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Applications Proposing Sharing Arrangements and Contingent Interests

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Released: March 12, 2014


Federal Communications Commission

News Media Information 202 / 418-0500


445 12th St., S.W.

TTY: 1-888-835-5322

Washington, D.C. 20554

DA 14-330
Released: March 12, 2014



In recent months, the Media Bureau has reviewed an increasing number of proposed broadcast
television transactions involving both agreements to share facilities, employees, and/or services of various
types between stations and financing and/or contingent interest agreements involving those stations.
These arrangements have drawn substantial public scrutiny. We issue this Public Notice to provide
guidance concerning the Bureau’s processing of applications seeking Commission approval of proposed
transactions that involve combinations of sharing arrangements and contingent or financial interests.


In its recent order approving the transfer of control of Belo Corp. to Gannett Co., Inc. and the
related assignment of certain Belo broadcast television licenses to Sander Media Co., LLC and Tucker
Operating Co., LLC, the Bureau stressed that “Congress’ express statutory command is that license
transfers must satisfy the ‘public interest, convenience, and necessity,’ a standard that is always informed
by regulatory standards, but which necessarily involves, as our licensing decisions have long noted, the
use of a “case-by-case” approach… [A]pplicants and interested parties should not forget that our public
interest mandate encompasses giving careful attention to the economic effects of, and incentives created
by, a proposed transaction taken as a whole and its consistency with the Commission’s policies under the
Act, including our policies in favor of competition, diversity, and localism.” 1
We have previously recognized that sharing arrangements and related transactional features may
raise issues pertinent to our review of the economic effects of a transaction and the incentives it creates.
For example, in a 2002 decision reviewing transfer applications, the Commission carefully scrutinized the
agreements and sharing arrangements between a licensee and a broker to determine whether they would
result in attribution of an ownership interest in the station to the broker because they deprived the
licensee of the financial incentive to control the station’s programming.2 In the 2010 Quadrennial Review
, the Commission asked a number of questions about the incidence and impact of sharing
arrangements and their relationship to our broadcast ownership rules.3

1 Shareholders of Belo Corp., Memorandum Opinion and Order, DA 13-2423 (MB rel. Dec. 20, 2013), at ¶¶ 29, 30.
2 Shareholders of Ackerley Group, Inc., Memorandum Opinion and Order, 17 FCC Rcd 10828, 10841 (2002).
3 2010 Quadrennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rule and Other Rules
Adopted Pursuant to Section 202 of the Telecommunications Act of 1996
, Notice of Proposed Rulemaking, 26 FCC
Rcd 17489 (2011), subs. hist. omitted.

In our ongoing review of proposed transactions involving sharing arrangements, we have
identified a concern that a broadcaster that has entered into a sharing arrangement with another same-
market station in which it also has a contingent financial interest, such as an option to purchase the station
or as a guarantor of the other station’s financing, may obtain a degree of operational and financial
influence that deprives the licensee of the second station of its economic incentive to control
programming. For example, an assignable option to purchase a station at less than fair market value may
counter any incentive the licensee has to increase the value of the station, since the licensee may be
unlikely to realize that increased value. Also, the compensation provisions of agreements to share
facilities and employees, to jointly sell advertising, and to jointly acquire programming, can be structured
such that the licensee of the station bears little or none of the risks and reaps little or none of the rewards
for the performance of the station. While each case must be judged on its individual facts, we have
determined that proposed combinations of such sharing arrangements and contingent financial interests
warrant careful scrutiny in our review of applications.

Processing Guidance

Accordingly, recognizing the time-sensitive nature of proposed transactions for which our
approval is sought, we provide this guidance. In reviewing broadcast assignment and transfer
applications going forward, including those currently before us, the Bureau will closely scrutinize any
application that proposes that two (or more) stations in the same market will:
(1) Enter into an arrangement to share facilities, employees, and/or
services or to jointly acquire programming or sell advertising, including
a Joint Sales Agreement (JSA), a Local Marketing Agreement (LMA), or
any other agreement or arrangement (written or oral) that would have the
same practical operational or financial effect as any of these agreements,
(2) Enter into an option, right of first refusal, put/call arrangement, or
other similar contingent interest, or a loan guarantee.
We will evaluate how any such arrangements operate and the incentives they create, and not how they are
styled by the applicants.
Each applicant bears the burden of showing that approval of its proposed transaction will be
consistent with the public interest, convenience, and necessity. Therefore, in the situations described
above, each applicant must provide sufficient information and documentation to fully describe its
proposed transaction, including any side agreements, and establish that it is an arm’s-length transaction
and would not impair the existing licensee’s control over station operations and programming, result in
attribution of the relationship, or be otherwise contrary to the public interest. While every transaction is
evaluated individually, we note that in past transactions we have seen certain circumstances that raise
particularized issues that we must review. For example, we will consider whether, in a specific
transaction, financial influence inheres in lending relationships as well as in the contingent interests
mentioned above. In particular, we will consider carefully the potential implications for application of the
public interest standard of a circumstance in which a proposed assignee/transferee shares the same
lending institution as an in-market broadcaster with which it has a sharing arrangement, and a portion of
the purchase price will be financed by a loan from that lending facility and the loan is not made at arm’s-
length. The same assessment will need to be made where an applicant proposes to sell license assets and
non-license assets of a station to different parties and the facts available to the Media Bureau seem to
suggest that the purchase prices for the license assets and the non-license assets do not reflect their fair
market values and the transaction is not truly at arm’s-length. We remind applicants of their required
certifications in their applications that the agreements placed in the station public file and submitted to the

Commission embody the complete and final understanding between the parties and that these agreements
comply fully with the Commission’s rules and policies.4 Consistent with that obligation, applicants must
submit all such documentation that is a part of their proposed transaction relevant to the Commission’s
review of their application, as described in this Public Notice. Pursuant to Section 308(b) of the Act and
Section 73.3514 of the Commission’s rules, if an application seeking approval of a proposed transaction
does not provide sufficient information for us to fully evaluate whether it would serve the public interest,
the applicants may be asked to provide additional information or documents,5 and our consideration of the
application will be delayed while we await that information.
We issue this guidance to apprise broadcasters and their representatives of some of the factors the
Bureau will consider in exercising its responsibility to review proposed assignments or transfers of
control of broadcast licenses pursuant to the Communications Act, Commission rules, and relevant
Commission precedent. Of course, we will continue to review the overall economic effects of, and
incentives created by, proposed transactions in determining whether they serve the public interest.
This action is taken by the Chief, Media Bureau, pursuant to authority delegated by 47 C.F.R. §
0.283 of the Commission’s rules.
For additional information, please contact David Brown (202-418-1645;
Press inquiries should be directed to Janice Wise (202-418-8165;

4 See FCC Form 314, Section II, Item 3, Section III, Item 3; FCC Form 315, Section III, Item 3, Section IV, Item 5.
5 47 U.S.C. § 308(b); 47 C.F.R. §73.3514(b) (“The FCC may require an applicant to submit such documents and
written statements of fact as in its judgment may be necessary. The FCC may also, upon its own motion or upon
motion of any party to the proceeding, order the applicant to amend the application so as to make it more definite
and certain.”). See also, 47 C.F.R. § 1.65(a); LUJ, Inc., Memorandum Opinion and Order, 17 FCC Rcd 16980,
16982-16983 (2002).

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