What the FCC Vote on JSAs Could Mean for Small Market Broadcasters

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If you advertise your digital publication on television, or if you sell ads to companies that also advertise on TV, then you might be affected by proposed changes to Federal Communications Commission (FCC) rules having to do with joint sales agreements (JSAs). In simplest terms, JSAs are agreements between two local television stations where one station sells ad time on the other station.

JSAs help local TV stations share resources, and are helpful in small and medium TV markets, where the costs of running a local TV station are harder to offset by ad revenues than is the case in larger markets that can demand higher ad rates.

FCC rules place limits on ownership of two television stations within a single, smaller market, to prevent one media owner from having disproportionate control over local media. JSAs have long been a way for stations to save on operational costs. Radio stations have used JSAs even longer, and the 1996 Telecommunications Act relaxed local market radio ownership rules in response.

But the FCC will not be relaxing TV station ownership rules in smaller markets. In fact, FCC commissioner Tom Wheeler wants to restrict television JSAs, and proposed FCC rule changes are making for strange political bedfellows. The question is, will the changes be, as Republican FCC Commissioner Ajit Pai says, ”a dagger aimed at the heart of small-town broadcasters,” or will they ”preserve values like competition, diversity and localism [and] protect consumers from practices that can drive up their bills,” according to Wheeler?

What the FCC Plans

The specific action Wheeler wants to take is to make JSAs in which one broadcaster sells more than 15% of the advertising time for another broadcaster in the same market count toward the local television ownership rule. With this change, such JSAs would be forbidden in markets where two stations cannot be commonly owned – small and medium markets. Wheeler wants to allow case-by-case waivers of JSAs if they can be shown to promote public interest. The vote is scheduled for March 31, and it’s unclear whether Wheeler can count on the two additional votes necessary for it to pass.

The March 31 FCC meeting will be closely watched.
The March 31 FCC meeting will be closely watched.

Support for FCC Rule Changes

Broadly speaking, the FCC’s proposed action is supported by the Justice Department, local cable companies, and Congressional Democrats. The Justice Department’s antitrust division told the FCC it should treat JSAs as ”attributable ownership interests” with exceptions only granted on a case-by-case basis.

As part of the FCC rule changes, Wheeler also wants to prohibit top TV stations in a single market from collectively negotiating with cable companies for retransmission consent fees, and cable companies applaud this move, noting retransmission fees have jumped from $28 million in 2005 to $2.4 billion in 2012, driving up cable costs. Congressional Democrats, including Reps Henry Waxman and Anna Eshoo of California back the FCC, saying that JSAs can be an end-run around FCC media ownership restrictions.

Opposition to Proposed FCC Rule Changes

National Association of Broadcasters (NAB) spokesman Dennis Wharton says that JSAs ”allow local TV stations that might otherwise go out of business to increase local news and community service, and to provide robust competition to pay TV giants,” and the NAB released a statement saying proposed changes would ”kill jobs, chill investment in broadcasting and reduce meaningful minority programming and ownership opportunities.”

Fox News analyst Juan Williams says proposed rule changes will harm minority owners of TV stations, saying, ”The black-owned stations simply lack the economic scale to get adequate advertising rates to pay their bills or even buy the station,” and that JSAs are supported by the National Association of Black Owned Broadcasters.

Republicans in the House of Representatives have added language to a satellite reauthorization bill preventing the FCC from making a change to the JSA rules until it completes its required quadrennial review of media ownership reviews, effectively slowing the process, giving time for Congress to intervene to stop the rule changes.

What’s Next

As with most things in Washington, none of this will happen quickly. The FCC’s open commission meeting is March 31, and if Wheeler can get the necessary votes to approve the new JSA restrictions, the next step is a lengthy process involving soliciting public comment on changes in media ownership rules.

The media landscape has changed tremendously in the last few years, and JSAs have become integral to local television markets. If you run an online publication that advertises on TV, or if you sell ads to companies that use TV and online marketing campaigns, paying attention to the outcome of the March 31 FCC meeting is smart, so you can adjust your marketing or monetization strategy accordingly if necessary.

Update: read about the outcome of the FCC meeting here: www.fcc.gov

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RealMatch provides recruitment advertising solutions for digital publishers and media companies, helping online publications develop an exciting revenue stream that can become an integral part of an overall website monetization strategy. Let RealMatch show you how we can help.

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