FCC’s Rosenworcel elbows out full commission, and broadcast suffers

It’s ironic that FCC Chairwoman Rosenworcel goes after broadcasters for their workarounds of ownership rules when she routinely circumvents her fellow commissioners in important, potentially precedent-setting ownership cases though staff actions.

She was the real party-in-interest when the Media Bureau staff derailed the $8.6 billion Tegna-Standard General merger a year ago by designating it for a hearing that would have lasted far longer than Standard General’s financing arrangements.

Likewise, the Rosenworcel-directed staff killed a Top-Four duopoly in Fargo, North Dakota, last summer by simply ignoring the transfer application. The parties had to walk away.

And now, the staff has wrecked Nexstar’s $75 million bid to bring WADL Detroit into its fold. Because buying the station directly would have put Nexstar over the FCC’s 39% national ownership cap, the group sent its sidecar company Mission Broadcasting to do the deal.

Not so fast, the Rosenworcel staff. It would approve the deal, but only if Nexstar agreed to a bunch of onerous conditions designed to put more financial and operational distance between Nexstar and Mission.

Rosenworcel undoubtedly knew the conditions were deal breakers and, indeed, last week, Mission CEO Dennis Thatcher, called it off.

“The FCC order … prohibits the consummation of the sales of the purchase asset contemplated by the purchase agreement because it imposes conditions on consummation that were not contemplated,” he said in a letter to the commission.

Sidecar companies like Mission have been around for a long time. They have been used strategically by a number of groups, mostly to double up stations in markets, with the blessing of the FCC, top to bottom.

“The various forms of sidecars were created to obtain some of the economic benefits that better ownership rules would provide,” says communications attorney Jack Goodman. “The FCC (or at least its staff) went along because it recognized that these transactions in many instances improved stations and service to the public.”

However, Rosenworcel has made strict adherence to the station ownership limits the centerpiece of her broadcasting agenda as if they alone are the only hope of preserving free, universal, over-the-air television. Among other things, that has meant closing the “loopholes” in the rules.

No consideration is given to the benefits that these deals might bring. In the case of Nexstar, it needs WADL to secure an outlet the DMA 14 for its CW network, a venture that doesn’t need its risk elevated further by meddling bureaucrats.

And given the importance of these deals to Nexstar and other groups that are bumping up against the national and local cap, it would be good government to get the full commission involved.

Frankly, I am weary of scolding Rosenworcel for an atavistic attitude toward TV broadcasting. So, I am going to let FCC Commissioner Brendan Carr finish up this column for me.

Rosenworcel’s Republican nemesis condemned the staff’s WADL action at the time it was announced, knowing that it was a deal killer and indignant that he and the other commissioners were cut out of the process. “To be sure, the bureau styles its decision as a ‘conditional approval,’ but it is no such thing,” he says in the statement.

“The bureau decision requires the parties to change the terms and nature of the deal financing, the amount of programming that can be provided to Mission, the percentage of advertising revenue retained by Mission, the monthly Performance Bonus that Mission can pay to Nexstar or its affiliates, the terms of Mission’s approach to its retransmission consent negotiations, and Mission’s future ownership decision.”

The FCC can either approve the deal or order a hearing, he said. But it can’t force the parties to draft a new one to its liking. “That’s not the FCC’s job or role.”

Carr, who is a former FCC general counsel, also took issue with the FCC staff using an earlier case involving WPIX New York as the basis for its action on WADL before it has been finalized by the full commission.

In March, the full commission (with Carr objecting) tentatively fined Nexstar and Mission for engineering a similar arrangement under which Mission would be the owner of record for WPIX so that Nexstar could stay under the cap. In addition to the fines, which Nexstar/Mission has appealed, the FCC staff said if Nexstar wants control of WPIX it will have to buy it directly, which would force it to spin off a bunch of other stations to stay below the national cap.

The WADL action is prejudging the outcome of the WPIX appeal that will go before the full commission, Carr said. “Or, it is making new and novel decisions without authorization from the full commission.

“The bureau does not have the authority to do either one of those things. Indeed, these are the types of decisions that should be made by the commission itself.”
The statement ends with Carr setting aside legal and bureaucratic matters and returning to the real problem: Rosenworcel’s misguided mindset on TV broadcasting.

“[W]e are at a break glass moment for America’s broadcasters,” he says.

“They are facing unprecedented headwinds and competition, including from their largely unregulated Big Tech competitors. The FCC should be focused on decisions that will make it easier for broadcasters to attract the capital necessary for them to invest, compete and serve their local communities.”

I couldn’t have said it better myself.

Editor’s note: This article has been updated. As originally posted, it said the staff, acting on its own authority, had fined Nexstar and Mission in the WPIX matter. That is wrong. It was an action of the full commission. TVNewsCheck