2014 Quadrennial Regulatory Review, 28995-29007 [2014-10874]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 79, Number 97 (Tuesday, May 20, 2014)]
[Rules and Regulations]
[Pages 28995-29007]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-10874]



[[Page 28995]]

Vol. 79

Tuesday,

No. 97

May 20, 2014

Part II





Federal Communications Commission





-----------------------------------------------------------------------





47 CFR Part 73





2014 Quadrennial Regulatory Review; Final Rule

Federal Register / Vol. 79 , No. 97 / Tuesday, May 20, 2014 / Rules 
and Regulations

[[Page 28996]]


-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MB Docket Nos. 14-50, 09-182, 07-294, and 04-256; FCC 14-28]


2014 Quadrennial Regulatory Review

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document completes the Commission's proceeding regarding 
the attribution of television joint sales agreements (JSAs)--in which a 
``brokering station'' sells the advertising time for a ``brokered 
station''--for purposes of applying the broadcast ownership rules. The 
Commission, consistent with its prior decision to attribute radio JSAs, 
attributes to the brokering station same-market television JSAs that 
cover more than 15 percent of the weekly advertising time for the 
brokered station.

DATES: Effective June 19, 2014, except for the amendment to Sec.  
73.3613, which contains information collection requirements that are 
not effective until approved by the Office of Management and Budget 
(OMB). The Commission will publish a document in the Federal Register 
announcing the effective date of these changes. A separate notice will 
be published in the Federal Register soliciting public and agency 
comments on the information collections and establishing a deadline for 
accepting such comments.

FOR FURTHER INFORMATION CONTACT: Hillary DeNigro, Industry Analysis 
Division, Media Bureau, FCC, (202) 418-2330. For additional information 
concerning the information collection requirements contained in the 
Report and Order, contact Cathy Williams at (202) 418-2918, or via the 
Internet at PRA@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Report and Order, in MB Docket Nos. 14-50, 09-182, 07-294, and 04-256; 
FCC 14-28, was adopted on March 31, 2014, and released on April 15, 
2014. The complete text of the document is available for inspection and 
copying during normal business hours in the FCC Reference Center, 445 
12th Street SW., Washington, DC 20554, and may also be purchased from 
the Commission's copy contractor, BCPI, Inc., Portals II, 445 12th 
Street SW., Washington, DC 20554. Customers may contact BCPI, Inc. at 
their Web site https://www.bcpi.com or call 1-800-378-3160.

Synopsis

I. Introduction

Attribution of Television JSAs

    1. The Commission finds that it has sufficient information to act 
with respect to the attribution of television JSAs, an issue on which 
comment was sought previously and renewed in the NPRM, 77 FR 2867, Jan. 
19, 2012, FCC 11-186, rel. Dec. 22, 2011, in the 2010 Quadrennial 
Review proceeding. It has looked closely at its standards for defining 
the kinds of agreements between stations that confer a sufficient 
degree of influence or control so as to be considered an attributable 
ownership interest under the Commission's ownership rules. Consistent 
with the Commission's earlier findings regarding radio joint sales 
agreements (JSAs), it finds that certain television JSAs convey 
sufficient influence to warrant attribution. As discussed below, the 
ability of a broker to control a brokered television station's 
advertising revenue, its principal source of income, affords the broker 
the opportunity, ability, and incentive to exert significant influence 
over the brokered station. For that reason, the Commission will count 
television stations brokered under a same-market television JSA that 
encompasses more than 15 percent of the weekly advertising time for the 
brokered station toward the brokering station's permissible ownership 
totals, just as it long has done with respect to radio stations. The 
Commission will not count same-market JSAs toward the brokering 
licensee's national ownership cap to the extent that it would result in 
double-counting (i.e., counting the same local population twice toward 
the national reach limit).
    2. The Commission finds that a transition period is appropriate to 
permit licensees that entered into television JSAs of this type prior 
to the release of the Report and Order to conform their practices to 
its requirements. In addition, the Commission clarifies that the JSA 
attribution rules (radio and television) do not apply to national 
advertising representation agencies. It finds that the benefits of its 
decision to count certain television JSAs as attributable interests for 
purposes of the ownership rules outweigh any costs or other burdens 
that may result from this action.

II. Background

    3. A JSA is an agreement that authorizes a broker to sell some or 
all of the advertising time on the brokered station. JSAs generally 
give the broker authority to hire a sales force for the brokered 
station, set advertising prices, and make other decisions regarding the 
sale of advertising time, subject to the licensee's preemptive right to 
reject the advertising. By contrast, a local marketing agreement (LMA), 
also referred to as a time brokerage agreement (TBA), involves ``the 
sale by a licensee of discrete blocks of time to a `broker' that 
supplies the programming to fill that time and sells the commercial 
spot announcements in it.'' Based on its ongoing review of television 
JSAs and the comments in the TV JSA proceeding, the Commission finds 
that television JSAs often involve the sale of significant portions of 
advertising time, and many involve the sale of 100 percent of the 
advertising time on the brokered station. In addition, in 2012 and 
2013, Commission staff reviewed 22 transactions involving the sale of 
31 television stations in which a JSA was part of the proposed 
transaction. In each case, the JSA provided for the sale of 100 percent 
of the brokered station's advertising time. These agreements may 
provide the brokered station a flat fee, compensation based on a 
percentage of revenues, or a mixture of both. Of the commenters that 
described their fee arrangements under their JSAs, none described fee 
arrangements that were solely based on a flat fee to the licensee. The 
Commission does not exclude this possibility since such arrangements 
appear in radio JSAs and since the Commission did not receive 
information about fee arrangements in every existing television JSA, or 
even the arrangements in the JSAs held by commenters in the TV JSA 
proceeding. Indeed, the JSA in Shareholders of the Ackerley Group, 
Inc., 17 FCC Rcd 10828 (2002) (Ackerley), involved the payment of a 
flat fee to the licensee. The agreements are often of substantial 
duration--typically five years or more, with provisions for renewal and 
cancellation by either party. Further, they are often multifaceted 
agreements that include, or are accompanied by, other agreements that 
involve the provision of programming, technical support, and/or 
operational services. In particular, the record indicates that 
television JSAs are often accompanied by various sharing agreements 
between the broker and the licensee, such as agreements that provide 
for technical assistance, sharing of studio or office space, accounting 
and bookkeeping services, or administrative services. Many television 
JSA brokers also provide programming or production services to their 
brokered stations under the JSA or related sharing agreements. In 
addition, television JSAs are often executed in conjunction with

[[Page 28997]]

