Broadcasters sue U.S. regulators over joint ad sales ban

WASHINGTON Fri May 30, 2014 6:20pm EDT

WASHINGTON May 30 (Reuters) - The National Association of Broadcasters is suing U.S. regulators over a ban on TV stations sharing advertising staff in what are known as joint sales agreements, the trade group said on Friday.

Nexstar Broadcasting Group Inc said it also challenged the March 31 decision by the Federal Communications Commission to prohibit broadcast companies from controlling two or more TV stations in a market through joint ad sales.

Both lawsuits ask the U.S. Court of Appeals for the District of Columbia Circuit to overturn the FCC ruling.

Under the new rules, approved in a 3-2 FCC vote along political party lines, a broadcaster is counted as having an ownership interest in any station where that owner sells 15 percent or more of weekly advertising time. Current FCC rules typically prohibit one broadcaster from owning two TV stations in one local market.

Republican FCC commissioners and broadcasters have argued that such agreements are vital to financially strapped local television stations, which can save cash on advertising sales and instead use it to improve programming.

FCC Chairman Tom Wheeler, backed by the U.S. Department of Justice, has called such ad sharing agreements a loophole for some TV stations to skirt existing rules and amass market power.

The NAB, in its petition, argues that the FCC's move violated its congressional mandate by setting the rules before completing the 2010 review of media ownership rules, which is required every four years. The FCC in March voted to launch the 2014 review, effectively folding the 2010 review into it.

On Thursday, television station owner Sinclair Broadcast Group Inc said it planned to take three of its stations off air to comply with the FCC's rules on joint sales after it could not find a buyer for those stations.

Though public interest groups saw Sinclair's action as a political move, Republican FCC commissioners Ajit Pai and Mike O'Rielly said it dovetailed with concerns they had expressed earlier, that the rules would hurt local TV markets.

The case is National Association of Broadcasters v. Federal Communications Commission and United States of America, U.S. Court of Appeals for the District of Columbia Circuit, No. 14-1092 (Reporting by Alina Selyukh; Editing by Ros Krasny and Grant McCool)