TV Stations Face New FCC Rules

Television broadcasters could find ways of offsetting the financial impact of a potential regulatory crackdown on joint ad-sales efforts, industry executives and analysts say.

The bigger worry is whether a crackdown will be extended into other service-sharing efforts between TV station owners, they say. Federal Communications Commission Chairman Tom Wheeler's proposal would treat broadcasters as the owners of any station for which they handle more than 15% of the advertising sales. It would also require stations to unwind joint sales agreements within two years or else be potentially found in violation of the FCC's rules on media ownership. Analysts played down the immediate impact of the potential move. "Nobody is really afraid [immediately] because there are workarounds" for any crackdown on joint sales agreements, said David Bank, an analyst at RBC Capital Markets. "A big fear," though, is that the FCC might take action in the future to restrict other shared services agreements. Many of the financial benefits of joint sales and services agreements are realized when the two are combined together, broadcasters say. Furthermore, Bank said tighter scrutiny on joint sales agreements will pose an additional hurdle for broadcast companies looking to buy other stations in an ongoing round of industry consolidation.