The cable trade association says the commission should not only retain its ban on the common ownership of two full-power Big Four network affiliates in the same market, but should also close a “loophole” that allows affiliates to double up by carrying Big Four programming on low-power stations and multicast streams. NCTA such deals give broadcasters an unfair advantage during retrans negotiations.
NCTA, the trade group representing the nation’s largest cable operators, is urging the FCC not only to retain its ban on the common ownership of two full-power Big Four network affiliates in the same market, but also to close a “loophole” that allows affiliates to double up by carrying Big Four programming on low-power stations and multicast streams.
“In today’s increasingly consolidated broadcasting marketplace, such protections are necessary to ensure that the commission’s rules are effective in preventing broadcasters from exercising undue leverage in negotiating retransmission consent agreements to the detriment of consumers,” NCTA says in comments in the FCC’s congressionally mandated review of its ownership rules.
“Although LPTV stations and multicast streams by themselves do not raise ownership concerns, these increasingly popular outlets are now being used by broadcasters to circumvent the top-four prohibition, and thus such arrangements should be considered subject to the rule.”
“Top-four rated” and “top four” are a bureaucrat’s phrases. In practice, the rule targets ownership of Big Four network affiliates, which is what worries NCTA.
“Even in today’s marketplace … the four top-rated television stations in a market retain a unique position because they are typically affiliated with the most popular broadcast networks that provide access to marquee programming, such as sporting events,” NCTA says.
Broadcasters already have too much leverage in retransmission consent negotiations, the NCTA says, and allowing combinations of network affiliates to proliferate would allow them to increase it.
“Despite denials by broadcasters, the harms from top-four combinations on retransmission consent fees are evident from the recent public statements of broadcasters themselves. Indeed, the commission itself recently found that ‘[f]rom 2015 to 2016, total retransmission consent fees paid by cable systems to television broadcast stations increased, on average, by 31.8% per year,’ ” the NCTA says.
“Without the backstop of the top-four prohibition, consumers inevitably will face unending and ever-higher price increases as a result of the excessive retransmission consent fee demands that this repeal would make more likely.”
The FCC has said that it will consider waivers of the top-four ban on a case-by-case basis, although it has failed to act on the only waiver request, by Gray Television in Sioux Falls, S.D., now before it.
The NCTA says the FCC should grant such waivers only under “exceptional” or “truly unique” circumstances.
“Given the harms the commission itself has recognized result from the joint negotiation of retransmission consent agreements, applicants should not be able to obtain a waiver of the Top-Four Prohibition simply by demonstrating that the joint ownership of two top-four stations would result in cost savings, increased revenues, and economies of scale.”
The low-power/multicast loophole is already a problem, the NCTA says. According to its count, it says there were as of 2018 103 instances across 85 markets of broadcasters airing a second Big Four affiliate using either a low-power station or multicast stream.
“While broadcasters of all sizes use this practice, the biggest beneficiaries of the current loopholes are the largest broadcasters in the country. For example, Gray accounts for more than a quarter of these instances, broadcasting one or more top-four affiliations using an LPTV station or multicast stream in 29 markets, over 30% of its total footprint.”
The NAB and a handful of individual broadcasters also commented in the proceeding. They called for a lifting of the top-four ban in all markets or, says News-Press & Gazette, at least in markets 75 and higher.
And perhaps anticipating the NCTA’s position, NAB argued against expanding the scope of the local ownership rule. “Treating multicast streams, satellites and LPTVs as stations subject to the local TV rule generally, or the top-four stricture specifically, also would be arbitrary and capricious because they are not equivalent to the full-service TV stations regulated under the FCC’s ownership rules.”
NAB and Meredith said the FCC should permit broadcasters to own more than two stations in a market.
“The current across-the-board rule is divorced from competitive reality in two important ways,” the NAB says. “First, the restriction is based on the premise that TV stations only compete for audiences and advertisers against other TV stations in the same market…. Second, [it] fails to take account of actual competitive conditions in any local market.”