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FCC Chair Holds Line on Newspaper, Network Mergers

Stocks in this article: SBGI NXST GTN GCI

NEW YORK (The Deal) -- Federal Communications Commission Chairman Tom Wheeler wants to retain restrictions on broadcasters' ability to own daily newspapers in their markets and to continue barring mergers between the top four broadcast television networks.

Wheeler's plans were discussed by senior FCC officials during a conference call with reporters. The staffers unveiled his plans to kick off the commission's 2014 review of its media ownership rules at the agency's next open meeting, which last week was moved to March 31 from March 19.

Proposals to retain the existing cross-ownership and network ownership rules will be included in the review, which under federal law the FCC must conduct every four years. The FCC's 2010 review did not result in rule changes because then-Chairman Julius Genachowski could not muster the votes needed to pass his plan.

At the March 31 meeting the FCC will also consider Wheeler's plan to impose tough new restrictions on business partnerships that broadcasters have used to sidestep a rule barring them from owning more than one TV station in a market. Thursday, the FCC staffers confirmed that the commissioners will address restrictions on joint sales and shared services agreements between broadcasters. Under JSAs, the larger station group helps the junior partner sell advertising time. Under an SSA, the junior partner receives technical or back office support from the larger station.

The Department of Justice has backed Wheeler's plan to rein in JSAs and SSAs. The DOJ in a filing to the FCC said the practices could allow the senior partner in the agreements to exercise de facto control of the junior partner.

If approved by Wheeler's colleagues, which is likely because agency chairmen rarely bring important matters to a vote unless they are likely to pass, the new restrictions would put a damper on a strategy used by some leading TV station groups. Sinclair Broadcast Group (SBGI - Get Report), Nexstar Broadcasting Group (NXST - Get Report), Gray Television (GTN - Get Report), LIN Television, Gannett (GCI - Get Report) and others have entered JSAs or SSAs with other broadcasters in their markets as a way of being involved in operations of an additional station in individual markets.

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