The affiliates want the FCC to impose a 39% ownership cap on the networks to keep the networks’ power in check. But that’s not what regulations are for — they should protect the public, not one business from another.
JESSELL AT LARGE
Ownership Cap Shouldn’t Be Used As Shield
The FCC’s review of the national broadcast ownership cap has once again exposed the deep level of distrust between the networks and their affiliates.
Rather than arguing for lifting the cap for all station groups in their joint comments in the proceeding, the affiliates are asking the FCC for a two-tier cap — one for themselves (78% of U.S. TV homes) and one for the network station groups (39%). The 39% is today’s nominal limit and three of the four networks (CBS, Fox and NBC) are already bumping up against it.
Only by keeping the lid on the networks, the affiliates say, can the networks be constrained from displacing affiliates with O&Os in more markets, demanding even more tribute in the form of reverse comp and denying affiliates their fair share of the revenue that is starting to trickle in from the OTT skinny bundles.
Of course, the affiliates don’t say that these eventualities will be bad for their businesses. That’s poor form in an FCC proceeding. Rather, they put it in public policy terms, saying unleashing the networks will be bad for “localism.”
Like all good Americans, I root for the underdog — be it the Continental Army, Rocky Balboa or UMBC. And in their running fight with the networks, the affiliates are clearly the underdogs. The networks certainly treat them as dogs.
The affiliates’ filing is a good, concise recounting of their maltreatment at the hands of the networks. I recommend it to all, especially outsiders who see broadcasting as a monolith.
BRAND CONNECTIONS
However, despite the high crimes and misdemeanors, I can’t go along with the affiliates here.
For starters, broadcasters should not use FCC regulations to protect themselves from the sturm und drang of the marketplace. Regulations should protect the public, not one business from another.
And the affiliates’ suggestion that they are really not looking to protect themselves, but the public, because they are the true stewards of localism is highly dubious.
Yes, a station not owned by one of the networks may be more apt to preempt a network show for a local parade or football game.
But when it really matters — when a storm blows in, when shots ring out in the high school, when the rivers rise — the network-owned stations react with the same urgency, journalistic imperative and willingness to sacrifice network programming as any affiliate.
Does anybody really doubt that the networks are as committed to local news as Tegna, Scripps, Cox, Raycom or Gray? They have the same motivation to excel in news. It’s a big money maker and every other year it draws heaps of political advertising.
It’s telling that the two largest owners of stations — Sinclair and Nexstar — are not going along with their fellow affiliates. They have told the FCC to eliminate the cap altogether. Let any group own a station in each of the 210 markets and reach 100% of homes, they say.
Sinclair and Nexstar figured out long ago that scale matters in the broadcasting business, that you cannot rely on the FCC to disadvantage competitors or referee intra-industry disputes.
They understood that if you are going up against powerful cable and satellite operators and networks, you had better bulk up yourself, which is what they did by acquiring as many stations as they could as fast as they could.
That path was open to all the other affiliate station groups. They chose not to take it. They continue to look to the FCC to keep the playground bullies at bay.
The networks did not file comments in the proceeding. They didn’t have to because they are adequately represented on the issue by the NAB.
In its comments, the NAB asked that the cap be set at 78% for all station groups, and that’s plenty high for any of the networks. Of the four, only Fox, which is negotiating to buy some of Sinclair’s stations, looks like it might reach 50%.
In its internal deliberations, the NAB came down on the side of the networks and of Sinclair and Nexstar, rejecting the affiliates’ desire to keep a tight rein on the networks.
The good news is that the disagreement did not rip apart the NAB as it did in the early 2000s. Then, the affiliates had their way, opposing a loosening of the cap and causing the disgruntled networks to quit the association for several years.
The NAB position is also a recognition that the cap is already half gone. When Chairman Ajit Pai restored the UHF discount, he effectively raised the cap from 39% to anywhere from 50% to 78%, depending on a station group’s mix of UHF and VHF stations.
Given the current lax state of the rule and Pai’s inclination to deregulate wherever he can, the affiliates have an uphill battle trying to convince the Republican-majority FCC to put hobbles on one segment of broadcasting (the networks) because they don’t measure up in local news.
I get it. Many of the complaints about excessive network power the affiliates raise are real. The networks will continue to move into markets they find attractive, wrecking incumbent affiliates, and they will continue to squeeze affiliates on reverse comp, cutting deeply into their margins.
I hope that individually or collectively affiliates find a way to bring back a balance of power so that their relationship with the networks becomes a true partnership.
But the FCC should not be that way.
Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or here. You can read earlier columns here.
Comments (14)
Brian Bussey says:
March 23, 2018 at 4:56 pm
Does anybody really doubt that the networks are as committed to local news as Tegna, Scripps, Cox, Raycom or Gray?
I would.
Disney O&O’s do local news the way it is supposed to be done. They staff their newsroomsto win. They have resources sitting aside for when the fertilizer hits the fan. Ask the old Belo stations what they think about how Tegna staffs a newsroom. I don’t know folk from the other groups. I have also heard that CBS is the worse local station owner. What I have been told is really, really really bad. Like they exist to grind for retrains checks.
