High-Stakes Duel in DC: NAB Vs. FCC

It was a bad day for broadcasting at the Federal Communications Commission, and perhaps a worse one for the National Association of Broadcasters, the lobby that is supposed to make sure the industry doesn't have any bad days anywhere in Washington.

Despite the vigorous opposition of the NAB, the FCC closed loopholes in its local ownership rules that have allowed broadcasters to effectively operate multiple stations, sometimes two Big Four affiliates, in small and medium markets. It banned new joint sales agreements (JSAs) and ordered broadcasters to unwind existing ones within two years.

The NAB is "getting pounded" at the FCC, said one group TV station executive and NAB member, who asked not to be identified. But the news out of the nation's capital is not all bad for NAB, according to communications policy players. The association is holding its own on Capitol Hill, where the battles may be fewer, but the stakes are considerably higher.

The NAB’s ineffectiveness at the FCC is worrisome to broadcasters because other important issues are currently in the regulatory pipeline. Among them are the UHF discount and the sports blackout rule. The FCC is considering eliminating both.

Free Press Staffer, Pai Get Into Tweet Tiff

After Free Press's Lauren Wilson suggested on Twitter that Federal Communications Commissioner Ajit Pai's concern for people of color is insincere, Commissioner Pai tweeted back that he is proud of his "Indian heritage and I am never going to apologize for standing for what I believe is right.” Wilson then tweeted an apology.

The exchange came in the context of the controversy surrounding FCC Chairman Tom Wheeler's plan to ban joint sales agreements, which Free Press supports and Commissioner Pai opposes.

NAB Compromise Would Allow Some JSAs

In an effort to head off an all-out Federal Communications Commission ban on joint sales agreements, the National Association of Broadcasters rolled out a detailed compromise proposal that would allow some JSAs to continue.

The proposal essentially asks the FCC to carve out an exemption from the blanket ban on JSAs that the agency is widely expected to adopt as soon as March 31. The exemption would protect JSAs that broadcasters can show provide public interest benefits and meet a series of specific tests intended to limit one station from using a sharing agreement to control one or more additional TV stations in the same market.

Under one key test in the NAB proposal, a brokered station in a JSA deal would be required to retain control of at least 85% of station programming and keep at least 70% of the brokered station’s net advertising revenue. In addition, the NAB proposal would require the licensee of the brokered station to retain “ultimate control over rates charged for advertising” and to retain an “option to hire its own advertising sales staff or retain other sales services,” said NAB President/CEO Gordon Smith in a letter to FCC Commissioner Mignon Clyburn.

Also under the NAB proposal, it would be up to the broadcaster who wants to continue an existing JSA -- or create a new one -- to “demonstrate clear and specific public interest benefits,” Smith said.

Poll: People Still Seek 'Meaty' News

A new study finds Americans of all ages are charting their own paths across a media landscape that no longer relies on front pages and evening newscasts to dictate what's worth knowing. They still pay heed to serious news even as they seek out the lighter stuff, according to the Media Insight Project.

The conclusions burst the myth of the media "bubble" -- the notion that no one pays attention to anything beyond a limited sphere of interest, like celebrities or college hoops or Facebook posts.

"This idea that somehow we're all going down narrow paths of interest and that many people are just sort of amusing themselves to death and not interested in the news and the world around them? That is not the case," said Tom Rosenstiel, executive director of the American Press Institute, which teamed with the Associated Press-NORC Center for Public Affairs Research on the project. People today are nibbling from a news buffet spread across 24-hour television, websites, radio, newspapers and magazines, and social networks. Three-fourths of Americans see or hear news daily, including 6 in 10 adults under age 30, the study found. Nearly everyone -- about 9 in 10 people -- said they enjoy keeping up with the news. And more than 6 in 10 say that wherever they find the news, they prefer it to come directly from a news organization.

NAB Proposes JSA Compromise

Instead of putting the kibosh on all joint sales agreements, the Federal Communications Commission should propose the conditions the agency would require of legitimate station sharing deals -- and then “prohibit only those operations that do not meet those standards,” according to a compromise being promoted at the agency by the National Association of Broadcasters.

