No Need to Wait for SSA Rulemaking to Rule Against Gannett/Belo’s, Groups and Providers Say

The FCC doesn’t have to wait for a full rulemaking proceeding on shared services agreements (SSAs) to rule against the ones associated with the Gannett/Belo merger, said the American Cable Association, Time Warner Cable, DirecTV and multiple public interest groups in reply comments filed in docket 13-189 Tuesday. To avoid overlaps that would conflict with media ownership rules, the terms of the merger call for some TV stations involved in the transaction to be transferred to other companies but still share services with Gannett under SSAs (CD July 26 p1).

Gannett and Belo have argued that the objectors are trying to use the transaction to force FCC policy changes that would more properly be part of the agency’s proceedings on retrans consent and the 2010 quadrennial review (CD Aug 12 p9), but the opposition rejects that argument. Though the FCC could address sharing agreements in a rulemaking, that doesn’t “obviate the need for the Commission to address the public interest questions raised by the sharing agreements in this transaction,” said the joint filing from Common Cause, Free Press and other groups. “It is a fundamental principle of administrative law that agencies may make policy by either adjudication or rulemaking."

The SSAs and joint service agreements in the Gannett/Belo merger “threaten concrete, transaction-specific harms” outside of the larger retrans proceeding, said ACA, TWC and DirecTV. The SSAs between Gannett and Sander Holdings and Tucker Holdings -- the two companies slated to take over stations but share Gannett’s services in Tucson, St. Louis and Phoenix -- will lead to illegal “collusion” in retrans agreements, said the filing. “The Applicants cannot point to the pendency of rulemaking proceedings as an excuse to violate these fundamental competition-law principles,” it said.

Those opposed to the merger need the FCC to see their objections as separate from ongoing rulemaking proceedings because it’s unlikely the commission would make a ruling that short-circuits its own process, said Fletcher Heald broadcast attorney Peter Tannenwald, who doesn’t represent any of the parties involved. “Traditionally the FCC doesn’t make rulings that are very broad in individual transactions,” Tannenwald said. Controversial “hot potato” issues require industry analysis and broad consensus that are unlikely to occur in a proceeding that’s expected to occur relatively quickly, such as a merger, said Tannenwald.

The FCC is obligated to show that the merger will actively serve the public interest, not just that it is within the rules, said the public interest groups. Gannett and Belo “misstate both the law and the FCC’s practice when they claim that the FCC must approve the transaction if it is consistent with FCC rules,” said their joint filing. The merger hurts the public interest by lowering the diversity of viewpoints in media and limiting outlets for local journalism, they said. “The proposed transaction will create relationships that result in the same harms as a transaction that, on its face, violates the media ownership rules,” said the groups. Public interest groups made similar arguments against the pending Tribune/Local TV merger earlier this week (CD Aug 21 p22), and Free Press Policy Director Matt Wood said it’s “likely” they will also file a petition to deny based on similar arguments in the pending merger proceeding between Sinclair and Allbritton (CD July 30 p5).