FCC Chairman Wheeler On Wrong Side Of Regulatory History

[Commentary] After nearly four decades of gradually and carefully loosening the rules governing how many TV stations a broadcaster may own and where it may own them, FCC Chairman Tom Wheeler and his two Democratic colleagues decided to more strictly enforce the local ownership rule, which forbids broadcasters from owning two stations in small and medium markets or from owning two top four stations in large markets.

They did that by reversing the FCC's 10-year-old policy of allowing broadcasters to operate (or at least enjoy the economies of) second stations through joint sales and shared services agreements in markets where they could not own them outright. They threw out 10 years of precedents, and they did so in a punitive way. No existing deals would be grandfathered and no pending deals would be approved. Broadcasters with joint sales agreements (JSAs) would have two years to unwind them.

I agree with FCC Commissioner Pai that in reneging on all its JSA approvals to date, the FCC is discouraging investment in broadcasting and, perhaps more important to Chairman Wheeler, undermining his planned incentive auction, through which he hopes to reallocate spectrum from TV to wireless broadband.

Unless overturned by the courts, the crackdown on JSAs is going to disrupt a lot of businesses. It's already caused a lot of financial damage. Chairman Wheeler says it's going to create more opportunities in broadcasting for small businesses, especially those owned by minorities and women, but he makes no good case for it. He offers no evidence that it will.