an option, right of first refusal, put/call arrangement, or other 
similar contingent interest, or a loan guarantee. For example, of the 
22 transactions involving television JSAs reviewed by Commission staff 
in 2012 and 2013 all involved some type of contingent interest 
agreement. Over time, the Commission has seen an increase in the 
prevalence of television JSAs, and recently such agreements have 
received more attention in broadcast television transactions.
    4. The Commission's attribution rules seek to identify those 
interests in licensees that confer on their holders a degree of 
``influence or control such that the holders have a realistic potential 
to affect the programming decisions of licensees or other core 
operating functions.'' For purposes of the multiple ownership rules, 
the concept of ``control is not limited to majority stock ownership, 
but includes actual working control in whatever manner exercised.'' 
Influence and control are important criteria in applying the 
attribution rules because these rules define which interests are 
significant enough to be counted for purposes of the Commission's 
multiple ownership rules. An interest that confers influence is an 
interest that is less than controlling, but through which the holder 
may obtain the ability to induce a licensee to take actions to protect 
the interests of the holder, and/or where a realistic potential exists 
to affect a station's programming and other core operational decisions. 
The attribution rules determine what interests are cognizable under the 
Commission's broadcast ownership rules; they are not ownership limits 
in themselves.
    5. The Commission first adopted attribution rules for LMAs 
involving radio stations in the same geographic market in 1992. The 
Commission was concerned that absent such rules significant time 
brokerage under such agreements could undermine the Commission's 
competition and diversity goals. The Commission found that the ability 
to control the programming on a non-commonly owned in-market radio 
station allowed the brokering party the ability to unduly influence the 
brokered station. In 1999, the Commission extended the attribution of 
time brokerage agreements to include LMAs between television stations, 
finding that the rationale for attributing same-market radio LMAs 
applied equally to same-market television LMAs. In its 1999 Attribution 
Order, 64 FR 50622, Sept. 17, 1999, FCC 99-207, rel. Aug. 6, 1999, the 
Commission considered also whether to attribute certain radio and 
television JSAs. The Commission acknowledged that same-market JSAs 
could raise competitive concerns but stated that, at that time, it did 
not believe that such agreements conveyed a sufficient degree of 
influence or control over station programming or core operations to 
warrant attribution, adding that JSAs could promote diversity by 
``enabling smaller stations to stay on the air.'' In the 2002 Biennial 
Review Order, 68 FR 46286, Aug. 5, 2003, FCC 03-127, rel. July 2, 2003, 
however, the Commission revisited its earlier decision not to attribute 
same-market radio JSAs. It concluded, on reexamination, that influence 
or control over the advertising revenue of a brokered station, 
generally the principal source of a licensee's income, afforded the JSA 
broker, like the LMA broker, the potential to exercise sufficient 
influence over the core operations of a station to warrant attribution. 
As it had with respect to both radio and television LMAs, the 
Commission adopted a 15 percent weekly threshold for determining 
whether to attribute same-market radio JSAs. It also concluded that 
same-market radio JSAs may sufficiently undermine the Commission's 
interest in broadcast competition to warrant limitation under the 
multiple ownership rules. As the Commission had not explicitly included 
the issue of attribution of television JSAs in the underlying Notice of 
Proposed Rulemaking, it did not address television JSAs in the 2002 
Biennial Review Order, but rather indicated that it would issue a 
further Notice of Proposed Rulemaking to seek comment on whether or not 
to attribute television JSAs. It subsequently did so in the TV JSA 
NPRM, 69 FR 52464, Aug. 26, 2004, FCC 04-173, rel. Aug. 2, 2004.
    6. In the TV JSA NPRM, the Commission tentatively concluded that 
television JSAs have the same effects in local television markets that 
radio JSAs do in local radio markets and that the Commission should 
therefore attribute television JSAs. The Commission noted that it had 
no reason to believe that the terms and conditions of television JSAs 
differ substantially from those of radio JSAs. The Commission asked, 
however, whether differences existed between television and radio JSAs 
such that it should not attribute television JSAs, and it asked whether 
television JSAs should be grandfathered if they were deemed 
attributable.
    7. The commenters in response to the TV JSA NPRM consist entirely 
of broadcasters, nearly all of whom urge the Commission not to 
attribute television JSAs. Commenters urge the Commission to reaffirm 
the 1999 determination that television JSAs, unlike LMAs, do not convey 
a sufficient degree of influence or control over broadcast stations to 
warrant attribution. They argue that the record does not support a 
change in policy, and that the Commission must give a reasoned account 
if it now rejects the previous conclusion.
    8. The Commission sought comment generally on attribution of 
agreements among co-market stations in the Notice of Proposed 
Rulemaking in the 2010 Quadrennial Review proceeding, specifically 
referencing the Commission's ongoing proceeding regarding the proposed 
attribution of television JSAs. Many parties addressed attribution of 
television JSAs in that proceeding. For example, UCC et al.'s comments 
in the 2010 Quadrennial Review proceeding support the Commission's 
tentative conclusion in the TV JSA NPRM that certain same-market 
television JSAs should be attributed. Numerous public interest groups, 
trade associations, and unions support the Commission's proposed 
attribution of certain television JSAs and its inquiry into SSAs. Many 
broadcast commenters, however, assert that television JSAs should not 
be attributable or urge the Commission to seek additional comment on 
television JSAs before issuing a decision on attribution.
    9. On February 20, 2014, DOJ submitted ex parte comments strongly 
supporting the Commission's tentative conclusion to attribute 
television JSAs. DOJ, noting its extensive and growing experience 
reviewing television JSAs in the context of its antitrust analysis of 
broadcast television transactions, asserts that television JSAs provide 
incentives similar to common ownership and should be made attributable 
under the Commission's rules. DOJ asserts that failure to attribute 
such agreements could result in circumvention of the Commission's media 
ownership limits and frustrate competition in local markets.

III. Discussion

    10. The Commission believes that the record compiled in response to 
the TV JSA NPRM, as informed by its ongoing transaction review and 
comments in the 2010 Quadrennial Review proceeding, provides it with 
relevant and sufficient information from which to act. Since the 
release of the TV JSA NPRM, the Commission has continued to review 
JSAs, often in conjunction with applications for approval to transfer 
or assign a television station license. The Commission notes that 
during the pendency of this rulemaking proceeding, the Media Bureau

[[Page 28998]]

continued to consider and approve applications for the assignment of 
license or transfer of control of broadcast television licenses that 
complied with the Commission's rules in effect at the time of the 
transfer or assignment, some of which included television JSAs. In the 
absence of a Commission rule attributing television JSAs, the Bureau 
reviewed and approved transactions that it determined did not raise 
questions of de facto control and where, in its opinion, the licensee 
of the brokered station retained a sufficient interest in the 
advertising revenue received from a JSA such that it retained control 
and remained invested in the successful operation of the station. 
However, there has never been a Media Bureau policy generally 
applicable to JSAs that the television licensee receive a specified 
percentage of the revenues under a JSA and, indeed, there is no 
requirement that JSAs even be approved by the Commission. The Bureau's 
approval of particular transactions in no way limits the Commission's 
ability to change its attribution rules going forward or to adopt a 
reasonable transition period for parties to ensure that existing 
television JSAs comply with the new attribution standard. Therefore, 
reliance on the Media Bureau's approval of transactions that included a 
JSA during a period when there was no television JSA attribution rule 
is misplaced. The Media Bureau applied the attribution rules in effect 
at the time it processed those applications. Indeed, the Bureau's 
decisions in cases involving television JSAs often referred to the 
pending TV JSA proceeding and reminded parties that the Bureau's 
actions were subject to any subsequent Commission action in that 
proceeding. Even assuming that the Bureau's past decisions could be 
read to mean that same-market television JSAs, generally speaking, do 
not confer influence over programming decisions if the brokered station 
retains at least 70 percent of the station's advertising revenues, the 
Commission rejects that premise and reaches a different conclusion in 
the Report and Order. The Media Bureau's review of future transactions 
will be guided by the new rule adopted herein. Based on the 
Commission's ongoing experience reviewing JSAs, it observes that 
neither the terms and conditions of JSAs as described in the comments 
nor their competitive impact on markets appear to have changed 
significantly. In addition, the submissions in the 2010 Quadrennial 
Review proceeding regarding television JSAs are consistent with the 
comments filed in the television JSA proceeding. Furthermore, some of 
those more recent submissions that advocate an additional formal 
comment period primarily seek an opportunity to provide additional 
argument about the potential public interest benefits associated with 
combined station operation under television JSAs and the existence of 
increased competition for broadcast television stations from non-
broadcast video alternatives. The Commission finds, however, that those 
arguments bear on the issue of liberalization of the local television 
ownership rules and not on the question of whether JSAs give the 
brokering station a degree of influence and control that rises to the 
level of attribution, which is the sole focus of the inquiry here. As 
discussed below, the asserted public interest benefits of common 
ownership, operation, or control of stations in the same local market, 
and the issue of whether competition from other video alternatives 
warrants relaxation of the ownership rules, are appropriately raised 
and considered in the context of setting the terms of the local 
television ownership rule. Moreover, the record already includes 
numerous comments on those points with regard to television JSAs. In 
addition, the Commission's decision is informed by its experience with 
the attribution of radio JSAs, which has operated to ensure that the 
goals of the radio ownership rules are not undermined by 
nonattributable agreements conferring the potential for significant 
influence over a station's core operating functions. Accordingly, the 
Commission finds that the existing record provides a sufficient basis 
on which to make the decision herein.
    11. On further examination of the issue, the Commission finds that 
television JSAs, like radio JSAs and radio and television LMAs, have 
the potential to convey significant influence over a station's 
operations such that they should be attributable. This is consistent 
with the Commission's more recent determination in 2003 to attribute 
same-market radio JSAs, which reversed the Commission's earlier 
determination in the 1999 Attribution Order that same-market radio JSAs 
should not be attributable. In Prometheus Radio Project v FCC, 373 F.3d 
372 (3d Cir. 2004) (Prometheus I), the Third Circuit upheld the 
Commission's change of course with respect to the attribution of radio 
JSAs, finding that the Commission's reexamination of the potential for 
a radio JSA to convey the ability for a brokering station to influence 
a brokered station satisfied the Commission's obligation to provide a 
``reasoned analysis'' for the change in policy. Consistent with the 
Commission's analysis supporting attribution of radio JSAs and with the 
tentative conclusion in the TV JSA NPRM, it now finds that television 
JSAs involving a significant portion of the brokered station's 
advertising time convey the incentive and potential for the broker to 
influence program selection and station operations. Thus, as the 
Commission concluded in 2003 with respect to radio JSAs, it concludes 
that the Commission's previous view that television JSAs do not convey 
sufficient influence to warrant attribution was incorrect. Whether a 
JSA provides the brokered station a fixed fee or a percentage fee, the 
broker's revenues depend on its ability to sell the ad time for the 
brokered station, which depends in turn on the popularity of the 
brokered station's programming. The broker therefore has a strong 
incentive to influence the brokered station's programming decisions. As 
Hubbard states, ``the assumption of market risk associated with local 
advertising sales, and the ability to create greater market strength in 
sales, necessarily influences programming decisions. In commercial 
broadcasting, programming and sales are inextricably connected.'' In 
addition, to the extent it transfers market risk to the brokering 
station, the licensee of the brokered station will have less incentive 
to maintain or attain significant ratings share in the market. In 
upholding the Commission's attribution rules in the past, courts have 
held that the Commission reasonably designed those rules to identify 
interests that provide the holder with the incentive and ability to 
influence or control the programming or other core operational 
decisions of the licensees, rather than to address individual instances 
of actual influence or control.
    12. The Commission finds that JSAs provide incentives for joint 
operation that are similar to those created by common ownership. For 
example, when two stations are commonly owned, the paired stations may 
benefit by winning advertising accounts that are new to both of them 
(rather than by having one co-owned station win an account from the 
other) and, possibly, by being able to raise advertising prices above 
those that they would obtain if the stations were independently owned. 
A broker selling advertising time on two stations, one of which is 
owned by the broker, has incentives similar to those of an owner of two 
stations to coordinate advertising activity between the two stations. 
JSAs thus provide strong incentives for coordination of

