MEDIA OWNERSHIP

FCC Should Review 

the Effects of 

Broadcaster 

Agreements on Its 

Media Policy Goals

Report to the Chairman, Committee on 

Commerce, Science, and 

Transportation, U.S. Senate

June 2014

GAO-14-558

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-558, a report to the 

Chairman, Committee on Commerce, Science, 

and Transportation, U.S. Senate

June 2014

MEDIA OWNERSHIP

FCC Should Review the Effects of Broadcaster 

Agreements on Its Media Policy Goals

Why GAO Did This Study

Local television stations play an 

important role in educating, 

entertaining, and informing the citizens 

they serve. FCC limits the number of 

television stations an entity can own or 

control to advance its media policy 

goals of competition, localism, and

diversity. Competing television stations 

are entering into agreements to share 

or outsource services, and some 

policymakers are concerned about the 

effects of these agreements on 

competition and programming. 

GAO was asked to review issues 

related to broadcaster agreements. 

This report examines (1) the uses and 

prevalence of broadcaster agreements; 

(2) stakeholders’ views on the effects 

of broadcaster agreements; and (3) the 

extent, if at all, that FCC has regulated

these agreements.

To address these objectives, GAO

reviewed relevant FCC proceedings;

conducted a literature review;

interviewed officials from FCC,

industry, and consumer associations;

and conducted nongeneralizable case 

studies in 6 markets (3 with 

agreements and 3 without) selected 

from small and medium-sized markets.

What GAO Recommends

FCC should determine whether it 

needs to collect additional data to 

understand the prevalence and context 

of broadcast agreements and whether 

broadcaster agreements affect its

media policy goals of competition, 

localism, and diversity. FCC agreed 

with the recommendation and noted 

that it has taken initial steps to address 

the recommendation, including 

proposing disclosure of sharing 

agreements.

What GAO Found

Local television stations use broadcaster agreements to share services with one 

another, but data are limited on the prevalence of these agreements. Stations 

use agreements to share or outsource a range of services, such as selling 

advertising time and producing local news. Agreements are referred to by a 

variety of names and two—joint sales agreements and local marketing 

agreements—have regulatory definitions; other types of agreements have 

commonly been referred to as shared service agreements or local news service 

agreements. Stations may participate in more than one type of agreement.

Federal Communications Commission (FCC) officials and industry 

representatives could not identify a central data source that tracks all broadcaster 

agreements. Station owners and financial analysts said that agreements are 

more prevalent in small markets because they have lower advertising revenues

than large markets. Further, FCC officials and stakeholders said that agreements 

are becoming more prevalent, and stakeholders stated that economic factors, 

including declining advertising revenues, drive the use of agreements.

Stakeholders expressed mixed views on the effects of broadcaster agreements. 

Consumer groups raised concerns that agreements in which stations share news 

resources can lead to duplicative content in local newscasts. Station owners 

counter that the agreements are needed to allow some stations to continue 

providing news and allow other stations that previously did not provide news to 

begin doing so. In addition, some agreements include provisions that allow 

stations to jointly negotiate for their signals to be carried by cable and satellite 

providers. Cable and satellite providers argue that these agreements increase

stations’ negotiating leverage and thereby contribute to higher prices for cable 

and satellite service. In contrast, station owners counter that these concerns are 

overstated. Comprehensive data are not available to evaluate this issue, 

because the negotiations are subject to nondisclosure agreements, and there is 

no data source identifying which stations participate in agreements.

FCC evaluates broadcaster agreements that occur in the context of a merger or 

acquisition, but it has not collected data or completed a review to understand the 

use and effects of broadcaster agreements. FCC’s recent regulatory approach 

has been to evaluate broadcaster agreements that occur as part of a merger or 

acquisition and to propose specific remedies as needed. To promote its media 

policy goals of competition, localism, and diversity, FCC established media 

ownership rules that limit the number of stations an entity can own or control in a 

local market. Station owners and consumer groups said that broadcaster 

agreements are used in situations where common ownership of stations is 

prohibited by FCC’s media ownership rules. FCC has stated that it is unable to 

determine the extent to which broadcaster agreements affect its policy goals and 

media ownership rules. Specifically, FCC does not collect data and has not 

completed a review on the prevalence of agreements, how they are used, or their 

effects on its policy goals and media ownership rules. Yet federal standards for 

internal control note the importance of agencies’ having information that may 

affect their goals. Without data and a fact-based analysis of how agreements are 

used, FCC cannot ensure that its current and future policies on broadcaster 

agreements serve the public interest.

View GAO-14-558. For more information, 

contact Mark L. Goldstein at (202) 512-2834 

or goldsteinm@gao.gov.
Page i GAO-14-558 Broadcaster Agreements

Letter 1

Background 3

Television Stations Are Increasingly Sharing Services through a 

Variety of Broadcaster Agreements, but Data on the Prevalence 

of These Agreements Are Limited 9

Stakeholders Have Mixed Views on the Effects of Broadcaster 

Agreements on Television Programming and the Subscription 

Video Industry 19

FCC Has Not Completed a Review of the Use and Impacts of 

Broadcaster Agreements 23

Conclusions 28

Recommendation for Executive Action 30

Agency Comments 30

Appendix I Objectives, Scope, and Methodology 31

Appendix II Comments from the Federal Communications Commission 35

Appendix III GAO Contact and Staff Acknowledgments 36

Tables

Table 1: Common Types of Services Provided under Different 

Broadcaster Agreements 13

Table 2: Percentage of Full-Power Commercial and Satellite 

Stations with a Joint Sales Agreement (JSA) or Local 

Marketing Agreement (LMA), or Both, by Designated 

Market Area (DMA), as of February 6, 2014 15

Table 3: Average Local Television Stations’ Revenue by 

Designated Market Area (DMA) in 2011 16

Figures

Figure 1: Television-Programming Distribution Flow 4

Figure 2: Example of a Merger-Generated Shared Service 

Agreement 18

Contents
Page ii GAO-14-558 Broadcaster Agreements

Abbreviations

DMA designated market area 

DOJ Department of Justice 

FCC Federal Communications Commission 

JSA joint sales agreement 

LMA local marketing agreement 

LNS local news service agreement 

MVPD multichannel video programming distributor 

RTDNA Radio Television Digital News Association 

SSA shared service agreement 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-14-558 Broadcaster Agreements

441 G St. N.W.

Washington, DC 20548

June 27, 2014

The Honorable John D. Rockefeller IV

Chairman

Committee on Commerce, Science, and Transportation

United States Senate

Dear Mr. Chairman:

Local television stations play an important role in educating, entertaining, 

and informing the citizens they serve. Congress and the Federal 

Communications Commission (FCC) have recognized the importance of 

this role by allowing local television stations to use the public airwaves to 

broadcast their signals, and by giving stations specific rights with respect 

to carriage of their broadcast signals on cable, satellite, and other 

subscription video services. In return, Congress and FCC have 

established certain obligations for local television stations, such as 

requiring that stations operate in the public interest. The laws and 

regulations outlining how local television stations should serve the public 

interest have evolved over time and become less prescriptive. However, 

three long-standing policy goals have guided FCC’s regulation of stations: 

competition, localism, and diversity. To advance these policy goals, 

Congress empowered FCC, and FCC has implemented broadcast 

ownership rules that limit the number of stations an entity can own or 

control locally and nationally. Since these rules were established, the 

media landscape has evolved, resulting in the proliferation of cable 

networks and Internet outlets, to provide citizens a broader array of 

content than was once the case. This increase in media competition has 

presented economic challenges for local television stations. In some 

cases, stations have entered into broadcaster agreements that allow 

them to share resources with other stations or contract out certain 

services. However, some policymakers and public interest groups have 

expressed concerns that such agreements allow competing stations to 

collaborate, avoid FCC’s media ownership limits, and could negatively 

affect FCC’s policy goals of competition, localism, and diversity.

You asked us to review issues related to the use of broadcaster 

agreements. This report reviews (1) what is known about the uses and 

prevalence of broadcaster agreements; (2) stakeholders’ views on the 

effects of broadcaster agreements on programming and the subscription 

video industry; and (3) the extent, if at all, that FCC has regulated these 

agreements. 
Page 2 GAO-14-558 Broadcaster Agreements

To address these objectives, we conducted a literature review that 

included relevant FCC regulations and rulemakings, prior GAO reports, 

academic studies, industry and advocacy reports, and media articles. We 

verified information from the literature review through interviews with FCC 

and Department of Justice (DOJ) officials. We also interviewed a variety 

of stakeholders that included: representatives of broadcast networks; 

local television station owners; cable, satellite, and other subscription 

video service providers; trade associations; labor groups; consumer 

groups; financial analysts; and other individuals with knowledge of the 

broadcast industry. We selected local television station owners and 

subscription video service providers that filed comments in FCC’s 2010

media ownership proceeding and that varied in the number of stations 

they owned or the number of subscribers they served, respectively; we 

selected other stakeholders by reviewing prior GAO reports, academic 

studies, and comments filed in FCC media-ownership and related

proceedings, and through recommendations from other interviewees. 

