Media Bureau: Mission's WADL Deal Either Approved With Conditions, or Going to Hearing
The FCC Media Bureau granted Mission Broadcasting’s application to buy WADL Detroit Michigan from Adell Broadcasting for $75 million, but with a number of conditions that would bar Nexstar from financing the deal, negotiating retransmission consent for WADL and limiting how much programming Nexstar could provide. If Mission doesn’t accept the conditions, the order says, the deal will be designated for a hearing, traditionally seen as a death sentence for transactions. The Media Bureau is “taking the application the FCC received and substituting it for a new one drafted by the agency,” said FCC Commissioner Brendan Carr in a statement: “That’s not the FCC’s job or role.”
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“I have been very, very pleased to see the FCC take its own rules seriously under the chairwoman,” said United Church of Christ Media Justice Ministry attorney Cheryl Leanza, a longtime opponent of broadcaster sidecar operations.
The conditions are intended to prevent Nexstar from taking de facto control of WADL the way the FCC alleges it has done with WPIX New York, the order said. Mission’s proposal to purchase WADL contained financing, programming and retrans negotiation provisions to the local programming agreement it has with Nexstar for WPIX, the order said. “We do not review the Application in a vacuum,” the order said. “The prospective conditions we adopt today seek to guard against future infractions” of FCC rules and “future harms to the public interest,” said the Media Bureau. The agency conceded that “on its face, the transaction does not violate any individual provision of the Act, other applicable statutes, and the Commission’s rules.”
Broadcast attorneys told us it's not clear how the parties will respond. Nexstar, Mission and Adell didn’t comment, and while the conditions are likely to radically alter the business case for the transaction, the order would seem difficult to successfully appeal, attorneys said. Since it isn’t a final decision, it must be appealed at the FCC with an application for review rather than directly to the courts, and there’s no limit on how long the agency could wait to consider such an application, longtime broadcast attorney Jack Goodman said. The parties could go through the hearing designation order process, but that can take years.
Carr seemed to lay the groundwork for possible legal challenges in his statement. The WADL order is entirely based on the WPIX Notice of Apparent Liability, which itself isn't a final FCC decision, Carr noted. “So the agency is doing one of two things. It is either prejudging the outcome of that Commission-level proceeding. Or it is making new and novel decisions without authorization from the full Commission,” Carr said. “The Bureau does not have the authority to do either one of those things.” The FCC is required to either grant applications or designate them for hearing, Carr said. “Here, the FCC chooses neither of the two options Congress authorized.”
The order imposes six conditions on the deal. Nexstar is barred from financing the transaction, acquiring an option to eventually buy the station from Mission, and from negotiating retransmission consent deals on WADL’s behalf or receiving information on such negotiations from Mission. The conditions also limit Nexstar to providing not more than 15% of WADL’s programming -- at WPIX, Nexstar provides all programming. Mission also must retain 70% of the station’s ad revenue and is barred from paying Nexstar an unspecified performance bonus outlined in the application. “The existence of such an undefined workaround” to the proposed split of advertising revenue “presents an unacceptable risk of an end run around our safeguards,” the order said.
“The HDO process, including threats that it will be invoked, is abysmal and borderline criminal in its abuse and misuse of regulatory power,” said former FCC Commissioner Mike O’Rielly. “It’s like the agency gets to use a trick coin: heads it wins; tails you lose.”