[[Page 28999]]

advertising activities rather than competition for advertising revenue.
    13. In addition, contrary to some commenters' claims, the 
Commission's experience indicates that television JSAs can be used to 
coordinate the operations of two ostensibly separately owned entities. 
For example, in Ackerley, the Commission found that the intertwined 
non-attributable television JSA and time brokerage agreement were 
``substantively equivalent'' to an attributable LMA. Many commenters 
assert that their agreements are structured so that the brokered 
station maintains control of its programming and other core operations. 
This argument misses the point. The issue in this proceeding is whether 
sufficient influence exists such that the interest should be counted in 
applying the ownership rules, which is a separate issue from whether 
the licensee has maintained ultimate control over its programming and 
core operations so as to avoid the potential for an unauthorized 
transfer of control or the existence of an undisclosed or unauthorized 
real party in interest.
    14. Several commenters acknowledge that a JSA broker may have some 
influence over a brokered station, but they argue that the level of 
influence is minimal because the broker is involved only in non-network 
advertising sales. They note that television JSAs differ from radio 
JSAs because television stations typically have network affiliations, 
and in such cases the network influences programming. For example, 
Entravision argues that television station affiliations are motivated 
by the economic arrangements between the licensee and the network and 
have little relationship to non-network advertising; that affiliations 
do not tend to change; that the broker cannot control the network 
arrangement; and that, given the affiliation agreements, it is 
questionable whether a JSA broker could ever control the programming 
decisions of a network-affiliated licensee. Entravision contrasts this 
with radio, where format changes occur regularly and where network 
affiliations are generally uncommon. Entravision asserts that, because 
television stations produce little of their own programming other than 
news and public affairs, there is little room for the JSA broker to 
control anything except how advertising is sold. Accordingly, 
commenters argue, a television JSA does not convey influence over 
selection of programming or other core operations.
    15. The Commission disagrees. It is possible for multiple parties 
to influence the programming decisions of a station. Television 
stations provide local and/or syndicated programming, not merely 
network programming. Thus, the fact that a station may air network 
programming does not prevent the broker from influencing the selection 
of non-network programming, be it local programming that the licensee 
of the brokered station produces or syndicated programming that it 
acquires to fill the rest of the broadcast day. The Commission notes 
further that not all stations are affiliated with national networks, 
and even among those that are, the amount of programming time provided 
by a national network can vary widely. Accordingly, the amount of non-
network advertising time available on a station is not uniformly small, 
as some commenters would suggest, and the broker's ability to influence 
the brokered station may not be meaningfully constrained, even if the 
Commission accepted commenters' arguments regarding the impact of 
network programming. Furthermore, Sec.  73.658(e) of the Commission's 
rules prohibits a station from entering into an affiliation agreement 
that does not permit the affiliate to preempt network programming that 
it finds ``unsatisfactory or unsuitable or contrary to the public 
interest'' and to substitute ``a program which, in the station's 
opinion, is of greater local or national importance.'' The JSA broker 
can potentially influence the brokered station's decision whether or 
not to pre-empt network programming, as well as its choice of non-
network programs, and has an incentive to do so given the strong 
relationship between programming decisions and sale of advertising time 
discussed above. In addition, a JSA broker can potentially influence 
the brokered station's choice of network affiliation. A broker has a 
strong incentive to ensure that the brokered station provides 
programming--and an audience--that is complementary to that offered by 
its own station in order to maximize the attractiveness of the two 
stations to advertisers. As a result, the effects of a JSA extend even 
to programming in dayparts in which the broker does not sell the 
advertising time. The more time the broker sells, the more likely it 
becomes that the broker will have the ability to act on that incentive 
and influence the selection of the brokered station's programming. 
Thus, the fact that some television stations have network affiliations 
does not undermine the finding that television JSAs confer sufficient 
influence that they should be attributed.
    16. In addition, many commenters argue that different treatment of 
radio and television JSAs is warranted because radio and television 
markets are different. They contend that television stations incur 
special costs (such as greater programming and equipment costs) that 
radio stations do not, and also face more competition than radio 
stations, because television stations compete with a greater variety 
and increasing number of alternative media outlets. Commenters also 
contend that television stations depend less on local advertisers than 
radio stations. Hubbard disagrees that market differences between radio 
and television justify different treatment of JSAs. According to 
Hubbard, there are fewer television outlets than radio outlets and 
fewer television programming networks than radio networks, so that 
``economic arrangements that tie local television stations together 
represent greater harm to diversity of programming and to competition 
than in radio.''
    17. The Commission does not agree that market or service 
differences support treating radio and television JSAs differently. 
While television stations may depend less on local advertisers than 
radio stations as a percentage of overall advertising revenue, 
advertising revenue data demonstrate that television stations do depend 
on local advertising for revenues to a significant degree. Also, 
arguments that television stations need JSAs to survive in a 
competitive television market are properly addressed in the context of 
setting the applicable ownership limits rather than in deciding whether 
television JSAs confer influence such that they should be attributed in 
the first place. Ultimately, the Commission finds that the fundamental 
nature of television JSAs and radio JSAs is the same, in that they both 
allow an in-market, same-service competitor the right to sell 
advertising time on an independently owned station and give rise to the 
same types of incentives and opportunities to influence the programming 
and operations of the brokered station. The Commission finds that the 
fee structure associated with the JSA does not change this conclusion. 
In deciding to attribute radio JSAs, the Commission made clear that the 
sine qua non of attribution is an interest ``through which the holder 
is likely to induce a licensee to take actions to protect the interests 
of the holder.'' And the Commission has calibrated attribution levels 
``based on our judgment regarding what interests in a licensee convey a 
realistic potential to affect its programming and other core