To assess how broadcaster agreements are used in the television 

industry, we conducted nongeneralizable case studies of six markets 

(three in which local stations used broadcaster agreements and three in 

which they did not) to understand how agreements were used in specific 

markets and obtain the perspective of the various station owners in those 

markets; we selected the case study markets from small and mediumsized markets.

1 To assess what is known about the prevalence of 

broadcaster agreements, we interviewed stakeholders about the 

comprehensiveness of data collected by FCC, private-sector, publicinterest, and academic sources on the number of broadcaster 

agreements nationwide. In addition, we acquired data from BIA/Kelsey, a 

market-research firm, to assess the prevalence of certain types of 

agreements, the stations involved in the agreements, and the size of the 

markets served by the stations. We tested the reliability of BIA’s data by 

reviewing stakeholder opinions on the reliability and accuracy of the data, 

reviewing existing information about the data, and obtaining information 

 1

The three markets that we selected that had a broadcaster agreement were CasperRiverton, Wyoming; Topeka, Kansas; and Paducah, Kentucky. The three markets we 

selected that did not have a broadcaster agreement were Mankato, Minnesota; ColumbiaJefferson City, Missouri; and Madison, Wisconsin. During interviews with station owners in 

the Madison, Wisconsin, market, we learned of a broadcaster agreement in that market. 

However, as our case studies were selected as illustrative examples only, the presence of 

such an agreement does not pose a methodological limitation to our review.
Page 3 GAO-14-558 Broadcaster Agreements

from BIA officials about how they collect the data; we found the data 

sufficiently reliable for our purposes. 

To determine stakeholders’ views on the effects of broadcaster 

agreements on programming and the subscription video industry, we 

reviewed FCC dockets and interviewed representatives of broadcast 

networks; local television station owners; cable, satellite, and other 

subscription video service providers; trade associations; labor groups; 

consumer groups; financial analysts; and other individuals with 

knowledge of the broadcast industry to collect their arguments and any 

supporting studies and data on the effects of broadcaster agreements. To 

determine the extent to which FCC has regulated broadcaster 

agreements, we reviewed relevant FCC dockets and rulings and 

interviewed FCC officials. See appendix I for more information about our 

scope and methodology.

We conducted this performance audit from July 2013 to June 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Typically, households receive television programming through over-theair broadcasts or a subscription video service. Broadcast television 

provides free over-the-air programming to the public through local 

television stations; according to FCC, almost 10 percent of households 

exclusively rely on over-the-air television. In contrast, consumers pay fees 

to video providers, including cable operators, satellite providers, or 

telecommunications companies—collectively referred to as multichannel 

video programming distributors (MVPD)—for subscription video service 

that includes local television stations as well as cable networks, such as 

CNN and ESPN. Television broadcast stations are licensed by FCC and 

are permitted to transmit a video broadcast signal on a specific radio 

frequency in a particular area and at a particular strength. 

Television stations produce, acquire, and distribute programming. Some 

stations are owned by or affiliated with one of the four major broadcast 

Background

Television Broadcast 

Industry
Page 4 GAO-14-558 Broadcaster Agreements

networks (ABC, CBS, FOX, and NBC). If a local station is owned and 

operated by a network, it is referred to as an “owned and operated” 

station; if it is independently owned but affiliated with the network, it is 

referred to as an affiliate station. Owned and operated and affiliated 

stations carry network programming and network-inserted advertisements 

during specific time periods. For example, a station that is affiliated with 

FOX has an agreement with the network that allows it to show FOX 

programs at particular times of the day. Aside from the network-furnished 

programming, including prime time shows, afternoon soap operas, 

national news programs, and sports, local stations fill in the rest of the 

week’s programming time with local programming (such as local news) 

and syndicated programming.2 In addition, there are independent stations 

that are neither owned by nor affiliated with a broadcast network. Figure 1 

illustrates how television programming is distributed, including broadcast 

and cable network programming. 

Figure 1: Television-Programming Distribution Flow

 2

Syndicated programming is non-network programming or post-network programming 

(including reruns, game shows, and daytime talk shows) that is licensed directly to 

individual television stations. In the Matter of Annual Assessment of the Status of 

Competition in the Market for the Delivery of Video Programming, ¶ 187, 28 FCC Rcd. 

10587-88 (July 22, 2013) (Annual Report).
Page 5 GAO-14-558 Broadcaster Agreements

Local commercial television stations earn the majority of their revenue by 

selling advertising time.3 In particular, advertising aired during local news 

represents a substantial portion of a local commercial station’s revenue. 

According to the 2013 Radio Television Digital News Association 

(RTDNA)/Hofstra University survey of 1,377 television stations, news 

represented an average of about 49 percent of station revenue, with that 

percentage increasing as market size decreased.4 The survey also found 

that of the stations surveyed, a total of 717 stations provided their own 

local news programming, and 235 stations received and aired news 

produced by another station. Many stations also receive compensation 

from MVPDs, known as retransmission consent, which is discussed later 

in this section.

Local broadcast television remains an important source of news for 

Americans; however, consumers are also getting their news from cable 

news networks, such as CNN, as well as online via computers and mobile 

devices. According to the Pew Research Center’s analysis of 2013 

Nielsen data, over the course of a month, 71 percent of U.S. adults 

watched local television news, 65 percent watched network news, and 38 

percent watched cable news.5 However, the audience for local news has 

declined since 2007, with viewership down 3 percent for morning 

newscasts, 12 percent for early evening newscasts, and 17 percent for 

late night newscasts.6 In addition, more Americans are also getting their 

news online via desktop and laptop computers or a mobile device. For 

example, according to another Pew Research Center report, in 2013, 82 

 3

In contrast, local noncommercial educational stations, such as PBS affiliates, are owned 

and operated by a public agency or nonprofit private foundation, corporation, or 

association; these stations generally meet their operating expenses with contributions 

from viewers and public-interest foundations, and may receive some government support. 

47 U.S.C. § 397; see, also, 47 U.S.C. § 338(k)(6).

4

2013 RTDNA/Hofstra University Survey. RTDNA is a professional organization serving 

the electronic news profession. RTDNA members include local and network news 

executives, news directors, producers, reporters, digital news professionals, educators, 

and students. The RTDNA/Hofstra University Survey is an annual survey of operating 

television stations.

5

Kenneth Olmstead et al., “How Americans Get TV News at Home,” Pew Research 

Journalism Project (Oct. 11, 2013), accessed Apr. 25, 2014, 

http://www.journalism.org/2013/10/11/how-americans-get-tv-news-at-home/. 

6

Katerina Eva Matsa, “Local TV Audiences Bounce Back,” Pew Research Center (Jan. 28, 

2014), accessed Apr. 25, 2014, http://www.pewresearch.org/fact-tank/2014/01/28/local-tvaudiences-bounce-back/. 
Page 6 GAO-14-558 Broadcaster Agreements

percent of Americans said they used a desktop or laptop computer to 

access news, whereas 54 percent said they accessed it on a mobile 

device (cell phone or tablet).7

FCC assigns licenses for television stations to use the airwaves expressly 

on the condition that licensees serve the public interest and are 

responsive to the needs of the local community. Section 310 of the 

Communications Act of 19348 outlines the limitations on holding and 

transferring broadcast licenses. For example, section 310(d) requires 

prior Commission approval before a license is assigned or transferred; 

when FCC is reviewing an application for a license assignment or 

transfer, it must determine whether the public interest, convenience, and 

necessity will be served by granting the application.

9 Toward this end, 

FCC has established three policy goals:10

• Competition. FCC seeks to create a marketplace in which broadcast 

programming meets the needs of consumers and has stated that 

competition drives stations to invest in better local programming. 

When reviewing competition in local television markets, FCC 

considers competition for viewers and advertisers.11

• Localism. FCC seeks to ensure that each station meets the needs 

and issues of the community that it is licensed to serve with the 

programming that it offers.

• Diversity. FCC seeks to maintain and enhance diversity based on the 

idea that diverse ownership among media outlets increases the 

number of viewpoints in broadcast content compared to what would 

otherwise be the case in a more concentrated ownership structure.12

 7

Pew Research Center, “Key Indicators in Media & News,” State of the News Media 2014 

(Mar. 26, 2014), accessed Apr. 24, 2014, http://www.journalism.org/2014/03/26/state-ofthe-news-media-2014-key-indicators-in-media-and-news/.

8

Communications Act of June 19, 1934, § 310, as amended, codified at 47 U.S.C. § 310 

(the Communications Act).

9

47 U.S.C. §310(d).

10In the Matter of 2014 Quadrennial Regulatory Review – Review of the Commission’s 

Broadcast Ownership Rules and Other Rules, ¶ 14, FCC 14-28, 2014 WL 1466887, at p. 7 

(Apr. 15, 2014) (2014 Quadrennial Review FNPRM and Report and Order). 

