Industry Focuses on Clyburn over JSAs

It’s possible broadcasters may have some room to work in the broader category of shared service arrangements, or through the use of waivers, either of which could provide a platform to address diversity concerns, said industry lawyers. “The question is whether all the loopholes will have been closed,” said Fletcher Heald’s Peter Tannenwald. NAB CEO Gordon Smith, meanwhile, wrote Clyburn Thursday to tell her that the association has a JSA compromise plan, which would avoid the waiver process the draft order now envisions (http://bit.ly/Ny7zvc). Under the NAB proposal, JSAs that demonstrated public interest benefits and in which licensess retained control over ad rates, had the option to hire staff, controlled 85 percent of programming and kept 70 percent of ad revenue would remain unattributed. Noncompliant JSAs would face attribution and enforcement action, NAB said. Also Thursday, Sinclair said it’s restructuring its plan to buy Allbritton Communications’ TV stations for about $985 million. (See separate report below in this issue.)

Clyburn “recognizes the need to balance competing interests,” said a spokesman for her office, and is “mindful” that JSA rule changes could affect prospective industry entrants, minorities and investors along with broadcasters. She’s weighing “localism, diversity and competition” in considering the item, the spokesman said. “There is no simple solution, and she has been quite deliberative about the options."

Clyburn is a focus of industry attention because Republican commissioners Ajit Pai and Mike O'Rielly have made their opposition to the draft order clear, and Rosenworcel is seen to support Chairman Tom Wheeler on the issue, several broadcast attorneys said. That leaves Clyburn as the obvious focal point for industry lobbying efforts to block or mitigate the rule, attorneys said.

The FCC should take the time to study the effect making JSAs attributable will have on diversity, Pai said in a statement (http://fcc.us/1hJaNFR). His office found that “43 percent of female-owned full-power commercial television stations currently are parties to JSAs,” as are “75 percent of African-American-owned full-power commercial television stations.” That information is “misleading,” said Free Press Policy Counsel Lauren Wilson in an interview. Most of the stations captured in Pai’s statistics are “shell companies” where the minority and female owners have no control over the station’s content, she said. “The FCC policies over the last 15 to 20 years are what caused the decline in media ownership,” she said.

Thursday afternoon, Wilson tweeted a link to Pai’s statistics calling them “a newfound concern for POC” (people of color). Pai tweeted in response that he’s “proud” of being Indian and “is never going to apologize for standing for what I believe is right.” Pai’s office is “disappointed that someone at Free Press has chosen to launch a racist attack against Commissioner Pai,” it said in a released response. “It is offensive to suggest that he -- the first Indian-American to serve in this position, and whose parents came to the United States with little other than their names -- does not care about people of color or any group of Americans.”

Wilson later sent Pai an emailed apology in response to his statement. “For weeks now, I have closely followed the lobbying efforts to exploit the Commission’s diversity goal and try to turn it against those it is meant to protect,” Wilson said. “In reaction, I chose my words poorly and, out of context, I can see how those words could be received in way in which they were not intended."

Remarks Tuesday from Clyburn at a Free State Foundation event seem to indicate she favors passing some form of increased JSA attribution. Asked about Monday’s plunge in broadcast stocks in response to the draft order, Clyburn said the market would “recalibrate” and adjust after the commission’s vote on March 31. She also said the commission would take into account both diversity goals and the need to uphold the rules.

Industry attention has linked Clyburn’s diversity concerns to a waiver proposal included in the draft order, which Wheeler has said would let beneficial JSAs continue unattributed. Some broadcast attorneys have said such a waiver process would be problematic to implement. Clyburn favors a waiver process with clear-cut standards and timetables, a spokesman for her office told us.

Since the JSA attribution rules are likely to become a reality, broadcasters who will be affected by the rule change are looking for ways to preserve their sharing arrangements despite the rules, said broadcast attorneys. If the commission makes shared sales staffs attributable, companies may be able to balance the cost of hiring new staff by ramping up sharing in other areas, depending on the specifics of new rules, said an attorney. Shared services agreements will be addressed only through an FNPRM at the March 31 meeting, but a recent public notice on transactions involving them seems to indicate their days are numbered as well, attorneys said. (mtayloe@warren-news.com)