[[Page 29000]]

operational decisions.'' To be sure, the Commission has noted that some 
licensee/broker arrangements, such as radio JSAs providing for payment 
of a flat fee to the licensee, not only provide the broker with the 
incentive and ability to influence station operations and programming, 
but also deprive the licensee of a financial stake in its own station. 
The Commission has never stated, however, that the licensee must be 
deprived of all financial stake in its station to warrant attribution. 
Regardless of the fee structure, the television JSA broker has the 
ability and incentive to influence the brokered station. Accordingly, 
the Commission finds that these agreements should receive the same 
treatment for attribution purposes. In deciding to change the 
attribution policy with respect to radio JSAs, the Commission stated 
that its reexamination of the issue had led it to find that, because of 
the broker's control over advertising revenues of the brokered station, 
JSAs ``have the same potential as LMAs to convey sufficient influence 
over core operations of a station'' to warrant attribution. The 
Commission believes that the same finding applies to television JSAs, 
notwithstanding any market differences, including the presence of 
network agreements.
    18. Schurz asserts that the Commission should refrain from making 
television JSAs attributable without also relaxing the ownership limits 
in the local television ownership rule. According to Schurz, it has 
typically been the Commission's practice to find certain agreements 
attributable at the same time as or after relaxing the relevant 
ownership limits. The attribution standards are not conditioned, 
however, on specific numerical ownership limits but instead help to 
ensure that the limits are not evaded. It is therefore necessary and 
appropriate to identify practices and agreements that confer a 
sufficient degree of influence that they should be counted toward the 
ownership limits. Although at times the Commission has acted to modify 
ownership limits at the same time it has revised its attribution rules, 
this has not always been the case. Ultimately, it is not necessary to 
relax the television ownership limits in conjunction with the 
determination that television JSAs are attributable.
    19. Finally, some commenters acknowledge that television JSAs 
confer at least some influence over the programming of the brokered 
station, but argue that their public interest benefits outweigh these 
other considerations. Similarly, commenters in the 2010 Quadrennial 
Review proceeding fail to acknowledge the potential for influence over 
the programming of the brokered station, and argue that the Commission 
should refrain from attributing television JSAs because of the public 
interest benefits that result from the efficiencies that arise from 
sharing, including allegedly facilitating minority and female ownership 
and increasing diverse programming. While the Commission recognizes 
that cooperation among stations may have public interest benefits under 
some circumstances, particularly in small to mid-sized markets, these 
potential benefits do not affect the assessment of whether television 
JSAs confer significant influence such that they should be attributed. 
Rather, any such benefits should be assessed in determining where to 
set the applicable ownership limit, i.e., how many television stations 
a single entity should be permitted to own, operate, or control in a 
local television market. The Commission's reexamination of the issue 
leads it to conclude that the contention that JSAs may rescue 
struggling stations by enabling smaller stations to stay on the air is 
not relevant to the question of whether JSAs confer the potential for 
significant influence, warranting attribution. Rather, it is an 
argument that is relevant to the determination of where to set the 
ownership limits and potentially to whether a waiver of the ownership 
rules is warranted in a particular case. The same holds true for any 
other asserted public interest benefits of television JSAs. 
Nonetheless, the Commission will afford transitional relief to stations 
that are party to existing television JSAs, as discussed below.
    20. The Commission does not wish to imply that all JSAs are 
harmful. The Commission has recognized that common ownership may have 
public interest benefits in some circumstances, and it believes that 
the same may be true of JSAs. JSAs may, for example, facilitate cost 
savings and efficiencies that could enable the stations to provide more 
locally oriented programming. JSAs, however, should not be used to 
circumvent the local broadcast television ownership rules, which are 
designed to promote competition. Some assert that it is unfair to 
attribute television JSAs while allowing multichannel video programming 
distributors (MVPDs) to engage in similar conduct through local 
``interconnects.'' While there are various Commission rules relating to 
MVPD ownership, there is no counterpart in the MVPD context to the 
local television ownership rule. And the broadcast attribution rules 
are designed to ensure that parties cannot circumvent the broadcast 
ownership rules. Further, the issue of MVPD local interconnects was not 
subject to notice in either the NPRM in the 2010 Quadrennial Review or 
the TV JSA NPRM, and is beyond the scope of this proceeding. If 
interested parties perceive a problem that would be remedied by 
attribution of MVPD joint advertising arrangements, they may file a 
petition for rulemaking, which the Commission will consider. Because 
television JSAs encompassing a substantial portion of the brokered 
station's advertising time create the potential to influence the 
brokered station and provide incentives for joint operation that are 
similar to those created by common ownership, the Commission finds that 
television JSAs that permit the sale of more than 15 percent of the 
advertising time per week of the brokered station, as described in 
greater detail below, should be cognizable interests for purposes of 
applying the ownership rules.
    21. Paxson submits a declaration of Mark Fratrik, Ph.D., Vice 
President of BIA Financial Network discussing the impact on the 
Herfindahl-Hirschman Index (HHI)--a measure used to analyze a proposed 
merger's potential impact on competition--of attribution of certain of 
Paxson's own television JSAs and other television JSAs it identified in 
publicly available records. According to Paxson, the combinations 
reviewed would produce only a small increase in the HHI below the 100 
point threshold that typically implicates DOJ antitrust issues. The 
analysis, however, does not address the ability and incentive for the 
brokering station to exert influence over the brokering stations core 
operating functions. Rather, Paxson's analysis goes to the 
appropriateness of the Commission's local television ownership limits 
(or the appropriateness of a waiver of those limits), which are not 
based simply on a structural antitrust analysis, but rather on a 
broader concern with promoting competition, localism, and diversity.
    22. The Commission has consistently applied a 15 percent threshold 
to determine whether to attribute JSAs in radio markets and LMAs in 
both television and radio markets, and it finds that it is appropriate 
to use that same threshold here. This threshold was most recently 
applied in the Commission's decision to attribute certain same-market 
radio JSAs, a decision that was upheld by the Third Circuit in 
Prometheus I. A 15 percent advertising time threshold will allow a 
station to broker a small amount of

[[Page 29001]]

