Besides the outcome of the BCS Championship and NFL playoffs, there are a number of issues that deserve our attention: Can dereg be too much of a good thing? ~~ The hyprocrisy of the American Television Alliance and some of its cable MSO members. ~~ The move by CBS from station seller to buyer. ~~ Why aren’t CBS and ABC in the mobile DTV game? ~~ Blair Levin’s belief that the Internet is more American than broadcasting. ~~ TV stations’ burgeoning political ad windfall from Republican presidential candidates.
For the first column of the year, it would be altogether fitting and proper for me to give you a pep talk pointing out the positive economic trends, technological developments and industry initiative that will make 2012 a winner for broadcasting. But TVB has already done that. So what I think I’ll do is comment of several matters that have been on my mind over the holidays and that don’t quite rise to the level of their own columns.
Can dereg be too much of a good thing? Although they rail against it, broadcasters really like government regulation as long as it the right kind of regulation. This truth was brought home by the NAB’s glib dismissal of the dereg bill floated last month by Rep. Steve Scalise and Sen. Jim DeMint.
The measure would eliminate all the broadcast ownership rules and toss out the compulsory license along with must-carry and retransmission consent that depend on the license.
If enacted, the legislation would rock the regulatory foundation of broadcasting and cable. That’s way too scary for many broadcasters. They don’t want any tampering of the retrans/must-carry regs, especially now that they have turned retrans into a nice revenue stream. And a lot of broadcasters are comfortable with the ownership rules just as they are.
But a wholesale deregulation bill is something that broadcasters should think about. Most broadcasters could get along at least as well as they do today without the compulsory license and retransmission consent. If those government artifices went away, they would be replaced with a conventional copyright regime that would turn each TV station into a local cable network. And like a cable network, the station could negotiate for programming fees just as they now do for retrans fees. It’s all the same. And cable networks get a lot more money per rating point via copyright than TV stations do via retrans.
The only stations that get hurt in this brave new world are those that are too weak or too unpopular to negotiate for carriage on cable. These are the ones that now rely on must carry. You’ve got to ask yourself: If they don’t have enough viewership to get carriage on their own merit, why should the government mandate it? Plus, must carry has always been constitutionally suspect.
I understand that the Scalise-DeMint legislation was cooked up by cable operators trying to gut broadcasters’ retransmission rights (see below), but they may be wrecking a system that could be replaced by another than puts them at an even greater disadvantage.
Lobbyist, heal thyself. The American Television Alliance is the faux-grassroots organization of cable operators and networks that is pushing for retrans reforms so they can better withstand broadcasters’ demands for retrans fees.
Among its tactics is to scream every time a broadcaster and cable operator fail to reach a retrans agreement and point out how much pain the loss of broadcast signals is causing the affected citizenry.
One problem for ATA is that it hasn’t had much to scream about. Virtually all the retrans contracts that expired at the end of 2011 were quietly renewed as usual.
Another problem is that the biggest and ugliest carriage dispute of the holiday season had nothing to do with retrans. It was Time Warner Cable’s refusal to meet Cablevision demands for higher fees for its two MSG regional sports networks in New York, thus depriving local fans of access to their beloved Knicks and Rangers.
The spat is nasty, with Time Warner Cable’s Glenn Britt at one point saying that sports channels should be relegated to pay tiers.
And, yes, you lovers of irony, Time Warner Cable and Cablevision are both members in good standing of the American Television Alliance.
What’s good for the goose… Cable operators who can’t stand the thought of paying the local network affiliates the same as they pay TNT or TBS also kvetch that it’s not fair that two affiliates in a market working together under a shared service agreement may negotiate jointly for retrans payments. It’s two against one, they whine to the FCC and whomever they can get a meeting with on the Hill.
Well, here’s something the lawmakers and regulators may not know. Time Warner Cable, the fourth largest satellite/cable operator (12.2 million subs), represents Bright House Networks, the 10th largest satellite/cable provider (2.1 million subs), in all retrans negotiations. That’s quite a lot of negotiating clout in the hands of Mr. Britt and company.
And, yes, you lovers of irony, Bright House is also a member of the American Television Alliance.
