transfers of all editorial and financial control of a station, there shouldn’t be a problem,” said Free Press’s Aaron. “Stations that may have a reasonable story to tell when it comes to sharing arrangements are free to ask the FCC for a waiver of whatever rules it eventually puts in place.” Such a system would likely lead to long delays in deals being approved, and a lack of clarity on how broadcasters could comply with any new rules, said an industry lawyer. “Everyone hates case-by-case."

The example of WLOO is likely not very similar to any other JSA in the country, several broadcast attorneys said. “Sharing cameras for students to use in producing their own original content seems like a good thing,” said Aaron. “Sharing reporters so that the same stories are just repeated on two stations -- accompanied by massive newsroom cuts -- is a another thing altogether. A few good apples won’t unspoil the bunch."

Former FCC Chairman Richard Wiley weighed in on the positive points of JSAs, in a post on the blog of his law firm, Wiley Rein (http://bit.ly/1hNq75W). “Sharing agreements, by affording better content and more choices at the local level, can be very much in the public interest,” said Wiley, now a broadcast attorney. Instead of a broad plan to make them all attributable, the commission should enact targeted rules “aimed at ensuring that relationships between sharing partners are arms-length and that the licensees of weaker stations maintain ownership direction and control,” Wiley said. “By imposing a blanket attribution restriction on all JSAs, the Commission would be wielding a hatchet where a surgical scalpel could suffice.” The agency should grandfather in existing arrangements that wouldn’t otherwise be in compliance, Wiley said. “Those who structured deals in reliance on the current regulations should not be penalized by a short window to unwind them.”