advertising time through a JSA with another station in the same market 
without triggering attribution, yet will fall short of providing the 
broker a significant incentive or ability to exert influence over the 
brokered station's programming or other core operating functions 
because it will not be selling the advertising time in a substantial 
portion of the station's programming. Just as in the radio context, the 
Commission believes that a 15 percent advertising time threshold will 
identify the level of control or influence that would realistically 
allow holders of such influence to affect core operating functions of a 
station, including programming choices, and give them an incentive to 
do so.
    23. Sinclair asserts that applying the 15 percent threshold used 
for radio and television LMAs and radio JSAs would be arbitrary and 
capricious because of differences in the radio and television 
marketplace. Sinclair's reference to comments DOJ filed in a prior 
attribution proceeding could be read to mean that DOJ determined that 
it was not appropriate to treat radio and television markets the same 
for attribution purposes. In fact, the cited comments merely pointed 
out that the agency had not analyzed television JSAs and therefore 
limited its comments to radio JSAs. The recent ex parte submission from 
DOJ strongly supporting the Commission's decision to attribute 
television JSAs confirms that Sinclair's reading of DOJ's earlier 
comments was mistaken. In addition, Sinclair is misguided in asserting 
that television JSAs cannot be attributed in the absence of detailed 
definitions of categories of station's advertising and programming 
time. Such elements would apply equally to radio and television LMAs 
and/or radio JSAs and have not proved necessary as components of the 
rule for successful implementation in those attribution rules. As 
discussed herein, the Commission finds that the differences between the 
radio and television markets do not warrant different treatment of 
radio and television JSAs. In addition, as discussed above, the 
Commission finds that the ability of the brokering station to control 
the advertising revenue of the brokered stations, the common component 
of JSAs and LMAs, gives the brokering station under a JSA the same 
incentive and ability to influence the brokered station's core 
operating functions as a brokering station under an LMA. For example, 
while an LMA gives the brokering station the direct ability to 
influence programming on the brokered station because the LMA broker 
provides the programming to the brokered station, the Commission has 
found that the sale of advertising time pursuant to a JSA provides the 
brokering station with the indirect ability to influence the brokered 
station's programming. As the amount of advertising revenue controlled 
by the brokering station increases, so too does its incentive and 
ability to influence brokered station's programming--including 
programming in dayparts in which the broker does not sell the 
advertising time. The Commission can see no benefit to permitting 
greater indirect influence over the brokering station's programming 
than could be achieved directly through an LMA; accordingly, the 
Commission reject Sinclair's assertion that applying the 15 percent 
threshold to television JSAs would be arbitrary and capricious. Were 
the Commission to establish a higher limit for JSAs, licensees and 
brokers could be expected to simply choose to enter into JSAs instead 
of LMAs because of the higher attribution threshold, thus creating a 
ready avenue for evading the LMA attribution rule and the ownership 
limits.
    24. In addition, Paxson briefly offers two proposals of its own: 
(1) A 35 percent all-market advertising sales standard and (2) a ``JSA-
Plus'' standard that would result in attribution in situations 
involving various levels of advertising sales, ownership options, and 
programming rights. Paxson's brief discussion, however, does not 
provide any empirical or theoretical basis upon which to adopt either 
of these proposals, both of which appear to focus primarily on the 
impact of the brokerage agreement on the competitive market rather than 
the broker's incentive and ability to influence the brokered station's 
core operating functions. Further, Paxson appears to have devised the 
thresholds, at least in the first option, in order to avoid the 
attribution of its own television JSAs. Ultimately, the record does not 
support the adoption of either of these alternatives, and the 
Commission believes that a broker has the ability and incentive to 
exert influence over a brokered station's programming and operations 
well below the threshold or combination of interests that Paxson 
proposes.
    25. The rationale for attributing LMAs and JSAs is the same for 
radio and television: To prevent the circumvention of the ownership 
limits. Ultimately, in attributing these other agreements, the 
Commission determined that the 15 percent threshold was the appropriate 
threshold, as below that threshold the Commission has found that a 
broker will lack significant incentive or ability to exert influence 
over the brokered station's programming or other core operating 
functions; and, as discussed above, the Commission finds no evidence 
that television JSAs are sufficiently unique as compared to other 
attributable agreements to justify a different attribution threshold. 
Thus, where an entity that owns or has an attributable interest in one 
or more television stations in a local television market sells more 
than 15 percent of the advertising time per week of another television 
station in the same market, it will be deemed to hold an attributable 
interest in the brokered station and such station will be counted 
toward the brokering licensee's ownership compliance.
    26. Finally, the Commission notes that parties that believe that 
the application of the attribution rules to their particular 
circumstances would not serve the public interest always have the 
ability to seek a waiver. The Commission has an obligation to take a 
hard look at whether enforcement of a rule in a particular case serves 
the rule's purpose or instead frustrates the public interest. Thus, for 
example, a party seeking waiver of the attribution rule could attempt 
to demonstrate that a particular television JSA in context--including 
any related agreements or interests--does not provide the brokering 
entity with the opportunity, ability, and incentive to exert 
significant influence over the programming or operations of the 
brokered station. In considering a request for waiver of attribution, 
the Commission will take into account the totality of the circumstances 
in order to assess whether strict compliance with the rule is 
inconsistent with the public interest. For example, to make such a 
showing, an applicant may provide the JSA together with any other 
agreements, documents, facts, or information concerning the operation 
and management of a brokered station that demonstrate that the 
underlying public interest considerations supporting the Commission's 
decision to attribute JSAs, as discussed herein, are not present in the 
particular case. The relevant factors may include, without limitation: 
(i) Specific facts that show a lack of incentive or ability for the 
broker station to influence the brokered station's programming or 
operations, and (ii) specific facts that demonstrate that the brokered 
station has the incentive and ability to maintain independent 
operations and programming decisions that are not influenced by the 
broker

[[Page 29002]]

station and the incentive and ability to exclude the broker station 
from exerting influence over programming and operations. A waiver 
request for a JSA that is limited in scope (i.e., percentage of the 
station's advertising sales) and duration so as to minimize or 
eliminate any influence on operations or programming is more likely to 
be successful than an open-ended request. Similarly, if a licensee 
believes that application of the local television ownership rule in a 
particular situation would adversely affect competition, diversity, or 
localism, it may seek a waiver of that rule. For example, an applicant 
may be able to demonstrate that a waiver would enable a school, 
community college, other institution of higher education, or other 
community support organization or entity to own a station and that the 
public interest benefits of such ownership outweigh the harms the 
Commission has identified with common ownership in support of the local 
television ownership limits. The Commission will carefully review and 
consider any such request on an expedited basis. The Commission 
recognizes that broadcast transactions are time sensitive and that 
Commission action on assignment and transfer applications, including 
any associated waiver requests, must be taken promptly without 
unnecessary delay. The Commission directs the Bureau to prioritize 
review of any applications for waiver necessitated by attribution of 
JSAs and to complete their review within 90 days of the record closing 
on such waiver petitions provided there are no circumstances requiring 
additional time for review.

A. Filing Requirements and Transition Procedures

    27. First, subject to OMB approval, the Commission will require 
going forward that attributable television JSAs be filed with the 
Commission within 30 days after the JSA is entered into. Currently, 
commercial television stations are required under Sec.  73.3526 of the 
Commission's rules to place a copy of any JSA involving the station in 
the local public inspection file, but are not required to file such 
agreements with the Commission. With the adoption of the Report and 
Order, commercial television stations that are party to an attributable 
JSA will now be required to file a copy of the agreement with the 
Commission pursuant to Sec.  73.3613, consistent with requirements for 
attributable LMAs and attributable radio JSAs. Second, the Commission 
will require parties to existing attributable television JSAs and/or 
parties to attributable television JSAs entered into after the release 
of the Report and Order but before the filing requirement becomes 
effective to file a copy of such agreements with the Commission within 
30 days after the filing requirement becomes effective. The Commission 
will seek OMB approval for the filing requirement, and, upon receiving 
approval, the Commission will release a document specifying the date by 
which television JSAs must be filed. Third, the Commission directs the 
Media Bureau to take the necessary steps to modify the relevant 
application forms to conform to the rule changes adopted in the Report 
and Order, including the reporting of attributable television JSAs, for 
example, in connection with a request for authority to transfer or 
assign a station license. Such forms would include, inter alia, FCC 
Form 314, Application for Consent to Assignment of Broadcast Station 
Construction Permit or License, and FCC Form 315, Application for 
Consent to Transfer Control of Entity Holding Broadcast Station 
Construction Permit or License.
    28. The Commission rejects arguments that it should automatically 
grandfather all television JSAs permanently or indefinitely. In these 
circumstances, the Commission finds that such grandfathering would 
allow arbitrary and inconsistent changes to the level of permissible 
common ownership on a market-by-market basis based not necessarily on 
where the public interest lies, but rather on the current existence or 
nonexistence of television JSAs in that market when the new attribution 
rule becomes effective. Instead, consistent with the Commission's 
treatment of existing radio JSAs when the Commission first made such 
agreements attributable, and as discussed in the TV JSA NPRM, parties 
to existing, same-market television JSAs whose attribution results in a 
violation of the ownership limits will have two years from the 
effective date of the Report and Order to terminate or amend those JSAs 
or otherwise come into compliance with the local television ownership 
rule. The Commission finds that such a transition period is necessary 
to avoid undue disruption to current business arrangements, and it 
believes that the two-year compliance period will give licensees 
sufficient time to make alternative arrangements. No transition period 
is granted with regard to new television JSAs that would cause the 
broker to exceed the media ownership limits. In order to avoid undue 
disruption, however, parties may renew existing television JSAs even if 
renewal would cause the broker to exceed the media ownership limits, 
provided that the renewal period shall not exceed the two-year 
transition period provided for in the Report and Order. The Commission 
notes that parties to television JSAs have long been on notice of the 
possibility that the Commission's would attribute certain same-market 
television JSAs. Moreover, as noted above, licensees may seek a waiver 
of the Commission's rules if they believe strict application of the 
rules would not serve the public interest.
    29. In the TV JSA NPRM, the Commission sought comment on whether it 
should take the same approach for television JSAs that it had taken 
when radio JSAs became attributable, noting that pre-existing radio 
JSAs were not grandfathered but affected licensees were given a two-
year compliance period. In contrast, when the Commission proposed 
making television LMAs attributable, it proposed grandfathering LMAs 
entered into before the further notice of proposed rulemaking was 
issued. Moreover, as with the Commission's radio JSA decision, the 
Commission is providing a two-year transition period for licensees to 
come into compliance. Thus, the Commission disagrees with Paxson that 
equitable considerations warrant the same grandfathering approach here 
as the Commission adopted for television LMAs. Likewise, the 
Commission's decision not to grandfather existing television JSAs does 
not conflict with the grandfathering of non-compliant ownership 
combinations. Broadcasters have been on notice since 2004 of the 
Commission's tentative conclusion that certain television JSAs should 
be attributed and that existing television JSAs would not necessarily 
be grandfathered. Thus, any broadcaster that entered into or renewed a 
JSA after the TV JSA NPRM was released knew the risk of doing so. 
Moreover, broadcasters are not required to obtain prior approval of 
JSAs, and JSAs are not reviewed at all unless they are part of a 
transaction requiring approval. The Commission also rejects Paxson's 
claim that failure to grandfather pre-existing television JSAs for at 
least five years would result in impermissible retroactive rulemaking. 
The Commission's decision to make television JSAs attributable alters 
the future effect, not the past legal consequences, of television JSAs. 
It does not alter the past legality of television JSAs, does not impose 
liability for past actions, and does not introduce any retrospective 
duties for past conduct.