CBS goes from station seller to station buyer. It was good to see some action in the station trading market in the last few months of 2011. It shows that there are still strong believers like Scripps and Sinclair willing to make big bets on the future of the business by paying fairly high cash flow multiples (9 or 10 times, by my reckoning). Sinclair was the most aggressive buyer, laying down nearly $600 million for the Four Points Media and Freedom groups.
But I think the most significant buy was CBS’s $55-million purchase of WLNY, a lowly independent on Long Island, so that flagship WCBS could have a duopoly partner. It says that CBS sees upside in the local TV business, if only perhaps in the major markets.
The deal is a turnaround. For the past several years, the Big Four have been station sellers. Indeed, CBS sold the stations that became Four Points Media and are now part of Sinclair to a private equity group in 2007.
One of the interesting stories of 2012 will be to see what CBS does with WLNY.
Time to get in the mobile game. What I hope CBS does with some of the spectrum that it picked up in the WLNY deal is to get involved in mobile DTV.
As we have reported repeatedly, there are many questions around whether either MCV or the Mobile500 can put together the kind of service that millions of consumers will demand when they go in for their next smartphone. But the potential for broadcasting — to once again be a truly ubiquitous TV medium — is great.
Mobile DTV’s best chance is if all the major broadcast networks take part. Through their leadership of MCV, Fox and NBC have contributed much money and talent and many ideas to the effort. It’s time for CBS and ABC to do the same.
My medium’s more American than your medium. It looks as if Congress early this year will grant the FCC authority to auction TV spectrum and share the proceeds with those broadcasters who voluntarily put up their spectrum for the auction.
The authorizing language, drafted by House Communications Subcommittee Chairman Greg Walden (R-Ore.), contains a number of provisions intended to protect broadcasters who opt to stay out of the auction.
If you read our story on Thursday, you know that Blair Levin, the guy who cooked up the spectrum auction plan in the first place, is not too thrilled with the way things are turning out.
He’s convinced that the auction is needed to move spectrum from TV to wireless broadband where forward-thinking companies will use it to bring good things to life, certainly better things than broadcasting. And he fears the Walden bill will hobble the TV auctions by exposing them to all kinds of litigation.
Levin would prefer that Congress give the FCC a blank check to conduct the auctions as it sees fit. Broadcasters can never allow that to happen. TV stations would be repacked into oblivion.
Anyway, in the story, Levin congratulates NAB President Gordon Smith for fixing things for broadcasters, but then suggests that the former GOP senator sold out his country by slowing efforts to get more spectrum in the hands of the wireless carriers. “That’s not putting the United States first. That’s not putting getting spectrum into the bloodstream of our economy first.”
When I first saw the quote, I thought that Levin was just blowing off some rhetorical steam. But then I was reminded of Reed Hundt’s notorious speech at Columbia University in 2010. (Hundt is the former FCC chairman from the Clinton days and Levin was his chief of staff.)
In the speech, Hundt explained why he and Levin pursued policies aimed at making the Internet the dominant mass medium in the U.S. “We … thought the Internet would fundamentally be pro-democracy and that broadcast had become a threat to democracy,” he said.
Holy cow, these guys really do believe they are on a mission from God to save The Republic. Or a mission from Silicon Valley.
Speaking of people on a mission from God to save The Republic. The Grand Old Party has been putting on quite a show with the battling over the presidential nomination. First it was Bachmann, then it was Perry, then Cain, then Newt and finally Santorum. Oh, yeah, let’s not forget Mitt Romney, who actually won the Iowa caucuses this week, and Ron Paul, who is hanging in. The way things are going Huntsman could rise from the dead before it’s all over.
What’s it all mean? I don’t know. Political science isn’t my forte. But the longer the nomination battle goes on, the more broadcasters will benefit from the TV campaigning. After a slow start, the ads really started flying in Iowa in the last few weeks. They came from candidates as well as from the “independent” super PACs backing the candidates.
With Bachmann Tuesday’s lone fatality, the primary battle could go on for awhile, meaning more political dollars for broadcasters in New Hampshire, South Carolina, Florida and on and on.
Broadcasters need not make any apology for reaping these political dollars, but they should make some efforts to earn them by stepping up coverage of local public affairs. It would be the right thing to do.
Let’s all have a great year.
Harry A. Jessell is editor of TVNewsCheck. You may contact him at 973-701-1067 or [email protected].