FCC rule change threatens area TV stations

A Federal Communications Commission decision in March 2014 that would have far-reaching impacts for Springfield TV stations has drawn sharp criticism, a legal fight and a call to action from lawmakers on both sides of the aisle.

In the crosshairs of the FCC are joint sales agreements, which are contracts that allow broadcasters to utilize a single sales force across multiple stations – a practice in play at partnered stations KSPR and KY3, as well as KOLR10 and KOZL. JSAs have been utilized for two decades.

“If it is implemented, it would have an impact on stations in southwest Missouri,” said Leo Henning, vice president and general manager of Nexstar Broadcasting Co. (Nasdaq: NXST), which owns KOZL-TV and provides services for KOLR10.

Henning said the rule change amounts to an overreach by a new commissioner. KOLR10 is owned by Ohio-based Mission Broadcasting Inc., and Dallas-based Nexstar Broadcasting sells advertising, among other services, under a JSA.

“The [FCC] chairman, Thomas Wheeler, was very aggressive on this. It was something he wanted to do,” Henning said. “He comes out of the cable industry. I think he skipped some steps, and there are steps you have to follow.”

According to FCC.gov, Wheeler is a 30-year cable and wireless industry veteran and a member of the Cable Television Hall of Fame. He was named FCC chairman in November 2013.

The rule change came out of an FCC review conducted every four years. A compliance deadline is set for Dec. 19, 2016. The directive extends the JSA “duopoly rule” that was established in the 1960s to prohibit market control by one or two TV station owners. Specifically, station staff members that sell more than 15 percent of advertising for another station in the same market would be prohibited.   

FCC officials say the rule change adopts a longstanding regulation in the radio industry, and it eliminates a loophole.  

But representatives of the four network stations in Springfield are crying foul. They’re supported by a National Association of Broadcasters’ suit filed in May 2014 seeking to remove the FCC’s pending order.

Central to the case is a claim the FCC did not meet the requirements of the Telecommunications Act of 1996 to review all local ownership rules every four years to determine if they were still necessary. In April, the International Center for Law and Economics filed an amicus brief to show support for the NAB case.

“(Capricious) is just the word to describe the FCC’s decision in its 2014 order to reverse a quarter century of agency practice by a vote of 3-2 and suddenly declare unlawful scores of JSAs between local television broadcast stations, many of which were approved by the FCC and have been in place for a decade or longer,” the brief states.

According to ICLE, the duopoly rule is outdated, and its proposed expansion is illegal.

“The 1996 act does not allow the FCC to retain its duopoly rule in its current form without making the statutorily required determination that it is still necessary,” the brief continues.

U.S. Sen. Roy Blunt, R-Mo., has co-sponsored legislation that would grandfather existing JSAs. The Senate Commerce Committee last month approved the bill.

“A JSA between KYTV and KSPR in Springfield enabled KSPR to upgrade to a state-of-the-art studio with digital transmission facilities,” Blunt spokesman Brian Hart said, via email, about the senator’s support.

“This arrangement enabled KSPR to produce unique local news programming in high-definition using its own news director and staff. In 2013, KSPR won the National Edward R. Murrow award for best newscast in small market television.”

KY3 Inc. General Manager Brian McDonough confirmed the Schurz Communications-owned station sells all advertising for KSPR, which has a separate owner: Springfield-based Perkin Media.

“We would need to create two separate sales staffs,” McDonough said via email.

At the stations across town, Henning said Blunt’s legislation benefits KOZL and KOLR 10 as well as a similar sales agreement in Joplin between Nexstar’s KSNF and Mission’s KODE.

“These arrangements were made when they were legal,” Henning said. “Now, (the FCC) is going back and saying you must break them up because they are no longer legal. Sen. Blunt felt that that is not really the way America works, and so grandfathering is the logical way to do this.”

If Blunt’s bill or the NAB lawsuit fail to halt the FCC move, Henning said the stations would consider dismantling the contractual relationship between Nexstar and Mission, establishing two separate sales staffs or merging operations under one ownership group.

“We’ve got options if the rule changes,” Henning said.[[In-content Ad]]