[[Page 29003]]

B. National Sales Representatives

    30. Sinclair sought clarification that the Commission would not 
attribute television and radio stations that are represented by 
national advertising representative firms (rep firms) where a rep firm 
is co-owned with a broadcaster, and the parent owns a same-market 
station. Rep firms bring national advertisers who want to buy 
commercial time in selected markets together with the individual 
stations in those markets. For the reasons discussed below, the 
Commission finds that the record does not support attribution of a rep 
firm's client stations to a rep firm.
    31. Some commenters argue that the Commission must reconcile its 
decision to eliminate the former Golden West Broadcasters, 16 FCC 2d 
918 (1969) (Golden West), cross-interest policy with respect to the 
attribution decision herein. Since eliminating the former cross-
interest policy (by which a licensee was prohibited from having an 
interest in more than one station in the same service in the same 
area), the Commission consistently has held that advertising 
representation does not constitute an attributable interest. Under the 
Commission's former Golden West policy, the Commission prohibited 
representation of a radio or television station by a national sales 
representative owned wholly or partially by the licensee of a competing 
station in the same service in the same community or service area. 
However, the Commission abolished that policy with respect to 
attribution in 1981, holding that market forces and the remedies 
available under antitrust laws were sufficient to deter the 
anticompetitive practices the policy was meant to address. The 
Commission also noted ``that the potential for impairment of economic 
competition that Golden West was designed to guard against will be 
mitigated by the incentive of the unaffiliated station to seek the 
sales representative that will most vigorously serve its interest.'' 
Since 1981, the Commission has consistently refused to prohibit or 
attribute sales rep agreements. The Commission believes the decision to 
eliminate the Golden West policy was sound, and the JSA attribution 
rules should not be read to disturb that decision.
    32. In this regard, the Commission notes that some commenters claim 
that attribution of television JSAs would be discriminatory and 
inconsistent with the Commission's previous decision not to attribute 
national advertising agreements, because both types of agreements 
provide one firm with the ability to influence an unaffiliated 
station's operations. As explained in the Report and Order, the 
Commission is attributing same-market television JSAs because they 
convey a sufficient degree of influence to warrant attribution. 
National advertising agreements do not raise the same concerns. Unlike 
JSAs involving competing stations in the same local market, national 
advertising agreements do not combine ownership of a local, competing 
television station with the potential for significant influence over 
programming. Therefore, the Commission disagrees with commenters that 
the decision today to attribute same-market television JSAs is 
inconsistent with previous attribution decisions.
    33. Given the unique nature of national advertising sales firms, as 
discussed below, the Commission clarifies that it will not generally 
apply the rules attributing television or radio JSAs to national 
advertising sales representation agencies. It observes that typically, 
national rep firms that are commonly owned with broadcast stations are 
operated separately from the commonly owned broadcast stations. With 
hundreds, if not thousands, of clients and a narrow business focus 
(namely, the sale of national spot advertising), rep firms are not 
involved in the day-to-day operations of their client stations, 
commonly owned or otherwise. In addition, there are fundamental 
differences in the relationship between a local station and a rep firm, 
and between local stations that are party to a JSA. For example, when a 
station contracts with a rep firm, it typically provides only enough 
information about its operations to enable the rep firm to sell 
national advertising spots on the station. Because of the way rep firms 
are structured and the contractual protections available to a local 
station, station-specific information is not provided to the competing 
stations in the market that also contract with the rep firm. By 
contrast, in a JSA involving multiple local stations, the advertising 
rate information and other otherwise confidential station information 
is shared between the parties. Moreover, as noted above, JSAs are often 
executed in conjunction with other types of sharing agreements, which 
leads to higher levels of common operation that are not present in 
relationships with rep firms. Ultimately, the Commission concludes that 
the relationship between a rep firm and its client station, as 
described herein, does not confer the same potential and incentives for 
the rep firm to influence a licensee that are present in a traditional 
JSA relationship. Therefore, national rep firms should not generally be 
subject to the television and radio JSA attribution rules. While the 
Commission is not aware of any instances of non-national advertising 
sales firms (e.g., regional advertising sales firms) that are commonly 
owned with a broadcast licensee, the rationale adopted in the Report 
and Order for excluding national rep firms from the television and 
radio JSA attribution rules would apply to such non-national rep firms 
to the extent these firms are operated in the same manner as national 
rep firms (i.e., completely separate and independent from the operation 
of the local broadcast stations).
    34. At the present time, the Commission has no evidence to suggest 
that a national advertising representation firm that has a commonly 
owned broadcast station in a local market in which it also represents a 
client for advertising services would have the incentive or ability to 
exert significant influence over the programming or other core 
activities of its client. Nevertheless, the Commission will entertain 
complaints based on a showing that a rep firm that is commonly owned 
with a broadcast licensee has not insulated the business of operating 
its commonly owned broadcast station from the business of providing 
advertising representation services in a market in which the rep firm 
has a commonly owned broadcast station. In such cases, the Commission 
will make a case-by-case determination of whether attribution is 
appropriate.

IV. Procedural Matters

A. Final Regulatory Flexibility Analysis

    35. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the TV JSA NPRM in MB Docket No. 04-256. The Commission 
sought written public comment on the proposals in the TV JSA NPRM, 
including comment on the IRFA. The Commission received no comments in 
direct response to the IRFA. This present Final Regulatory Flexibility 
Analysis (FRFA) conforms to the RFA.
1. Need for, and Objectives of, the Report and Order
    36. Consistent with the Commission's earlier findings regarding 
radio joint sales agreements JSA), the Report and Order finds that 
television JSAs similarly convey sufficient influence over the brokered 
station's finances, personnel, and programming decisions to warrant 
attribution. A JSA is an agreement that authorizes a broker to