At least according to the NAB, FCC Chairman Tom Wheeler’s current plan to crack down on JSAs and other station sharing agreements, which has been slated for an agency vote March 31, represents overkill.

Under the Chairman Wheeler proposal, the formation of new JSAs would be barred immediately, and broadcasters with existing JSAs would have two years to unwind, unless they can persuade the FCC to give them a waiver to continue a particular station combination. As part of its evolving lobbying counterattack, the NAB is now arguing that the waiver policy that Chairman Wheeler is said to be considering as part of his JSA crackdown would put the burden of proof “on precisely the wrong parties -- the ‘good operators’ that are promoting localism, diversity and competition,” the NAB disclosure filing says.

Dish-Disney Deal Bodes Well For Affiliates

[Commentary] The Dish-Disney deal got a lot of media play, but none of the coverage I saw considered the impact on network affiliates.

With the various Disney programming services as charter tenants, Dish plans to launch an online video service that would be the functional equivalent of cable TV circa 1989. It will comprise a bunch a cable networks and the local broadcast signals and sell for $20-$30 a month.

Dish believes such a service will appeal to young people. “We think there is a group of individuals, 18-to-34-year-olds, who would love to have a lower-cost product with some of the top content out there,” David Shull, Dish's chief commercial officer told Bloomberg.

“That’s who we’ll be targeting.” Its deal with Disney includes ESPN, the Disney Channel, ABC Family and the ABC O&Os. But as good as those channels are, they are far from sufficient. Dish will have to cut similar multichannel deals with the likes of CBS, Fox, NBCUniversal, Viacom and Turner.

FCC Auction Taking Toll On TV RF Vendors

Electronics Research, a Chandler (IN)-based manufacturer of radio frequency components, waveguide and antennas, has laid off 22 employees, its entire television-related manufacturing and sales force, an apparent consequence of the Federal Communications Commission's policy aimed at freeing up TV spectrum for the wireless industry.

The laid off workers represent about 16% of the company’s overall workforce, leaving 102 employees focused on RF products for the radio industry. “As long as this incentive auction and [TV spectrum] repack is pending, there is really no capital investment being made by domestic television stations in transmission facilities,” said Bill Harland, ERI vice president of marketing. Harland said the FCC's April 2013 public freeze on both new construction permits and pending applications for modifications to existing facilities has been devastating to the small community of vendors supplying RF technology to US TV broadcasters.

FCC Chairman Wheeler's Just Wrong On Duopolies

[Commentary] The Federal Communications Commission rule barring common ownership of two TV stations in the same market is 40 years old. Now, disregarding all the extraordinary changes that have roiled the television industry over those four decades, from HBO to Netflix, FCC Chairman Tom Wheeler believes that it is absolutely imperative that the FCC buck up the old local ownership rule by closing loopholes that broadcasters have been using to get around it.

In essence, he is saying that the ban against duopolies in small markets is as vital to the nation today as it was in 1974 when most Americans had a choice of just four or five channels. That's quite a position for a man who is supposed to be focused on the future of telecommunications in this country. Chairman Wheeler intends to bring his proposal to a vote on March 31 and he apparently has the two other Democratic votes lined up to win approval. The vote will be a real blow to broadcasters who have been building businesses around the sharing agreements. Just the prospect of the FCC action has battered broadcast stocks.

Since the beginning of 2014, Nexstar is down 26%, Sinclair is down 21% and LIN is down 19%. I understand Wheeler's desire to tidy up FCC's rules and regulations. But in this case he could just as easily do that by getting rid of the underlying 40-year-old ownership rule. The sharing agreements have been a boon to the broadcasters that have taken advantage of them. The efficiencies of running two stations in a market are obvious.

But I cannot sit here and tell you whether they have been a net positive or net negative for the American public. And neither can the FCC. It hasn't investigated the sidecar deals to see if they, on the whole, have increased the level of service to the public and advertisers or diminished it. Right now, I'm inclined to believe that Chairman Wheeler is working primarily for the wireless companies by devaluing TV stations. As President of the National Association of Broadcasters President Gordon Smith suggests, the tougher the broadcasting business becomes, the more likely broadcasters will be to participate in the incentive auction, by which the FCC intends to buy broadcast spectrum and sell it to wireless companies.

[March 7]