112014 Quadrennial Review FNPRM and Report and Order, ¶ 22, at p. 11.

122014 Quadrennial Review FNPRM and Report and Order, ¶ 14, at p. 7.

Regulatory Environment
Page 7 GAO-14-558 Broadcaster Agreements

To advance these policy goals, Congress empowered FCC, and FCC has

implemented rules that limit the number of stations an entity can own or 

control locally and nationally. 

• Local television ownership limit.13 Under the local television 

ownership limit, a single entity can own two television stations in the 

same designated market area (DMA)14 if (1) at least one of the 

stations is not ranked among the top-four stations in terms of 

audience share and (2) at least eight independently owned and 

operating full-power commercial or noncommercial television stations 

would remain in the DMA.15 An existing licensee of a failed, failing, or 

unbuilt television station may seek a waiver of the rule.16

• National television ownership cap.17 Subject to compliance with other 

ownership rules, a single entity can own any number of television 

stations nationwide as long as the stations collectively reach no more 

than 39 percent of national television households.

• Cross-ownership limits. FCC has also established rules limiting crossownership of media outlets, such as a newspaper and television 

station or a radio and television station in the same market.18 For 

 1347 C.F.R. § 73.3555(d).

14To measure television viewing, Nielsen Media Research divided the country into 210 

local television markets, also referred to as designated market areas (DMA). Each DMA 

consists of all the counties whose largest viewing share is given to stations of the same 

market area. 

15Alternatively, a single entity can own multiple television stations in the same market if 

the stations’ signal contours (coverage areas) do not overlap. 47 C.F.R. § 73.3555(b)(1). 

16A “failed” station is one that has been dark for at least 4 months or is involved in courtsupervised involuntary bankruptcy or involuntary insolvency proceedings. Under the 

standard for “failing” stations, a waiver is presumed to be in the public interest if the 

applicant satisfies each of the following criteria: (1) one of the merging stations has had an 

all-day audience share of 4 percent or lower, (2) the financial condition of one of the 

merging stations is poor, and (3) the merger will produce public interest benefits. Under 

the standard for “unbuilt” stations, a waiver is presumed to be in the public interest if an 

applicant meets each of the following criteria: (1) the combination will result in the 

construction of an authorized but as yet unbuilt station and (2) the permittee has made 

reasonable efforts to construct the licensed facility and has been unable to do so. (47 

C.F.R. § 73.3555 Note 7 and In the Matter of Review of the Commission’s Regulations 

Governing Television Broadcasting, ¶ 86, 14 FCC Rcd. 12903, 12941 (1999) (Local TV 

Ownership Report and Order).

17See 1996 Act, § 202(c), as amended by Consolidated Appropriations Act, 2004, Pub. L. 

No. 108-199, § 629, 118 Stat. 3, 99.

1847 C.F.R. § 73.3555(c) and (d).
Page 8 GAO-14-558 Broadcaster Agreements

example, the newspaper/broadcast cross-ownership rule prohibits 

ownership of a daily newspaper and television stations that serve the 

same market. 

FCC developed attribution rules to determine what interests should be 

counted when applying these media ownership limits.19 FCC’s attribution 

rules seek to identify those interests in or relationships to licensees that 

confer on their holders a degree of influence such that the holders have a 

realistic potential to affect the programming decisions or other core 

operating functions of licensees.20 If an entity, such as a station 

ownership group, is found to have an attributable interest in a station, that 

station would be included when determining whether the entity has 

exceeded FCC’s ownership limits. 

FCC has several carriage and programming rules that are designed to 

support the provision of local content by local television stations. These 

rules set forth the conditions under which MVPDs carry stations’ content. 

Some key rules that affect carriage and programming include:

• Must carry and carry-one carry-all.

21 The must carry and carry-one 

carry-all rules address the right of television broadcast stations to 

have their signals carried by MVPDs serving their markets. Stations 

that select must-carry or carry-one carry-all status must be carried by 

the MVPDs serving the station’s market, but receive no compensation 

from the MVPDs. 

• Retransmission consent.

22 Retransmission consent refers to 

permission allowing an MVPD to retransmit a station’s signal when 

the station chooses not to elect carriage through the must carry or 

carry-one carry-all rules. By opting for retransmission consent, 

 1947 C.F.R. § 73.3555, Notes. 

20In the Matter of Review of the Commission’s Regulations Governing Attribution of 

Broadcast and Cable/MDS Interests, ¶ 40, 14 FCC Rcd. 12559, 12580 (1999) (Report and 

Order).

21The must carry rule enables each commercial and noncommercial television broadcast 

station to require cable operators in its local market to carry its signal. 47 U.S.C. § 534(a); 

47 C.F.R. § 76.56. Under the carry-one carry-all provision, any satellite operator that 

chooses to serve a particular local area (by carrying an in-market local station) must also 

carry upon request the signal of all television broadcast stations located within the same 

local market. 47 U.S.C. § 338; 47 C.F.R. § 76.66.

2247 U.S.C. § 325(b); 47 C.F.R. § 76.64.
Page 9 GAO-14-558 Broadcaster Agreements

stations give up the guarantee of carriage in exchange for the right to 

negotiate for the terms of carriage, including potential compensation. 

Retransmission rights are negotiated directly between a station and 

the MVPD. We have previously found that after the 1992 Act was 

enacted, negotiations for retransmission consent generally involved 

“in kind” compensation to local broadcasters, such as carriage of new, 

affiliated cable networks.23 However, in recent years, financial 

compensation has become more common and retransmission fees 

received by local stations have increased. 

By statute, FCC is required to review its media ownership rules every 4

years—the quadrennial review—and determine whether any such rules 

remain necessary in the public interest.24 

Television stations can enter into agreements with other stations to share 

or provide a variety of services. The agreements between stations can 

involve either two or more stations sharing a resource or one station 

providing a service to another station. Common services that can be

shared or provided between stations include:

 23GAO, Telecommunications: Issues Related to Competition and Subscriber Rates in the 

Cable Television Industry, GAO-04-8 (Washington, D.C.: Oct. 24, 2003).

241996 Act, § 202(h), 110 Stat. 56, 111-112, as amended by the Consolidated 

Appropriations Act, 2004, § 629, 118 Stat., 99.

Television Stations 

Are Increasingly 

Sharing Services 

through a Variety of 

Broadcaster 

Agreements, but Data 

on the Prevalence of 

These Agreements 

Are Limited 

Television Stations Can 

Share a Variety of 

Services through 

Broadcaster Agreements 
Page 10 GAO-14-558 Broadcaster Agreements

• News resources. Stations can enter into an agreement to share newsgathering resources, such as helicopters, reporters, cameramen, 

video footage, and graphics. For example, in 2009, three television 

stations in Phoenix, Arizona, entered into an agreement to share one 

news helicopter for aerial footage of news stories and traffic reporting.

• Production and delivery of programming. Two stations can enter into 

an agreement wherein one station produces another station’s local 

news. For example, in West Palm Beach, Florida, E.W. Scripps 

Company station WPTV-TV (an NBC affiliate) produces newscasts for 

Raycom-owned WFLX (a FOX affiliate) at 7:00 to 9:00 a.m., 4:00 to 

4:30 p.m., and 10:00 to 11:00 p.m.

• Program acquisition. Stations can enter into an agreement wherein 

the licensee or owner of one station can negotiate another station’s 

affiliation agreement with a broadcast network. For example, one 

station group owner told us that it negotiated the renewal of affiliation 

agreements at the request of the station owners that it has 

agreements with.

• Joint retransmission consent negotiations. A station owner can 

contract out its retransmission consent negotiations with MVPDs to 

another station owner, meaning that the retransmission consent fees 

are handled during one negotiation, despite the fact that the stations 

are not owned by the same company. As discussed later in this 

report, in March 2014, FCC prohibited such arrangements if they 

involve two or more separately owned top-four stations (based on 

audience share) in the same market.

• Advertising sales. A licensee or owner of a station can authorize 

another station to sell its advertising time.

• Station engineering. One station can provide technical support for 

another station. For example, one station can monitor, maintain, 

repair, and install another station’s technical equipment and ensure 

the quality of the other station’s on-air technical performance.

• Office services. One station can provide back office services for 

another station, such as providing office space, accounting services, 

and other general administrative services. 

We identified four common types of agreements that may include 

combinations of the services described above. In some cases, FCC has 

established regulatory definitions for these agreements; in other cases, it 

is a common industry term that may be used to characterize an 

agreement, but there is no regulatory definition. The services provided by 

or shared between stations fall under the following common types of 

broadcaster agreements:
Page 11 GAO-14-558 Broadcaster Agreements

• Joint sales agreement (JSA).25 A JSA is an agreement in which one 

station is allowed to sell the advertising time for another station in 

exchange for a percentage of the advertising revenues, a flat fee, or 

some other consideration. For example, stations WEEK-TV and 

WHOI-TV in Peoria, Illinois, entered into a JSA agreement in 2009. 