[[Page 29004]]

sell some or all of the advertising time on the brokered station. In 
particular, the Report and Order finds that television JSAs provide 
incentives--including incentives for stations to coordinate advertising 
activities and avoid competing with each other--that are in some cases 
similar to those created by common ownership. Accordingly, the Report 
and Order concludes to count television stations brokered under a same-
market television JSA toward the brokering station's permissible 
ownership totals under the Commission's broadcast ownership rules 
consistent with the treatment of radio JSAs. Specifically, where an 
entity owns or has an attributable interest in one or more stations in 
a local television market, joint advertising sales of another 
television station in that market for more than 15 percent of the 
brokered station's weekly advertising time will create a cognizable 
interest for the brokering station for purposes of applying the 
broadcast ownership rules. The 15 percent threshold is the same 
threshold adopted by the Commission for radio JSAs and will allow a 
station to broker a small amount of advertising time through a JSA with 
another station in the same market without triggering attribution, yet 
will fall short of providing the broker a significant incentive or 
ability to exert influence over the brokered station's programming or 
other core operating functions because it will not be selling the 
advertising time in a substantial portion of the station's programming. 
The Report and Order finds that a two-year transition period is 
appropriate to permit licensees that entered into television JSAs of 
this type prior to the release of the Report and Order to address those 
circumstances. In addition, parties to existing, attributable 
television JSAs, and/or parties to attributable television JSAs entered 
into after the release of the Report and Order but before the filing 
requirement becomes effective, must file a copy of such agreements with 
the Commission within 30 days after the filing requirement becomes 
effective. Stations are already required to include these agreements in 
their public inspection file. Going forward, parties to attributable 
television JSAs must file copies of such agreements with the Commission 
within 30 days after execution.
    37. The Commission finds in the Report and Order that the 
attribution of television JSAs is necessary because these agreements 
can be used to coordinate the operations of two ostensibly separately 
owned entities and can provide incentives that are similar to those 
created by common ownership. While the Commission has previously 
recognized the potential benefits of common ownership, and believes 
that JSAs may provide similar benefits, such as facilitating cost 
savings and efficiencies that could enable the stations to provide more 
locally oriented programming, the Commission finds that television JSAs 
should not be used to circumvent the local broadcast television 
ownership rule, which is designed to promote competition. Additionally, 
the Report and Order finds that television JSAs provide the brokering 
stations the ability and incentive to influence the selection of non-
network programming on the brokered stations. In addition, the 
Commission finds that a JSA broker can influence the brokered station's 
choice of network affiliation. The Report and Order concludes that a 
broker has a strong incentive to ensure that the brokered station 
provides programming--and an audience--that is complementary to that 
offered by its own station in order to maximize the attractiveness of 
the two stations to advertisers. Thus, the fact that some television 
stations have network affiliations does not undermine the Commission's 
finding that television JSAs confer sufficient influence that they 
should be attributed.
    38. The Commission finds no support for treating radio and 
television JSAs differently. While the Report and Order finds that 
television stations may depend less on local advertisers than radio 
stations as a percentage of overall advertising revenue, advertising 
revenue data demonstrate that television stations do depend on local 
advertising for revenues to a significant degree. Also, the Commission 
finds that arguments that television stations need JSAs to survive in a 
competitive television market are properly addressed in the context of 
setting the applicable ownership limits rather than in deciding whether 
television JSAs confer influence such that they should be attributed in 
the first place. In addition, the Report and Order concludes that 
fundamental nature of television JSAs and radio JSAs is the same and 
that these agreements should be treated the same for attribution 
purposes. In deciding to change its attribution policy with respect to 
radio JSAs, the Commission stated that its reexamination of the issue 
had led it to find that, because of the broker's control over 
advertising revenues of the brokered station, JSAs have the same 
potential as LMAs to convey sufficient influence over core operations 
of a station to warrant attribution. The Report and Order finds that 
the same finding applies to television JSAs, notwithstanding any market 
differences, including the presence of network agreements.
    39. Because television JSAs can create the potential to influence 
the brokered station and provide incentives for joint operation that 
are similar to those created by common ownership, as described in the 
Report and Order, the Commission finds that same-market television JSAs 
that permit the sale of more than 15 percent of the advertising time 
per week of the brokered station should be cognizable interests for 
purposes of applying the broadcast ownership rules.
    40. The Report and Order also clarifies that the radio and 
television JSA attribution requirements do not apply to national sales 
representative firms (rep firms). The Commission concludes that the 
relationship between a rep firm and its client station as understood by 
the Commission does not raise the same issues of control that are 
present in a traditional JSA relationship. Therefore, national rep 
firms should not generally be subject to the television and radio JSA 
attribution rules. However, the Commission will entertain complaints 
based on a showing that a rep firm that is commonly owned with a 
broadcast licensee has not insulated the business of operating its 
commonly owned broadcast station from the business of providing 
advertising representation services in a market in which the rep firm 
has a commonly owned broadcast station. In such cases, the Commission 
will make a case-by-case determination of whether attribution is 
appropriate.
2. Legal Basis
    41. The Report and Order is adopted pursuant to sections 1, 2(a), 
4(i), 303, 307, 309, 310, and 403 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 152(a), 1544(i), 303, 307, 309, 310, and 403, 
and section 202(h) of the Telecommunications Act of 1996.

B. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    42. The Commission received no comments in direct response to the 
IRFA.

[[Page 29005]]

C. Description and Estimate of the Number of Small Entities to Which 
Rules Will Apply

    43. The RFA directs the Commission to provide a description of and, 
where feasible, an estimate of the number of small entities that will 
be affected by the rules adopted. The RFA generally defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A ``small business concern'' is one which: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the Small Business 
Administration (SBA). The final rules adopted herein affect small 
television and radio broadcast stations and small entities that operate 
daily newspapers. A description of these small entities, as well as an 
estimate of the number of such small entities, is provided below.
    44. Television Broadcasting. The SBA defines a television 
broadcasting station that has no more than $35.5 million in annual 
receipts as a small business. The definition of business concerns 
included in this industry states that establishments are primarily 
engaged in broadcasting images together with sound. These 
establishments operate television broadcasting studios and facilities 
for the programming and transmission of programs to the public. These 
establishments also produce or transmit visual programming to 
affiliated broadcast television stations, which in turn broadcast the 
programs to the public on a predetermined schedule. Programming may 
originate in their own studio, from an affiliated network, or from 
external sources. Census data for 2007 indicate that 2,076 such 
establishments were in operation during that year. Of these, 1,515 had 
annual receipts of less than $10.0 million per year and 561 had annual 
receipts of more than $10.0 million per year. Based on this data and 
the associated size standard, the Commission concludes that the 
majority of such establishments are small.
    45. The Commission has estimated the number of licensed commercial 
television stations to be 1,387. According to Commission staff review 
of the BIA Kelsey Inc. Media Access Pro Television Database (BIA) as of 
November 26, 2013, 1,294 (or about 90 percent) of an estimated 1,387 
commercial television stations in the United States have revenues of 
$35.5 million or less and, thus, qualify as small entities under the 
SBA definition. The Commission has estimated the number of licensed 
noncommercial educational (NCE) television stations to be 396. The 
Commission notes, however, that, in assessing whether a business 
concern qualifies as small under the above definition, business 
(control) affiliations must be included. This estimate, therefore, 
likely overstates the number of small entities that might be affected 
by this action, because the revenue figure on which it is based does 
not include or aggregate revenues from affiliated companies. The 
Commission does not compile and otherwise does not have access to 
information on the revenue of NCE stations that would permit it to 
determine how many such stations would qualify as small entities.
    46. In addition, an element of the definition of ``small business'' 
is that the entity not be dominant in its field of operation. The 
Commission is unable at this time to define or quantify the criteria 
that would establish whether a specific television station is dominant 
in its field of operation. Accordingly, the estimate of small 
businesses to which rules may apply do not exclude any television 
station from the definition of a small business on this basis and are 
therefore over-inclusive to that extent. Also, as noted, an additional 
element of the definition of ``small business'' is that the entity must 
be independently owned and operated. The Commission notes that it is 
difficult at times to assess these criteria in the context of media 
entities and the estimates of small businesses to which they apply may 
be over-inclusive to this extent.

