This map from Free Press shows how commonplace so-called “sidecar” agreements have become — and today the Justice Department says it’s time for the FCC to hit the brakes on the deals that enable one station to sell ads or provide services for others in a market. The alliances too often lead to artificially inflated ad prices and weak local newscasts, antitrust officials said in a filing today. Lawyers want the FCC to reject joint sales arrangements in cases where ownership caps would bar stations from being jointly owned, and scrutinize local marketing agreements and shared services agreements. “Failure to account for the effects of such arrangements can create opportunities to circumvent FCC ownership limits and the goals those limits are intended to advance,” the filing says. Although the deals are supposed to protect competition, by propping up a weak station, “our investigations have revealed that these ‘sidecars’ often exercise little or no competitive independence from the other station.” The National Association of Broadcasters rejected the conclusion. “Joint sales agreements allow local TV stations that might otherwise go out of business to increase local news and community service, and to provide robust competition to pay TV giants,” EVP Dennis Wharton says. But the die appears to be cast for an FCC vote scheduled for March 19. The DOJ filing probably “was coordinated at some level with the FCC,” says Guggenheim Partners’ Paul Gallant. “Nothing is settled yet, but we suspect the Democratic majority will vote to adopt something like what DOJ recommended.”
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