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FCC Expected to Vote on Shared Service Agreement Ban

FCC_304Federal Communications Chairman Tom Wheeler is expected to ask the FCC to vote on a ban of some shared-service agreements in the commissions next meeting.

The proposal is also expected to ban local stations from teaming up in retransmission negotiations.

Bloomberg reports Sinclair Broadcasting, along with several other station groups including Nexstar and LIN Media would be forced to give up some stations if the proposal passes.

Sinclair’s revenue last year from the type of arrangement the officials said Wheeler is most directly targeting amounted to $36 million, according to the filing. Sinclair reported $1.36 billion in revenue last year.

Sinclair fell 1.9 percent to $29.51 at 10:12 a.m. New York time. Nexstar lost 1.7 percent to $42.84, while Lin Media declined less than 1 percent to $23.09.

Wheeler needs to win a vote to pass the change at the FCC, where he is part of the three-member Democratic majority. The agency’s next meeting is March 31 in Washington.

American Cable Association President and CEO Matthew M. Polka said in a statement, “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 stations owners, who are supposed to be competing with one another.”

Variety reports station groups will be able to apply for a waiver from the proposed rule if they can prove their SSA serves the public interest.

According to an FCC official, the Commission is prepared to adopt a rule mandating that if one station sells 15% or more of the advertising time of a competing station, then it will be considered to have an ownership stake in that station. Station owners can apply for waivers, and will receive them if they can demonstrate how a joint services agreement serves the public interest, this officials said.

The Commission is required by law to assess its media-ownership rules every four years, but concerns over “sidecar” arrangements have been extant since 2004, according to the FCC official. More recently, the U.S. Department of Justice has voiced concerns about such practices, and in December placed added scrutiny on Gannett Co.’s then-pending acquisition of Belo Corp. The DOJ expressed concern that Gannett would help a St. Louis executive run a Belo station there, even though it already owned a top station in the market. Gannett and Belo agreed to sell the station to an independent third party instead.

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