Minority ownership at stake with FCC rule change

Without shared services agreements (SSAs) and joint sales agreements (JSAs), minority ownership would completely disappear from the broadcast marketplace. Viewpoint diversity, which the ownership rules are designed to protect, is also likely to suffer in such an event.

As the only African-American full broadcast TV station owner in the United States today, I want to dispel any misconceptions that JSAs and SSAs are merely devices that allow big broadcast owners to skirt the rules and establish monopolies in TV markets across the USA. In my case, they have been essential to leveraging critical financing that has made the difference in bringing my dream of owning a pay TV station to fruition.

My company, Howard Stirk Holdings, owns and operates television stations in Saginaw, Mich., and Florence, S.C., which are relatively small, underserved media markets. In structuring the financial part of the deal that made these purchases possible, my firm entered into SSAs and JSAs with the Sinclair Broadcasting Group, a larger broadcast station owner that also owns stations in these markets. These agreements allow our firms to share some back-office services, and obligate us to provide up to 15 percent of programming and spot/advertising time.

With the remaining 85 percent of the programming space, my firm is developing its own original content, which, given its more than 20 years as a media content creator, puts it in a unique position among firms that have entered into these agreements in the past. Many have been run by entrepreneurs with no real television expertise. We not only own catalogs of unique content expressing minority viewpoints across a number of formats — news, politics, entertainment and business — we have already begun developing new content in anticipation of ownership of the broadcast platform.

All I can say is that the numbers speak for themselves — I am just one of two African-American owners, along with Tougaloo College in Jackson, Miss., that employ SSAs and JSAs. Without question, gaining financing and access to capital are significant obstacles to minority ownership, and these mechanisms provide the sole public policy avenue for specifically enabling those goals.

I find it baffling and bizarre that the Federal Communications Commission (FCC) would abruptly change its position on allowing SSAs and JSAs after approving these arrangements for the past 20 years with substantial input from both the public and policymakers. The FCC’s change seems timed to coincide with my proposal to again use such agreements in two new transactions with Sinclair, which is part of Sinclair’s larger proposal to acquire Allbritton Communications Co. If I were to speculate about the reasons for this, I would look to one primary factor: the desire of the cable industry (heavily owned by Democrats) to re-purpose spectrum that has been traditionally allocated to broadcast television for broadband Internet services. Considering that just two months ago the FCC approved Gannett Co.’s $1.5 billion acquisition of Belo Corp. and the Tribune Co.’s $2.73 billion purchase of Local TV Holdings LLC, both of which relied on SSAs and JSAs, this seems a fair criticism.

When placed in the larger context of the media industry in which free-to-the-home TV competes with several other platforms, including cable, satellite and Internet broadband, these threatened actions appear even more discriminatory. If the No. 1 and No. 2 cable entities in the nation can merge, as Comcast and Time Warner have agreed to do, it is difficult to understand why minorities and experienced group owners should be denied the ability to enter into sharing agreements for services, programming and airtime inventory. As a condition of Comcast’s purchase of NBC Universal a few years ago, and in the name of diversity and minority participation, the Rev. Al Sharpton ended up with his own cable program. That process supposedly advances diversity, but my use of JSAs and SSAs to become the only black broadcast TV network owner somehow does not?

If JSAs and SSAs were no longer available at this stage, I would not be able to survive the competitive marketplace, and minorities would lose one of the few opportunities for ownership and success. Such an outcome manifestly diminishes diversity, and I have to believe FCC Commissioner Tom Wheeler is aware of this despite what he argues.

Whatever the ultimate policy decision of the FCC might be, it seems quite unfair for them to change the rules in the middle of the game. These deals have been in the pipeline for more than a year now, and we have made significant monetary investment in legal and regulatory compliance as well as corporate and content development. In fact, we have made every effort to comply with both the letter and spirit of the law, and have literally banked on the rules remaining what they were at the beginning of this process. If the FCC ultimately decides to disallow such structures in the future, it should grandfather all of those transactions currently in the pipeline. This is the only fair course of action.

Williams is sole owner and manager of Howard Stirk Holdings and editor-in-chief of American Current See Magazine.