The broadcast industry lobby group told the U.S. Court of Appeals in DC that the FCC had no basis for deciding in March to block a station from selling ads for others in the same market. As a result it allegedly was “arbitrary, capricious, and an abuse of discretion” as well as illegal. The 3-2 party line vote on Chairman Tom Wheeler’s proposal was predicated on a view that many, if not most, of these deals violate the public interest. Joint Sales Agreements “have been used to skirt existing [media ownership] rules to create market power that stacks the deck against small companies seeking to enter the broadcast business,” Wheeler said. The Justice Department also said that its investigations “have revealed that these ‘sidecars’ often exercise little or no competitive independence from the other station.”
The problem, according to the National Association of Broadcasters, is that regulators never defined the public interest. The FCC should have done that in a congressionally mandated quadrennial review of ownership rules that was supposed to have taken place in 2010, but didn’t. A “fact-based examination of today’s marketplace would show that FCC ownership restrictions against free and local broadcasters are outdated in a world of national pay TV giants,” EVP Dennis Wharton says. “These rules – some of which have not been altered since 1975 – place broadcasters at a competitive disadvantage as we strive to continue delivering news, entertainment and lifeline programming to local communities across America.” The group says that the joint sales agreements enable many weak stations in mid-sized and small markets to stay afloat, increasing the number of local voices. Nexstar Broadcasting and Howard Stirk Holdings also will challenge the FCC, the NAB says.