To illustrate the threat outsourcing agreements pose, Free Press released on Wednesday an updated version of its report Cease to Resist: How the FCC’s Failure to Enforce Its Rules Created a New Wave of Media Consolidation. The study examines the current wave of consolidation sweeping across the broadcast industry.
The report documents the increased use of outsourcing agreements by Gannett Company, Nexstar Broadcast Group, Raycom Media, Sinclair Broadcast Group, Tribune Company and other broadcasters. Through these deals, station owners create so-called “sidecar” or shell companies to evade the FCC’s rules and establish near-monopolies over local TV news production in markets across the country.
These arrangements do not simply concern two stations sharing some common functions. Rather, they involve one large broadcaster owning all of the physical assets of another in-market station. The broadcaster runs all of that station’s day-to-day operations, produces 100 percent of the local news programming and keeps most of the station’s profits.
These agreements are used to evade the FCC’s ownership rules in nearly half of all U.S. media markets. They are used to form otherwise illegal duopolies between two top-four ranked stations in 78 markets. This rule is particularly important for ensuring communities have access to the greatest number of independent sources of news and information, which are often produced by the major network-affiliated stations.