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.
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.
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.