According to the agreement, WEEK-TV sells advertising time and 

provides other services for WHOI-TV in exchange for a monthly 

commission equal to 30 percent of the total amount of net advertising 

revenue that WEEK-TV sells for WHOI-TV.

• Local marketing agreement (LMA).26 Also referred to as time 

brokerage agreements, LMAs allow one or more parties other than 

the station’s owner to purchase blocks of time and then provide 

programming and sell advertising in that block of time. For example, in 

Austin, Texas, KXAN (an NBC affiliate) entered into an LMA with 

KNVA, an affiliate of The CW Network. Under the agreement, KXAN 

provides news, sports, informational, and entertainment programming 

to KNVA. According to the agreement, KXAN’s owner (LIN Media 

LLC) has the sole right to sell advertising time to be placed in all 

programming broadcasted on KNVA and also retains all advertising 

revenues from the advertising sales.27 In exchange, KXAN’s owner 

pays KNVA’s owner an annual fee for the duration of the agreement.

• Local news service agreement (LNS). LNSs are agreements in which 

multiple stations in a local market share news-gathering resources. 

LNSs can include sharing photographers, news helicopters, or 

satellite trucks to cover a news event. For example, stations can rely 

on one camera crew shared by all participating stations to get footage 

of a press conference rather than covering it individually.

• Shared service agreement (SSA). SSA is a broad term that can 

include a variety of services. SSAs can include arrangements wherein 

one station produces another station’s news content and also 

 25See 47 C.F.R. § 73.3555 Note 2k.

26See 47 C.F.R. 73.3555 Note 2j.

27This agreement was created prior to a 1999 FCC order that made LMAs attributable if 

an entity programs more than 15 percent of another in-market station’s weekly 

programming hours. In the Matter of Review of the Commission’s Regulations Governing 

Attribution of Broadcast and Cable/MDS Interests, ¶ 55, 14 FCC Rcd. 12585.
Page 12 GAO-14-558 Broadcaster Agreements

provides operational, administrative, and programming support.28 For 

example, according to Nexstar Broadcasting Group, Inc.’s comments 

filed with FCC in 2012, Mission Broadcasting Inc. paid Nexstar 

approximately $7.2 million for producing more than 7,400 hours of 

local news on 12 of its stations, and also for engineering, accounting, 

and other back office administrative assistance provided under the 

parties’ SSAs.

The various services provided by and shared between stations mentioned 

above fall under the four common types of broadcaster agreements (see 

table 1). Stations may have several agreements in place, such as an SSA 

and JSA, or a single agreement that includes components typical of 

different types of agreements. For example, according to a March 5, 

2012, filing from the Coalition to Preserve Local TV Broadcasting, Fort 

Wayne, Indiana, stations WISE-TV and WPTA (TV) operated under a 

JSA and SSA agreement; WISE-TV provides news programming, sales, 

and other back office services for WPTA (TV) and both stations transmit

from the same tower. Stakeholders told us that some companies have 

relationships through which one company enters into a series of 

broadcaster agreements to allow another company to provide the 

services for most of its stations. For example, as mentioned above, 

Mission Broadcasting, Inc. typically enters into broadcaster agreements 

with Nexstar Broadcasting Group, Inc. 

 28In 2014, as part of a proposal to require the disclosure of SSAs, FCC requested 

comment on defining an SSA as any agreement or series of agreements, whether written 

or oral, in which (1) a station, or any individual or entity with an attributable interest in the 

station, provides any station-related services, including, but not limited to, administrative, 

technical, sales, or programming support, to a station that is not under common ownership 

(as defined by the Commission’s attribution rules); or (2) stations that are not under 

common ownership (as defined by the Commission’s attribution rules), or any individuals 

or entities with an attributable interest in those stations, collaborate to provide or enable 

the provision of station-related services, including, but not limited to, administrative, 

technical, sales, or programming support, to one or more of the collaborating stations. 

FCC concluded that this broad definition would include LNSs. 2014 Quadrennial Review 

FNPRM and Report and Order, ¶¶ 330, 331, at p. 153. 
Page 13 GAO-14-558 Broadcaster Agreements

Table 1: Common Types of Services Provided under Different Broadcaster Agreements

Services

Agreements

Joint sales 

agreement

Local marketing 

agreement

Local news service 

agreement

Shared service 

agreement

Sharing of news resources (e.g., 

cameras, helicopter)

X X

Program production X X X

Program acquisition X X

Advertising sales X X

Station engineering X

Office (e.g., accounting) X

Source: GAO analysis based on interviews with stakeholders and document reviews. | GAO-14-558.

Note: While the regulatory definition of a joint sales agreement focuses on the sale of advertising, 

these agreements have been written to include the provision of other services, such as programming 

or technical services.

FCC officials and industry representatives were unable to identify a 

central data source that tracks all broadcaster agreements. According to 

FCC officials, the Commission does not track or have a central data 

source on the number of agreements, the stations involved, or services 

provided through the agreements. Stations are required to disclose and 

file certain types of agreements with FCC, but not all agreements. In 

particular, FCC regulations require stations to file JSAs and LMAs in their 

public inspection files to provide the local community with information on 

stations’ programming and operations.29 In addition, if one station uses an 

LMA to provide more than 15 percent of the programming hours for 

another same-market station, FCC requires the stations involved to file 

 29Broadcast stations are required to maintain a “public file” that contains information about 

each station’s operations and service. A station’s public inspection file includes a variety of 

information, including political time sold or given away, data on ownership of each station, 

and active applications each station has filed with the Commission. 47 C.F.R. § 73.3526.

While Data Are Limited on

the Number and Nature of 

Broadcaster Agreements, 

Stakeholders Report That 

Agreements Are Becoming 

More Prevalent 

Data Limitations
Page 14 GAO-14-558 Broadcaster Agreements

that agreement with the Commission.30 In April 2014, FCC released an 

order requiring that stations file copies of JSAs with the Commission if the 

JSA involves one entity’s selling more than 15 percent of another samemarket station’s weekly advertising time.31 There are no similar filing 

requirements for SSA and LNS agreements. However, in April 2014, FCC 

requested comments on whether it should require stations to disclose 

SSAs.

32 Station owners must submit copies of all their agreements when 

they file an application for a license assignment or transfer, which 

typically occurs with a merger or acquisition, and they must describe any 

agreements or contracts in their biennial ownership reports submitted to 

FCC; however, this would not include SSAs or LNSs. 

Some stakeholders have attempted to track the number and nature of 

these agreements; however, these studies have limitations and do not 

cover all the types of agreements. For example, BIA/Kelsey surveys 

station personnel and reviews press releases to collect data on the 

number of JSA and LMA agreements, but it does not track SSA or LNS 

agreements.33 In addition, other stakeholders have reported on the 

number of DMAs in which stations have an agreement, but the findings of 

such reports have varied as the studies used different methodologies. For 

example, some studies identified agreements by searching publicly 

available documents while others contacted stations or MVPDs directly. 

Based on the JSA and LMA data available from BIA/Kelsey and from our 

interviews with industry representatives, broadcaster agreements appear 

to be less prevalent in large markets. In particular, while 4 percent of 

stations in the largest 25 DMAs participated in a JSA or LMA, or both, in 

 3047 C.F.R. § 73.3613.

312014 Quadrennial Review FNPRM and Report and Order, App. 2, ¶¶ 2, at p. 182-183. 

322014 FNPRM and Report and Order, ¶ 328, at p. 152. 

33According to our analyses of BIA/Kelsey data, as of February 6, 2014, 71 of 210 DMAs 

had at least one full-power commercial main or satellite station participating in a JSA or 

LMA agreement. Data on SSA and LNS agreements were not available. BIA/Kelsey 

defines a satellite station as a full power commercial station that rebroadcasts the same 

programming as a station in the same market or an adjacent market. The station may 

have staff on site due to the production of local news broadcasts. The remainder of the 

programming comes from the parent (primary) station.

Prevalence of Agreements
Page 15 GAO-14-558 Broadcaster Agreements

February 2014, 20 percent of the stations in DMAs ranked 101 through 

150 based on size participated in these agreements (see table 2 below).34

Table 2: Percentage of Full-Power Commercial and Satellite Stations with a Joint 

Sales Agreement (JSA) or Local Marketing Agreement (LMA), or Both, by 

Designated Market Area (DMA), as of February 6, 2014 

DMAs (ranked from largest to 

smallest)

Percentage of full-power commercial 

stations with a JSA or LMA, or both

1–25 4%

26–50 12%

51–100 16%

101–150 20%

151–210 12%

Source: GAO analysis of BIA/Kelsey data. | GAO-14-558.

Note: The data do not include shared service agreements or local news service agreements and 

multicast channels (multiple channels aired by a single broadcast station). Satellite stations, as 

defined by BIA/Kelsey, are full power commercial stations that rebroadcast the same programming as 

a main station in the same market or an adjacent market, but may also have staff on site for the 

production of local news broadcasts.