D. Description of Reporting, Recordkeeping, and Other Compliance 
Requirements for Small Entities

    47. The Report and Order adopts a requirement that parties to 
existing, attributable television JSAs, and/or parties to attributable 
television JSAs entered into after the release of the Report and Order 
but before the filing requirement becomes effective, must file a copy 
of such agreements with the Commission within 30 days after the filing 
requirement becomes effective. Going forward, parties to attributable 
television JSAs must file copies of such agreements with the Commission 
within 30 days after execution. The Report and Order directs the Media 
Bureau to take the necessary steps to modify the relevant application 
forms to require applicants to file attributable television JSAs at the 
time an application is filed using the forms.
    48. In addition, the following FCC forms and/or their instructions 
will be modified to require the reporting of attributable television 
JSAs: (1) FCC Form 301, Application for Construction Permit For 
Commercial Broadcast Station; (2) FCC Form 314, Application for Consent 
to Assignment of Broadcast Station Construction Permit or License; (3) 
FCC Form 315, Application for Consent to Transfer Control of 
Corporation Holding Broadcast Station Construction Permit or License; 
(4) FCC Form 323, Ownership Report for Commercial Broadcast Station. 
The impact of these changes will be the same on all entities, and 
compliance will likely require only the expenditure of de minimis 
additional resources.

E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    49. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its approach, which may 
include the following four alternatives (among others): (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    50. The Report and Order finds that television JSAs convey 
sufficient influence to warrant attribution, such that the Commission 
will count television stations brokered under a same-market television 
JSA toward the brokering station's permissible ownership totals if the 
amount of time jointly sold is equal to or greater than 15 percent of 
the station's advertising time. This rule brings the Commission's 
policy regarding JSAs in the television market in line with the 
existing rules regarding radio markets. While the Report and Order 
recognizes that JSAs may have public interest benefits, particularly in 
small- to mid-sized markets, these potential benefits do not affect the 
assessment of whether television JSAs confer significant influence such 
that they should be attributed. The rule adopted in the Report and 
Order protects local markets--including small businesses operating in 
local markets, as opposed to regional or national markets--from 
exposure to competitive harms that might result from contractual 
agreements between stations for control

[[Page 29006]]

of advertising. Therefore, the Commission believes that in many cases 
the attribution of a same-market television JSA will protect small 
businesses, as well as large, from the adverse impacts of competing 
stations' coordination of advertising sales.
    51. Nonetheless, the Report and Order finds that a transition 
period during which parties are required to come into compliance is 
necessary to avoid undue disruption to current business arrangements. 
Such a transition period will be especially helpful to small television 
stations that do not have the same financial and technical resources as 
large stations. Accordingly, parties to existing, same-market 
television JSAs whose attribution results in a violation of the 
ownership limits will have two years from the effective date of the 
Report and Order to terminate or amend those JSAs or otherwise come 
into compliance with the local television ownership rule. No transition 
period is granted with regard to new television JSAs that would cause 
the broker to exceed the media ownership limits. However, parties may 
renew existing television JSAs even if renewal would cause the broker 
to exceed the media ownership limits, provided that the renewal period 
shall not exceed the two-year transition period provided for in the 
Report and Order. The Report and Order finds that this transition 
period will give licensees with television JSAs sufficient time to make 
alternative arrangements--such as revise the agreement to limit the 
amount of advertising time sold to 15 percent of the weekly advertising 
time or enter into an agreement with another entity that would not 
result in an impermissible attributable interest--or to seek waiver 
relief from the Commission's rules, if appropriate. Parties that 
believe that the application of the attribution rules to their 
particular circumstances would not serve the public interest always 
have the ability to seek a waiver. These steps will minimize the 
adverse impact on small entities.
    52. In addition, parties to existing, attributable television JSAs, 
and/or parties to attributable television JSAs entered into after the 
release of the Report and Order but before the filing requirement 
becomes effective, must file a copy of such agreements with the 
Commission within 30 days after the filing requirement becomes 
effective. Going forward, parties to attributable television JSAs must 
file copies of such agreements with the Commission within 30 days after 
execution. The impact of this filing requirement will be minimal and 
uniform for all entities. The Commission anticipates that compliance 
will only require the expenditure of de minimis additional resources, 
and believes, therefore, that the filing requirement is the least 
economically burdensome alternative. In addition, entities may be 
required to report attributable television JSAs on certain FCC Forms, 
for example, in connection with a request for authority to transfer or 
assign a station license. The Commission anticipates that compliance 
will only require the expenditure of de minimis additional resources. 
Accordingly, adverse economic impact on small entities will be minimal, 
at most, and in many cases non-existent.

F. Report to Congress

    53. The Commission will send a copy of the Report and Order, 
including this FRFA, in a report to be sent to Congress pursuant to the 
Congressional Review Act. In addition, the Commission will send a copy 
of the Report and Order, including this FRFA, to the Chief Counsel for 
Advocacy of the SBA. A copy of the Report and Order and FRFA (or 
summaries thereof) will also be published in the Federal Register.

V. Ordering Clauses

    54. Accordingly, it is ordered, that pursuant to the authority 
contained in sections 1, 2(a), 4(i), 303, 307, 309, 310, and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 
303, 307, 309, 310, and 403, and section 202(h) of the 
Telecommunications Act of 1996, the Report and Order is adopted. The 
rule modifications shall be effective June 19, 2014, except for those 
rules and requirements involving Paperwork Reduction Act burdens, which 
shall become effective on the effective date announced in the Federal 
Register notice announcing OMB approval. Changes to FCC Forms required 
as the result of the rule amendments adopted herein will become 
effective on the effective date announced in the Federal Register 
notice announcing OMB approval.
    55. It is further ordered, that the proceeding MB Docket No. 04-256 
IS terminated.
    56. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of the Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects 47 CFR part 73

    Radio, Reporting and recordkeeping requirements, Television.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 73 as follows:

PART 73--RADIO BROADCAST SERVICES

0
1. The authority citation for part 73 continues to read as follows:

    Authority:  47 U.S.C. 154, 303, 334, 336 and 339.


0
2. Section 73.3555 is amended by redesignating paragraph k.2. as k.3., 
in Note 2 to Sec.  73.3555, adding new paragraph k.2., and revising 
newly redesignated paragraph k.3. to read as follows:


Sec.  73.3555  Multiple ownership.

* * * * *

    Note 2 to Sec.  73.3555:  * * *

    k. * * *
    2. Where two television stations are both located in the same 
market, as defined for purposes of the local television ownership rule 
contained in paragraph (b) of this section, and a party (including all 
parties under common control) with a cognizable interest in one such 
station sells more than 15 percent of the advertising time per week of 
the other such station, that party shall be treated as if it has an 
interest in the brokered station subject to the limitations set forth 
in paragraphs (b), (c), (d), and (e) of this section.
    3. Every joint sales agreement of the type described in this Note 
shall be undertaken only pursuant to a signed written agreement that 
shall contain a certification by the licensee or permittee of the 
brokered station verifying that it maintains ultimate control over the 
station's facilities, including, specifically, control over station 
finances, personnel and programming, and by the brokering station that 
the agreement complies with the limitations set forth in paragraphs 
(b), (c), and (d) of this section if the brokering station is a 
television station or with paragraphs (a), (c), and (d) of this section 
if the brokering station is a radio station.
* * * * *

0
3. Section 73.3613 is amended by revising paragraph (d)(2) to read as 
follows:


Sec.  73.3613  Filing of contracts.

* * * * *
    (d) * * *
    (2) Joint sales agreements: Joint sales agreements involving radio 
stations

[[Page 29007]]

where the licensee (including all parties under common control) is the 
brokering entity, the brokering and brokered stations are both in the 
same market as defined in the local radio multiple ownership rule 
contained in Sec.  73.3555(a), and more than 15 percent of the 
advertising time of the brokered station on a weekly basis is brokered 
by that licensee; joint sales agreements involving television stations 
where the licensee (including all parties under common control) is the 
brokering entity, the brokering and brokered stations are both in the 
same market as defined in the local television multiple ownership rule 
contained in Sec.  73.3555(b), and more than 15 percent of the 
advertising time of the brokered station on a weekly basis is brokered 
by that licensee. Confidential or proprietary information may be 
redacted where appropriate but such information shall be made available 
for inspection upon request by the FCC.
* * * * *
[FR Doc. 2014-10874 Filed 5-19-14; 8:45 am]
BILLING CODE 6712-01-P