Broadcasters to sue FCC on resource-sharing ban

The broadcast industry plans to sue the Federal Communications Commission over its decision to crack down on resource-sharing deals between broadcasters.

On Friday, the National Association of Broadcasters (NAB) will ask the D.C. Circuit Court of Appeals to overturn a March FCC vote that requires broadcasters to unwind many of their advertising sales resource sharing arrangements, according to a source familiar with the matter.

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NAB Executive Vice President of Communications Dennis Wharton declined to comment.

In March, the FCC voted 3-2 to consider any two broadcasters that share more than 15 percent of their advertising sales resources to be owned by the same company.

That vote effectively banned these resource-sharing arrangements, as a company can own only one of the top four broadcast stations in any market.

While those critical of broadcast companies hailed the move as a crackdown on agreements that had allowed broadcasters to skirt the agency’s rules, broadcasters protested, saying that small broadcasters rely on these agreements to operate competitively.

In a statement after the vote, Wharton called the decision “arbitrary and capricious” and pointed to the fact that the agency had previously allowed these resource-sharing deals between broadcasters.

“For a decade, Republican and Democratically-controlled FCCs have approved [these deals], which allow free and local TV stations to survive in a hyper-competitive world dominated by pay TV giants,” he said.

The item voted on in March was published in the Federal Register last week.

Earlier this month, the NAB sued the FCC over a separate set of guidance issued by the agency's Media Bureau, warning broadcasters the FCC would be more rigorously scrutinizing arrangements to share advertising sales and other resources during merger reviews.

On Thursday, broadcast giant Sinclair announced that it would be shuttering three of its stations in Alabama and South Carolina as a result of the agency's new rules on resource sharing.

While some attributed Sinclair's decision to political posturing, Republican Commissioners Ajit Pai and Michael O'Rielly pointed to the agency's March vote to effectively ban resource sharing arrangements.

In a joint statement, the pair said that they "warned that this decision would lead to 'less ownership diversity' and 'more television stations going out of business.'"  

"Unfortunately, just two months later, this is coming to pass," they said.