Broadcasters and financial analysts told us that one factor contributing to 

the greater use of agreements in small to medium markets is that stations 

in these markets receive less advertising revenue than stations in large 

markets. The Pew Research Center’s analysis of BIA/Kelsey data shows 

that in 2011, stations in the largest 25 local television markets had 

average revenues substantially greater than stations in smaller markets.35

In particular, stations in the largest 25 DMAs received, on average, 

advertising revenues of $57 million per year, while stations in DMAs

ranked 151 through 210 according to size received $3 million (see table 

3). However, the costs of broadcasting (cameras, vehicles, bandwidth, 

monitors, and other production infrastructure) can be similar across small 

 34DMAs are ranked in order of size, with the largest market (DMA 1) being New York City. 

Stations in large markets may still enter into agreements, particularly LNS agreements. 

For example, NBC and FOX entered into agreements to share camera crews in some 

markets, including Chicago, Dallas, Los Angeles, New York, Philadelphia, and 

Washington.

35Pew Research Center, “All Market Sizes Lost Revenue on Average in 2011,” The State 

of the News Media 2013 accessed May 2, 2014, 

http://stateofthemedia.org/2013/local-tv-audience-declines-as-revenue-bounces-back/local

-tv-by-the-numbers/24-all-markets-sizes-lost-revenue-on-average-in-2011/. 
Page 16 GAO-14-558 Broadcaster Agreements

and large markets. Thus, broadcasters in small- and medium-sized 

markets are more likely to enter into agreements to share or reduce 

costs. 

Table 3: Average Local Television Stations’ Revenue by Designated Market Area 

(DMA) in 2011

DMAs (ranked from largest to 

smallest)

Average local television 

stations’ revenue (dollars in 

millions)

1–25 $57

26–50 $21

51–100 $11

101–150 $6

151–210 $3

Source: Pew Research Center 2013 State of the Media Report’s analysis of BIA/Kelsey data. | GAO-14-558.

Note: Advertising comprises the bulk of a station’s revenue.

Stakeholders also noted that stations in small and medium markets may 

be more likely to enter into agreements because FCC’s ownership rules 

disproportionately affect stations in these markets. Specifically, as 

mentioned previously, FCC rules allow a single entity to own two 

television stations in the same DMA if at least one of the stations is not 

ranked among the top four stations in terms of audience share and at 

least eight independently owned and operating full-power television 

stations would remain in the DMA. Small markets are less likely to have 

enough stations to meet these requirements. For example, the smallest 

market with 9 or more stations, which could support a merger, is the 

Spokane, Washington, market.

36 Thus, stations in smaller markets may 

use broadcaster agreements to gain operating efficiencies that they 

cannot obtain through common ownership. 

 36Our analysis was based on BIA/Kelsey data on the number of stations and the 

corresponding parent company in each market. For the purposes of our analysis of the 

number of independent stations in a market, we did not include stations based in Mexico 

that also transmit into U.S. DMAs. In addition, there are markets larger than Spokane, 

Washington—such as Baltimore, Maryland—that do not have enough independently 

owned stations to support a merger. 
Page 17 GAO-14-558 Broadcaster Agreements

According to FCC and industry representatives, agreements are being 

used more often in recent years. Station owners and financial analysts

noted that factors driving the use of agreements include declining 

advertising revenues and an increase in station acquisitions and mergers, 

as described below.

• Advertising revenues. The average advertising revenue for stations 

fell during the 2007-2009 recession, and has not returned to prerecession levels. Station owners stated that this was part of a longterm trend of declines in advertising revenues for local television 

stations and attributed it to increasing competition in recent years for 

viewers and advertisers from cable and non-traditional media outlets, 

such as Facebook. The average over-the-air local television station’s 

advertising revenue has decreased 10 percent from 2004 to 2012.37

According to industry representatives, some stations are entering into 

agreements to help reduce operating costs to offset the dilution of 

advertising revenue. However, some consumer groups have argued 

that the recent decline in advertising revenues is the result of the 

recession and that advertising revenue has been on the rise since the 

recession ended in 2009. Specifically, between 2009 and 2012, 

average over-the-air advertising revenues have increased 28 percent. 

Consumer groups have also noted that other factors have improved

station value, such as increased political advertising and a growth in 

retransmission consent fees. FCC sought comment on issues related 

to stations’ competition for audience share and advertising revenue in 

2014.

38

• Station acquisitions and mergers. In some instances, agreements are 

components of a larger transaction, such as an acquisition or merger. 

According to the Pew Research Center, in 2013, there were a large 

number of mergers and acquisitions in the television broadcast 

industry; the number of acquisitions of full-powered local stations 

increased from 95 acquisitions representing $1.9 billion in 2012 to 290 

acquisitions representing $8.8 billion in 2013. During a merger or 

acquisition, stations may enter into agreements that allow them to 

share services and gain efficiencies while still avoiding violating FCC’s 

ownership rules that limit the number of media outlets an entity can 

 37The estimates are based on the Pew Research Center’s Journalism Project. The 

estimates are for over-the-air advertising revenue, do not include digital or mobile 

advertising revenue, and are based on Pew’s analysis of BIA/Kelsey data.

382014 Quadrennial Review FNPRM and Report and Order, ¶¶ 20, 24, at pp. 9-10, 11-12.
Page 18 GAO-14-558 Broadcaster Agreements

own or control locally and nationwide. For example, as depicted in 

figure 2, when Gannett acquired Belo’s television stations in 2013, it 

entered into broadcaster agreements for stations that were located in 

markets where Gannett already owned newspapers or stations and 

was thus prohibited from taking ownership of those stations through 

the merger. In one of the affected markets, Louisville, Kentucky, 

Gannett owns The Courier Journal, a newspaper; to avoid violating 

FCC’s cross-ownership rules, Gannett sold the newly acquired Belo 

station, WHAS-TV, in Louisville, to Sander Operating Co. and entered 

into agreements so that Gannett would handle all ad sales and 

provide local news for the station. 

Figure 2: Example of a Merger-Generated Shared Service Agreement 
Page 19 GAO-14-558 Broadcaster Agreements

In filings with FCC and interviews with us, consumer groups and labor 

representatives raised concerns that some broadcaster agreements 

negatively affect local news programming. In particular, these groups 

stated that agreements in which news resources are shared or 

outsourced can lead to duplicative content in local newscasts. In reports 

created or commissioned by consumer and labor groups, researchers 

have identified stations involved in broadcaster agreements using the 

same reporter, anchor, scripts, video, or graphics. The extent to which 

such resources are shared varies with each agreement, but one case 

highlighted by consumer and labor groups is an SSA between three 

stations in Honolulu, Hawaii, that resulted in consolidated news 

operations and the stations’ airing identical coverage of a local election.

Consumer groups have also filed comments with FCC stating that the use 

of broadcaster agreements leads to less diversity in programming and

may negatively affect minority ownership by allowing companies to 

circumvent media ownership restrictions. For example, in comments filed 

with FCC, a consortium of consumer groups stated that SSAs may 

reduce opportunities for minority and women entrants to acquire stations 

by allowing struggling stations to avoid the requirements for a failed 

station waiver.39

 39Under 47 C.F.R. § 73.3555 (note 7), a failing station can get a waiver of the local 

television limit to sell to an in-market broadcaster if it can show that the in-market 

broadcaster is the only entity willing and able to operate the station. This requirement was 

crafted in order to allow opportunities for new entrants, including minorities and women, to 

purchase broadcast stations. 

Stakeholders Have 

Mixed Views on the 

Effects of Broadcaster 

Agreements on 

Television 

Programming and the 

Subscription Video 

Industry

Programming
Page 20 GAO-14-558 Broadcaster Agreements

Station owners counter that these agreements do not necessarily lead to 

duplicative local news programming and can, in fact, better serve 

residents by providing news at different times. Station owners and a trade 

association representative explained that even if two stations in the same 

market are jointly owned or controlled, the local news on each station will 

differ, because each station needs to draw viewers from different 

audiences. For example, one station owner told us that providing the 

exact same newscast on two different stations can lead to a 

cannibalization of both stations’ audience ratings, advertising revenues, 

and profits, so it is in the stations’ self-interest to maintain separate 

identities and target different audiences. Station owners also noted that 

agreements can be used to air news at different times of day. For 

example, some station owners told us that a local FOX–affiliated station 

may enter into an agreement to have a newscast produced by the local 

ABC-, CBS-, or NBC-affiliated station, meaning that the FOX station can 

air news at 10:00 p.m., while the other station airs its news at 11:00 

p.m.40

In addition, broadcasters, station owners, and the financial analysts we 

interviewed told us that agreements can result in economic efficiencies 

that are needed in certain cases to allow a station to continue providing 

any news at all. They added that the agreements have also provided 

localism and diversity benefits by allowing some stations that previously 

did not provide news to begin doing so, or to add additional local 

programming. For example, in Wichita Falls, Texas, Nexstar’s NBC 

station provides services that allowed the FOX station, which previously 

did not air local news, to air a 9:00 p.m. newscast. Similarly, a trade 

association told us that a JSA and SSA between stations owned by 

Schurz Communications Inc. and Entravision Holdings LLC resulted in 

the launch of Spanish-language news on a station in Derby, Kansas, 

making it the first and only Spanish-language local television news 

operation in the state. In our six case-study markets, some station owners 

who had not entered into agreements stated that this was because their 

station was strong economically and did not need an agreement. 

