GAO Report Could Serve Both Advocates, Opponents of Tighter Ownership Rules
A GAO report on broadcaster sharing agreements issued last week (http://1.usa.gov/1nOn1nv) could be used to support arguments both for and against FCC regulation of those arrangements, public interest and broadcast attorneys told us. The report concluded that the FCC has little data on the prevalence of such agreements, and that the agency needs to decide if it must have that information to regulate them (CD July 29 p14). “Without data and a fact-based analysis of how agreements are used, FCC cannot ensure that its current and future policies on broadcaster agreements serve the public interest,” said GAO. The FCC’s lack of information on such arrangements could be used to challenge the foundation for limits on joint sales arrangements, or could serve the interests of public interest groups challenging the FCC closure of the 2010 quadrennial review, attorneys told us.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
FCC and industry officials “were unable to identify a central data source that tracks all broadcaster agreements,” said GAO. It spoke with analysts and other sources that attempt to track the deals. FCC and industry representatives told GAO that sharing agreements “are being used more often in recent years,” driven by “declining advertising revenues and an increase in station acquisitions and mergers,” the report said. GAO repeatedly pointed to a lack of information as limiting its and the FCC’s conclusions about sharing deals. “The lack of comprehensive data and the long delays in completing FCC’s review makes it difficult to objectively determine the effect of the agreements,” said the report.
The FCC Media Bureau agrees that the commission should collect more ownership data, said Bureau Chief Bill Lake in a letter to GAO included in the report. The FCC 2014 quadrennial review is an “initial step” in gathering that data, Lake said. Since the FCC had already begun the review when the GAO report was issued, the report and Lake’s response don’t “advance the ball very much,” said Andrew Schwartzman, senior counselor at Georgetown Law’s Institute for Public Representation. Schwartzman is a longtime opponent of broadcaster sharing arrangements and represents Prometheus Radio Project in its court challenge of the FCC closing of the 2010 quadrennial review.
Prometheus Radio’s court challenge is partially based on the argument that the commission should have required disclosure of sharing arrangements in the 2010 review (CD June 2 p3). Though comments on such disclosure rules are part of the 2014 review -- and are due at the FCC Wednesday -- Schwartzman said it was “arbitrary and capricious” for the agency not to have required them earlier. The GAO report “underscores” the Prometheus position, he said. “We're happy to have another voice agreeing that the FCC needs to gather this data,” said Free Press Policy Counsel Lauren Wilson. Free Press has also advocated for more regulation of sharing agreements.
Advocates for the broadcaster view of sharing agreements see the report in the opposite light. Since it concludes that the FCC doesn’t have sufficient data on sharing agreements, it could be used by broadcasters in their challenge to the quadrennial review and FCC rules on JSAs, the attorneys said. Though the report wouldn’t be definitive evidence for overturning the rule, its being by GAO gives it weight and it could be evidence that the rules are arbitrary, the attorneys said. Federal agencies must have a basis for their rules, said an attorney who deals extensively with sharing arrangements.
The GAO conclusion that the FCC needs more data shouldn’t be taken to mean it doesn’t have enough to make rules on sharing agreements, Wilson and Schwartzman told us. The commission has enough information to conclude that sharing agreements have negative consequences, even if it doesn’t know how many there are, Schwartzman said. He pointed to information entered into the record in the 2010 quadrennial review and studies by Free Press as providing clear evidence for the commission’s tightening of sharing rules: “They don’t need to know more to make them attributable."
The data gathered by GAO is evidence against tighter regulations for sharing agreements, said Wilkinson Barker broadcast attorney David Oxenford. The study shows sharing arrangements as being more common in small markets than larger ones, and points to revenue as the cause, he said. Stations in top designated market areas average 20 times the revenue of those in the smallest ones, Oxenford said. “With these differences, it’s no wonder that the only way that all but the most dominant stations in small markets can survive with significant program commitments (like news programming) is to combine with other stations in their market,” he said in a blog post (http://bit.ly/1pw9hfI). That argument is backed up Sinclair’s decision to shut stations down (CD July 26 p1) when it concluded that the FCC would not approve the deal to buy Allbritton if it involved sharing agreements, Oxenford said. He told us the report supports arguments that the FCC shouldn’t restrict sharing agreements for small stations unless it adjusts the ownership cap.