Free Press Action Fund Urges Congress and the FCC to Put an End to Illegal TV Station Ownership

WASHINGTON — In testimony before Congress on Wednesday, Free Press Policy Director Matt Wood will speak out against a House bill that would strip the Federal Communications Commission of its ability to crack down against serious and ongoing violations of its local television-station multiple ownership rule.

These violations take the form of illegal outsourcing agreements in dozens of U.S. broadcast markets, where one conglomerate creates shell companies to dodge station-ownership rules. For viewers this often results in a single team producing news and information for multiple stations. “These violations harm competing businesses and diminish the number of competing viewpoints on our nation’s airwaves,” Wood wrote in his submitted testimony.

“They cause job losses, as broadcasters outsource the news and consolidate newsrooms. And they diminish the number of competing local newscasts, because stations subject to outsourcing agreements and de facto control by another broadcaster simply do not gather or air their own news.”

Wood will testify at 10:30 a.m. before the House Energy and Commerce Subcommittee on Communications and Technology in a hearing on the “Reauthorization of the Satellite Television Extension and Localism Act.” Several draft sections of the Act are designed to limit the FCC’s ability to promote competition and diversity in local broadcast markets, both primary mandates of the agency.

Wood’s full written testimony is available at: http://www.freepress.net/resource/105962/free-press-written-testimony-ownership-hearing

To illustrate the threat outsourcing agreements pose, Free Press released on Wednesday an updated version of its report “Cease to Resist: How the FCC’s Failure to Enforce Its Rules Created a New Wave of Media Consolidation." The study examines the current wave of consolidation sweeping across the broadcast industry.

The report documents the increased use of outsourcing agreements by Gannett Company, Nexstar Broadcast Group, Raycom Media, Sinclair Broadcast Group, Tribune Company and other broadcasters. Through these deals, station owners create so-called “sidecar” or shell companies to evade the FCC’s rules and establish near-monopolies over local TV news production in markets across the country.

These arrangements do not simply concern two stations sharing some common functions. Rather, they involve one large broadcaster owning all of the physical assets of another in-market station. The broadcaster runs all of that station’s day-to-day operations, produces 100 percent of the local news programming and keeps most of the station’s profits.

These agreements are used to evade the FCC’s ownership rules in nearly half of all U.S. media markets. They are used to form otherwise illegal duopolies between two top-four ranked stations in 78 markets. This rule is particularly important for ensuring communities have access to the greatest number of independent sources of news and information, which are often produced by the major network-affiliated stations.

“We are in the midst of an explosion in the use of outsourcing agreements, which is fueling the current historic wave of consolidation,” says Free Press Research Director S. Derek Turner, who authored the report. “Before the FCC turned a blind eye to these evasions, small broadcasters and new entrants actually had a chance to participate in this industry, particularly in the medium- and smaller-sized markets. But now that companies like Sinclair and Nexstar are using these evasion tactics to gobble up stations, the opportunities for other competitors are virtually non-existent.”

The Free Press report is available at: http://www.freepress.net/resource/105961/cease-resist-update-october-report