 40The FOX network airs 2 hours of network programming in the evening whereas ABC, 

CBS, and NBC air 3 hours. Thus, FOX affiliates can air their local news an hour earlier 

than ABC, CBS, and NBC affiliates. 
Page 21 GAO-14-558 Broadcaster Agreements

MVPDs voiced concerns about the impact of broadcaster agreements on 

the subscription video industry. In some cases, stations involved in 

broadcaster agreements enter into joint negotiations with MVPDs 

regarding the retransmission consent fee the MVPDs will pay to carry the 

stations. We heard of two ways in which joint retransmission negotiations 

may occur: 

• Two or more separately owned stations located in the same market 

enter into an agreement in which they are represented by one 

negotiator who negotiates the retransmission consent fees for the 

separately owned stations at once.

• In the case of large station groups, the company may represent all of 

its stations, as well as all of the stations it operates via broadcaster 

agreements, during the negotiations. 

MVPDs opposed the use of joint negotiations by separately owned 

broadcast stations, particularly when the negotiations included multiple 

top-four stations (typically ABC, CBS, FOX, and NBC) in one market. 

MVPDs noted that the increased risk of losing more than one of the topfour stations in a given market gives the negotiating stations more 

leverage over the MVPDs. MVPDs said that the increased leverage can 

lead to higher retransmission consent fees that could be passed on to 

consumers. 

Station owners and two of three financial analysts we interviewed counter 

that MVPDs overstated the extent to which joint negotiation of 

retransmission consent affects the final retransmission consent fee, and 

identified other factors affecting retransmission consent negotiations.41

For example, we were told that in cases in which a broadcaster or station 

group owns multiple stations, the MVPD and station owner negotiate the

retransmission consent terms for all of the owner’s stations across 

multiple geographic markets. Station owners and MVPDs both noted that 

in such a negotiation, the amount of leverage each party—the station 

owner and MVPD—has depends on the overlap in the stations’ audience 

size and the number of MVPD subscribers. For example, one MVPD 

stated that if a station group owns stations in 70 percent of the MVPD’s 

service area, then the station group has more leverage because a 

 41The third analyst stated that there is disagreement among station owners regarding the 

extent to which the number of stations involved affects leverage in retransmission consent 

negotiations. He added that some station owners believe that leverage depends on the 

strength of a station’s programming.

Subscription Video 

Industry 
Page 22 GAO-14-558 Broadcaster Agreements

programming blackout would affect a large percentage of the MVPD’s 

subscribers than would be the case if the station group only covered 10

percent of the MVPD’s service area.

Comprehensive data are not available to evaluate the effect of 

broadcaster agreements on retransmission consent fees, but FCC 

recently took action to prohibit separately owned top-four stations in the 

same market from engaging in joint retransmission consent negotiations.

Broadcasters and MVPDs have each submitted economic studies to FCC 

supporting their positions, and a few individual MVPDs provided data to 

FCC on how joint retransmission consent negotiations affected their 

retransmission consent fees. However, comprehensive data on the extent 

to which these agreements affect retransmission consent fees are not 

available, because retransmission consent fee negotiations are subject to 

non-disclosure agreements. Moreover, even if the retransmission consent 

fees were publicly available, as we noted earlier, it is not always known 

when stations are involved in a broadcaster agreement. On March 31, 

2014, FCC adopted an order prohibiting separately owned, top-four 

stations in the same market from entering into joint retransmission

consent negotiations with one another, or otherwise collaborating during 

retransmission consent negotiations.42 In the order, FCC concluded that 

joint negotiation by same market, separately owned top-four stations 

eliminates price rivalry between and among stations that otherwise would 

compete directly for carriage on MVPD systems and the associated 

retransmission consent revenues. FCC added that joint negotiation gives 

such stations both the incentive and the ability to impose on MVPDs 

higher fees for retransmission consent than they otherwise could impose 

if the stations conducted negotiations for carriage of their signals 

independently.

DOJ took action in 1996 when three companies, each owning a network

affiliate in Corpus Christi, Texas, agreed not to enter into a retransmission 

consent agreement with any cable operator until the operator had 

reached an agreement with all three companies. In the complaint, DOJ 

stated that the effect of this combination was to increase the price of 

retransmission consent and to restrain competition among the defendants 

 42In the Matter of Amendment of the Commission’s Rules Related to Retransmission 

Consent, ¶¶ 1, 27, FCC-14-29, at pp. 2, 10-12, 2014 WL 1284562 (March 31, 2014) 

(Report and Order and FNPRM). 
Page 23 GAO-14-558 Broadcaster Agreements

in the sale of retransmission rights.43 DOJ officials told us that in this 

case, the companies were not involved in any other agreements, such as 

SSAs, and if they had been, DOJ would have evaluated whether there 

were efficiencies derived from the agreements that would have balanced 

against the anticompetitive effects.

FCC’s recent regulatory approach has been to evaluate broadcaster 

agreements that occur as part of a merger or acquisition, and propose 

specific remedies as needed for individual cases.44 When merging or 

acquiring stations, companies must obtain FCC approval to transfer the 

station licenses. As previously noted, companies may enter into 

broadcaster agreements during the course of a merger or acquisition if 

the newly acquired stations present ownership combinations that violate 

FCC’s ownership rules. For example, in July 2013, FCC began a 

proceeding to review Tribune Broadcasting Company II’s acquisition of 17 

stations owned by Local TV Holdings. Since Tribune already owned 

newspapers in two of the markets served by Local TV’s stations and 

would thus be prohibited under existing FCC rules from acquiring the 

stations, the acquisition included a provision transferring the licenses of 

those two stations to Dreamcatcher Broadcasting. The paperwork filed 

with FCC explained that Tribune would then enter into SSAs to provide 

technical, back-office, promotional (website), retransmission consent, and 

programming services to the Dreamcatcher stations. In the order 

 43United States v. Texas Television, Inc., No. C-96-64, Competitive Impact Statement at 

p. 2 (S.D. Tex. 1996). 

44FCC’s Media Bureau will also review agreements if they are challenged by an outside 

party. For example, see In the Matter of KHNL/KGMB License Subsidiary, 26 FCC Rcd. 

16087 (MB. 2011) (Memorandum Opinion and Order and Notice of Apparent Liability for 

Forfeiture).

FCC Has Not 

Completed a Review 

of the Use and 

Impacts of 

Broadcaster 

Agreements

FCC Evaluates Individual 

Broadcaster Agreements 

as Part of Its Review of 

Mergers and Acquisitions
Page 24 GAO-14-558 Broadcaster Agreements

approving the acquisition and corresponding agreements, the Media

Bureau noted that the provisions of the arrangements were similar to 

agreements that it had approved in the past, and the agreements did not 

implicate its attribution rules, which are discussed below.45

FCC’s review of agreements that occur as part of a merger or acquisition 

involves determining if the agreements constitute (1) an attributable 

interest that should be counted under an entity’s ownership cap and (2) 

an unauthorized transfer of control of the station. In addition, as 

previously noted, when reviewing an application for a license assignment 

or transfer, FCC must consider whether the transaction serves the public 

interest, as required by the Communications Act.46

FCC reviews sharing agreements to determine if they constitute an 

attributable interest that should be counted under a licensee’s ownership 

cap. As mentioned earlier, the broadcast attribution rules define which 

financial or other interests in a licensee that must be counted in applying 

the broadcast ownership limits. FCC’s attribution rules and corresponding 

notes provide guidance to identify interests that create sufficient degrees 

of influence in other licensees’ stations.47 For example, when an entity 

programs more than 15 percent of a same-market station’s weekly 

programming hours or sells more than 15 percent of a same-market 

station’s weekly advertising time, it is deemed to have an attributable 

interest. Station owners told us, therefore, that they write agreements to 

avoid implicating the attribution rules. 

Some broadcaster agreements have been challenged by consumer 

groups, competing stations, and MVPDs on the grounds that they either 

raise attribution issues or amount to an unauthorized transfer of control, 

given the functions that a station may cede to another station. For 

example, consumer groups have stated that agreements in which one 

company provides the studio, production facilities, tower, and local news 

for another company’s station, while also controlling the sale of 

advertisements and entering into agreements such as securing the 

 45In the Matter of the Applications of Local TV Holdings, LLC, ¶ 17, 28 FCC Rcd. 16850, 

at p. 5 (MB. 2013) (Memorandum Opinion and Order).