Wagner Pereira says:
March 24, 2018 at 12:53 am
Actually, I will agree that Disney does a very good job in local news. However, when Cox and Disney were head to head in San Fran, Cox smoked them (on a Fox affiliate no less). WRAL also destroys WTVD. But I get your point. I would also say that while I was dubious when Comcast obtained NBC, they have done right. Look what they have done on the Network side. But more important, look what they have done on the local level. GE destroyed WNBC’s local news. Put their low cost local NY “Lifestyle” Programming in the 5PM hour after being hired from Yahoo. Comcast hired Magid, built the best local set of the decade imo with 105″ Panasonic Plasmas and got back to a quality New Product. Well done Comcast! You earned my respect.
Wagner Pereira says:
March 24, 2018 at 12:56 am
Meant to say put in the local NY “Lifestyle” Programming in the 5PM hour after hiring Maria Sansome from Yahoo with no real TV experience.
Brian Bussey says:
March 23, 2018 at 5:03 pm
While I find it comical that the cable monopolies are complaining about the broadcast monopolies, they are still right. These giant TV groups think that retrains dollars will go on forever. They wont. I-Heart Radio thought it wise to borrow the equivalent of total radio billing to finance acquisitions. Then they laid off thousands. Now they are sitting in bankruptcy court.
Matt Hortobagyi says:
March 23, 2018 at 7:14 pm
Sad to say the retrans revenue may be the death of local television stations.
Teri Green says:
March 24, 2018 at 2:36 am
I don’t see any difference in the news casts of any of the stations in my market or when I travel. They have the same stories in some different order. I think it’s time to move to a model where the networks can have repeaters in each market and then each market can have two or three independent stations. We also need rethink the market media thing and some markets need to be combined and others split, if you’re going to keep them. I can not understand why every business insists on refusing to change, when their modes are clearly outdated and not working. This article points out, that Nexstar and Sinclair understand the negotiating power they get with retrans, which also needs to be rethunk in a world where it’s so different.
Dan Levitt says:
March 24, 2018 at 9:21 am
Anybody investing in buying broadcast stations ain’t too bright. If your future isn’t invested in Mobile Web – you are dead in the water. If you are looking to expand the ownership rule you need to have your head examined, you are going the wrong way – like the group of survivors that pass Gene Hackman in the Poseidon Adventure.as his group heads to the hull.
Jeff Groves says:
March 24, 2018 at 10:17 am
The media meltdown is immanent. Pay-TV is in a death spiral (raise prices, lose subscribers add more commercials, lose more subscribers, do away with late night movies with infomercials, lose subscribers replace scripted shows with “reality” shows and lose even more subscribers.
kendra campbell says:
March 24, 2018 at 2:12 pm
Networks and local stations are bleeding demos. As Einstein said: The definition of insanity is doing the same thing over and over again and expecting different results.
Amneris Vargas says:
March 24, 2018 at 5:03 pm
“Tegna, Scripps, Cox, Raycom or Gray…” Hard to talk about localism and news without mentioning Hearst.
kendra campbell says:
March 25, 2018 at 11:00 am
Hearst leads the pack in quality. Raycom, Sinclair, Gray, and Nexstar are bottom feeders. All others are in the middle. Best small group is Graham. Worst small group is Bahakel. Best network group is ABC/Disney
Linda Stewart says:
March 25, 2018 at 9:56 pm
I appreciate Hearst’s excellence in news, but the point I was making is that the network-owned stations are, on the whole, no worse than the affiliate stations.
Sue Knudson says:
March 25, 2018 at 11:56 am
Harry,
Over the years I have really appreciated your insightful articles and points of deliberation in the broadcast world. You seemed to truly understand why people enjoy broadcasting business. Albeit for many, those ships have sailed. It is and has been a full arms race for the last 10+ years and you are right Sinclair and Nexstar did a great job growing into enormous powerful entities. I do agree that when push comes to shove the Networks and largest US Broadcast entities do care about their communities and the local information within.
Notwithstanding these observations you have greatly missed the point of “Localism.” Localism is not only airing the local sports game or 4th of July Parade, it is developing, communicating face to face and employing the hard working people who live in these communities. Many jobs are preserved and increased with duopolies initially yet when size grows to a national scale the reverse happens and jobs are eliminated. The importance of going to the local business that advertises with you and getting to know these folks is immeasurable. Eliminating the ownership cap along with the past elimination of the “Main Studio Rule” destroys local broadcasting at the core. Local, regional and national sales staffs along with news staff become regionalized. How can a broadcaster truly know what is going on in a community unless he has face to face interaction with the people in the community? Let’s not be mistaken Sinclair/Nexstar and the networks want to maximize dollars and if they can do this through nationalization and a central hub they will continue to do it.
As the local philosophy goes you should support local affiliates by protecting their interests within the community and hope we do not continue to move in the direction of a business model devoid of interpersonal community involvement. Elimination of the cap perpetuates a major dilemma in our society today which is not knowing thy neighbor and fellow community member. Since the FCC is the master ruler of our licenses they are the correct regulatory entity to fight this battle because we all received are licenses to inform and educate our local communities. A broadcaster cannot do this in rural America from a desk in NYC. Harry you should support local affiliates requests to restrict the national cap otherwise your paycheck may start coming from CBS, NBC, FOX, ABC, Sinclair or Nexstar and I bet you will not like how they will control what you can or cannot write. The national cap regulation does protect the public and I support it.
Heritage Broadcasting
Pete Iacobelli -CEO
Dan Levitt says:
March 25, 2018 at 5:33 pm
Then again, if Sinclair is just Stockpiling TV Stations to corner the market on Spectrum so they can decide how much to sell and then pick and choose when to sell it as the auctions come up – it’s the greatest Scheme of All-Time.