4647 U.S.C. §310(d).

4747 C.F.R. § 73.3555, Notes.

Attributable Interests

Transfer of Control
Page 25 GAO-14-558 Broadcaster Agreements

station’s debt or receiving a percentage of the station’s profits, result in 

the station owner ceding control of the station to another party. 

FCC has previously stated that its analysis of transfer of control 

“transcends formulas” and must be determined on a case-by-case 

basis.48 FCC evaluates the following factors when determining who 

controls a station: 

• Programming: Licensees must maintain ultimate control over their 

station’s programming. Licensees may accomplish this by including 

contractual language providing that the licensee retains the ultimate 

authority over the selection and procurement of programming. 

• Personnel: FCC requires licensees to have at least one managerial 

and one nonmanagerial employee at their stations, thus maintaining a 

“meaningful staff presence” as required by the Commission’s main 

studio rule.49 As long as the licensee meets this requirement and 

retains ultimate control of station operations pertaining to personnel 

responsibilities, the station providing services can place its employees 

at the station receiving the services. For example, FCC officials told 

us that if another station’s employees are performing work related to 

functions the licensee of the station receiving services should control, 

then the employees should report to the licensee’s managers.

• Finances: Payment for services rendered in broadcaster agreements 

may factor into a case-by-case determination of financial control. FCC 

officials noted that ultimate authority for all aspects of a station’s 

financial operations must rest with the licensee, and FCC’s analysis of 

control may consider payments for services. For example, FCC has 

previously approved agreements in which the licensee of the station 

receiving services retained 70 percent of cash flow resulting from 

operation of the licensee’s station. FCC has also approved previous 

agreements where a flat fee for services rendered, as part of a 

shared-service agreement, was combined with a split of advertising 

revenue. 

FCC has previously held that participation in an agreement does not 

necessarily establish a transfer of control, even if the agreement 

constitutes an attributable interest that should be counted under the 

 48In re Application of Fox Television Stations, Inc., ¶ 154, 10 FCC Rcd. 8452, 8514 (1995) 

(Memorandum Opinion and Order).

4947 C.F.R. § 73.1125(a).
Page 26 GAO-14-558 Broadcaster Agreements

ownership cap.50 The licensee can delegate responsibility over a station 

as long as the licensee sets basic policy and retains ultimate control over 

the station. While there are some provisions codified in regulation, 

stakeholders told us that they typically use previously approved 

agreements as precedence on how to structure agreements so that they 

will garner FCC approval. However, in March 2014, the Media Bureau

issued a notice stating that it would closely scrutinize applications for the 

assignment or transfer of a license that propose that two or more stations 

in the same market will (1) enter into an arrangement to share facilities, 

employees, or services or to jointly acquire programming or sell 

advertising and (2) enter into certain financial agreements, such as loan 

guarantees or options to purchase the station.

51 In explaining this notice, 

the Media Bureau cited concerns that such arrangements may weaken 

the economic incentive of licensees to control programming for their 

stations. 

Station owners and consumer groups both told us that the media 

ownership rules have influenced the development of broadcaster 

agreements. Station owners told us that by limiting the number of stations 

an entity can own in a local market, the media ownership rules have led 

companies to enter into broadcaster agreements as a means of realizing 

economic efficiencies that they are unable to achieve through 

acquisitions. Consumer groups have raised concerns that the use of such 

agreements constitutes an “end-run” around the media ownership rules 

because they amount to common ownership of two stations in the same 

market. While both groups recognize the relationship between the media 

ownership rules and broadcaster agreements, each group proposes 

differing solutions. For example, station owners note that the agreements 

are not as efficient as joint ownership and state that the media ownership 

rules should be relaxed due to the increasing competition that broadcast 

stations face from new media, such as Internet-delivered programming. 

Conversely, consumer groups want the agreements made attributable 

 50See, e.g., In re Application of WGPR,10 FCC Rcd. 8140 (1995) (Memorandum Opinion 

and Order), vacated and remanded on other grounds, Serafyn v. FCC, 149 F3d 1213 (DC 

Cir., 1998). In the Matter of Shareholders of Hispanic Broadcasting Corp., ¶ 20, 18 FCC 

Rcd. 18834, 18843 (2003) (Memorandum Opinion and Order).

51Processing of Broadcast Television Applications Proposing Sharing Arrangements and 

Contingent Interests, DA 14-330 2014 WL 988647 (MB, March 12, 2014) (Public Notice).

FCC Has Not Completed a 

Review of the Use and 

Impacts of Broadcaster 

Agreements
Page 27 GAO-14-558 Broadcaster Agreements

due to concerns that they increase media consolidation and reduce 

viewpoint diversity. 

Similarly, in February 2014, DOJ filed comments with FCC noting that 

there has been a pronounced trend in broadcaster agreements that allow 

one station to control another station that is nominally owned by a 

separate entity, often called a “sidecar.” DOJ stated that its investigations 

have revealed that these “sidecars” often exercise little or no competitive 

independence from the station providing services and that the extent of 

cooperation and integration with “sidecars” is so extensive that some 

television-station ownership groups even consolidate the financials of 

affiliated “sidecars” in their securities filings.52

FCC has stated that it is unable to determine the extent to which 

broadcaster agreements affect its media ownership rules and policy goals 

of competition, localism, and diversity. In 2014, FCC noted that public 

interest groups had raised meaningful concerns about the impact of 

agreements on its policy goals, but also stated that broadcast

stakeholders had provided evidence that agreements may produce public 

interest benefits. FCC concluded that it lacked information about the 

scope and prevalence of broadcaster agreements and, thus, could not 

conduct a thorough analysis of the impact of the agreements on its rules 

and policy goals. Yet federal standards for internal control, which provide 

the overall framework for identifying and addressing major performance 

and management challenges, note the importance of obtaining 

information from external stakeholders that may have a significant impact 

on an agency achieving its goals.53

To some extent, this uncertainty exists because FCC has not collected 

data or completed a review to understand how broadcaster agreements 

are being used and the potential impacts with respect to its media 

ownership rules and the corresponding policy goals of competition, 

localism, and diversity. Specifically, FCC has not collected 

comprehensive data to determine the number of agreements, the 

services provided through the agreements, and other relevant data to 

 52For example, Sinclair Broadcast Group consolidates the financial data from several 

companies, including Cunningham Broadcasting Company and Deerfield Media.

53GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
Page 28 GAO-14-558 Broadcaster Agreements

provide useful context, such as the market and station characteristics 

associated with the use of agreements. FCC has instead relied on 

comments from stakeholders on these issues and its experience 

reviewing individual transactions. As part of its 2010 Quadrennial Review 

of its ownership rules, FCC requested comment on making LNSs and 

SSAs attributable, and on how to determine the impact of such 

agreements on its policy goals of competition, localism, and diversity,54

but it has not completed the review. FCC continued its assessment of 

these issues in its 2014 Quadrennial Review. Specifically, FCC’s notice 

for its 2014 Quadrennial Review stated that it needed additional 

information to assess whether additional regulation of agreements is 

warranted, and solicited comments on requiring the disclosure of SSAs, 

tentatively defining the term in a manner that would include LNS 

agreements.55 In the 2014 notice, the Chairman indicated that he

instructed the Media Bureau to complete the review by June 30, 2016.

The lack of comprehensive data and the long delays in completing FCC’s 

review makes it difficult to objectively determine the effect of the 

agreements on FCC’s policy goals of competition, localism, diversity. 

Broadcasters, station owners, and consumer groups have provided 

counterarguments about the effect of broadcaster agreements on FCC’s 

media ownership rules and its policy goals of competition, localism, and 

diversity. FCC has also recognized the benefits and potential harms 

associated with these agreements and has approved a number of 

agreements that occurred as part of a merger or acquisition. However, 

without conducting a fact-based analysis of how agreements are being 

used, FCC cannot ensure its current and future policies on broadcaster 

agreements serve the public interest. 

Congress and FCC have long recognized the valuable role that local 

television stations play in informing citizens, and have adopted rules and 

regulations to ensure that broadcasters are serving the public interest.

FCC seeks to achieve competition, localism, and diversity through its 

media ownership rules; however, restrictions on local television station 

 54In the Matter of 2010 Quadrennial Regulatory Review, ¶¶ 194-208, 26 FCC Rcd. 17489, 

17564-17570 (2011) (NPRM).

552014 Quadrennial Review FNPRM and Report and Order, ¶¶ 325 328-331 339, at p. 

101-107.

Conclusions
Page 29 GAO-14-558 Broadcaster Agreements

ownership have remained largely unchanged since 1999. Meanwhile, the 

media marketplace is rapidly evolving and offering consumers a variety of 

platforms for receiving information and programming, including a number 

of Internet-based sources. This has led to increased competition between 

broadcast stations and other media platforms for viewers, content, and 

advertising. In addition, broadcaster agreements appear to be increasing 

and evolving with respect to the types of services provided. While few 

disagree that broadcaster agreements have evolved partly in response to 

FCC’s restrictions on media ownership, broadcast stations and consumer 

groups offer varying perspectives on whether the agreements positively 

or negatively affect FCC’s policy goals of competition, localism, and 

diversity. 

FCC has recognized both sides of the issue, noting that broadcaster 

agreements can provide important public interest benefits, such as 

helping a struggling station improve its operations and adding local news 

programming in a market, but these agreements can also create 

relationships that would be viewed as joint ownership under FCC’s 

existing regulations. FCC has also recognized that in certain 

circumstances, its policy goals of competition, localism, and diversity may 

conflict, such as in cases where preventing consolidation leads to less 

economically healthy stations that cannot invest in local news. Given the 

complexity of regulating an evolving industry, FCC would benefit from

improved data on and analysis of the extent to which broadcaster 

agreements affect its media ownership rules and its media policy goals of 

competition, localism, and diversity. However, FCC has not completed a 

study of and lacks basic data on broadcaster agreements. This lack of 

analysis and information could undermine FCC’s efforts to ensure its 

media ownership regulations achieve their intended goals.
Page 30 GAO-14-558 Broadcaster Agreements

FCC should determine whether it needs to collect additional data to 

understand the prevalence and context of broadcaster agreements. FCC 

should also evaluate whether broadcaster agreements affect its media 

policy goals of competition, localism, and diversity.

We provided a draft of this report to FCC for review and comment. In 

written comments, reproduced in appendix II, FCC agreed with our 

recommendation. FCC also noted that it has taken initial steps to address 

the recommendation. In particular, FCC noted that in the 2014 

Quadrennial Review, it proposed defining a category of sharing 

agreements and requiring their disclosure.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Chairman of the 

Federal Communications Commission and the appropriate congressional 

committees. In addition, this report will be available at no charge on 

GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix III.

Sincerely yours,

Mark Goldstein

Director, Physical Infrastructure

Recommendation for 

Executive Action

Agency Comments
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-14-558 Broadcaster Agreements

The objectives of this report were to examine (1) the uses and prevalence 

of broadcaster agreements in the television industry; (2) stakeholders’ 

views on the effects of broadcaster agreements on programming and the 

subscription video industry; and (3) the extent, if at all, that the Federal 

Communications Commission (FCC) has regulated these agreements. 

To assess how broadcaster agreements are used in the television 

industry, we first identified the different types of broadcaster agreements 

through a literature search and review of prior GAO reports, academic 

studies, industry and advocacy reports, and media articles. We also 

reviewed the descriptions and definitions of broadcaster agreements 

provided in FCC regulations and rulemakings. We obtained specific 

examples of agreements from filings submitted to FCC by broadcasters, 

station owners, and public-interest groups, as well as descriptions of 

agreements reported by station owners in press releases, and U.S. 

Securities and Exchange Commission 10-K and 10-Q filings. We verified 

information from the literature review through interviews with FCC and 

Department of Justice (DOJ) officials. We also interviewed a variety of 

stakeholders, including representatives of broadcast networks, television 

broadcast station owners, multichannel video programming distributors 

(MVPDs),1 trade associations, labor groups, consumer groups, financial 

analysts, and other individuals with knowledge of the broadcast industry. 

We selected local television station owners and MVPDs that filed 

comments in FCC’s media ownership proceeding and that varied in the 

number of stations they owned or the number of subscribers they served, 

respectively; we selected other stakeholders by reviewing prior GAO 

reports, academic studies, and comments filed in FCC media ownership 

proceedings, and through recommendations from other interviewees.

We conducted case studies to understand how agreements were used in 

specific markets and obtain the perspective of station owners in those 

markets. We conducted case studies of six designated market areas 

(DMAs), three markets with stations using broadcaster agreements and 

three markets in which the stations did not use broadcaster agreements. 

To select the case study DMAs, we used a stratified random sample. We 

obtained the 2013–2014 list of DMAs from Nielsen Media Research’s

website. We eliminated the top 25 DMA markets because stakeholders 

 1

MVPD refers to cable operators, satellite providers, and telecommunications companies 

that provide subscription video services to consumers. 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 32 GAO-14-558 Broadcaster Agreements

told us that broadcaster agreements are less common in those markets 

and likely to have less impact in those markets. We divided the remaining 

markets into three separate groups based on market size. We randomly 

ordered the markets within each stratum and selected the first DMA listed 

in each of the three stratums to conduct the case study. If there was a 

broadcaster agreement in the selected market, we then matched it with a 

similarly-sized market without an agreement, and if a chosen market did 

not have a broadcaster agreement, we looked for a similarly-sized market 

with an agreement. To determine whether stations in a market 

participated in a broadcaster agreement, we used the Warren Television 

and Cable Factbook, FCC’s website, stations’ public inspection files, and 

a BIA/Kelsey database to identify full-power commercial and noncommercial stations within each DMA. We then used the abovementioned sources, press releases, news articles, a Georgetown 

University study, a University of Delaware study, and data from MVPDs, 

to identify whether any broadcaster agreements exist within the three 

selected markets. 

After the 6 case study markets were selected, we contacted and 

interviewed station owners to learn more about the specific broadcaster 

agreements being used in the selected DMA. In addition, we contacted 

cable companies in the DMAs we identified having agreements to learn 

more about how or if the broadcaster agreements within their respective 

DMAs affected the retransmission consent fee negotiations. In the DMAs 

we identified as not having an agreement, we contacted and interviewed 

owners of the top-four stations in the market. We defined a broadcaster 

agreement as any instance where two or more independently owned 

stations within the same DMA have entered into any of the following 

agreements: time brokerage agreement/local marketing agreement, 

shared service agreement, joint sales agreement, and local news service 

agreement. We did not include instances where a station entered into a 

broadcaster agreement with another separately-owned out-of-market 

station because we focused on FCC’s local ownership rules, which limit 

the number of stations a company can own within a market. In addition, 

we did not include low power or translator stations, but we did include 

satellite stations. The three DMAs that we selected that had a 

broadcaster agreement were Casper-Riverton, Wyoming, Topeka, 

Kansas, and Paducah, Kentucky. 2

 The three DMAs we selected that did 

 2

One station owner party to broadcast agreements in the Casper-Riverton DMA declined 

our request for an interview.
Appendix I: Objectives, Scope, and 

Methodology

Page 33 GAO-14-558 Broadcaster Agreements

not have a broadcaster agreement were Mankato, Minnesota, ColumbiaJefferson City, Missouri, and Madison, Wisconsin.3

 

To assess what is known about the prevalence of broadcaster 

agreements, we interviewed stakeholders about the comprehensiveness 

of data collected by FCC, private-sector, public-interest, and academic 

sources on the number of broadcaster agreements nationwide. In 

addition, we acquired data from BIA/Kelsey, a market-research firm, to 

assess the prevalence of certain types of agreements, the stations 

involved in the agreements, and the size of the market served by the 

stations. We analyzed BIA/Kelsey data on television markets, stations, 

and agreements. We tested the reliability of BIA’s data by reviewing 

stakeholder opinions on the reliability and accuracy of the data, reviewing 

existing information about the data, and obtaining information from BIA 

officials about how they collect the data. We found the data sufficiently 

reliable for our purposes. We also examined FCC regulations and 

interviewed FCC officials to understand the extent to which broadcasters 

are required to disclose broadcaster agreements and the methods for 

doing so. 

To determine stakeholders’ views on the effects of broadcaster 

agreements on programming and the subscription video industry, we 

reviewed FCC dockets and interviewed representatives of broadcast 

networks; local television station owners; cable, satellite, and other 

subscription video service providers; trade associations; labor groups; 

consumer groups; financial analysts; and other individuals with 

knowledge of the broadcast industry to obtain their views and identify any 

supporting studies and data on the effects of broadcaster agreements. 

We also conducted literature reviews to identify any relevant studies on 

the effects of broadcaster agreements. 

To determine the extent to which FCC has regulated broadcaster 

agreements, we reviewed relevant FCC dockets and rulings and 

interviewed FCC officials. In addition, we interviewed the previously 

mentioned stakeholders to gain their perspective on the extent to which 

broadcaster agreements affect FCC’s policy goals.

 3

During interviews with the station owners in the Madison, Wisconsin, market, we learned 

of a local news service agreement in that market. However, as our case studies were 

selected as illustrative examples only, the presence of such an agreement does not pose 

a methodological limitation to our review.
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-14-558 Broadcaster Agreements

We conducted this performance audit from July 2013 to June 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusion based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Comments from the Federal 

Communications Commission

Page 35 GAO-14-558 Broadcaster Agreements

Appendix II: Comments from the Federal 

Communications Commission
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 36 GAO-14-558 Broadcaster Agreements

Mark L. Goldstein, (202) 512-2834 or goldsteinm@gao.gov. 

In addition to the contact named above, Michael Clements, Assistant 

Director; Amy Abramowitz; Richard Bulman; Crystal Huggins; Bert 

Japikse; Sara Ann Moessbauer; Josh Ormond; Amy Rosewarne; and 

Rebecca Rygg made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(543328)
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