NAB to FCC: Review Pay TV Ad Practices

The NAB urges the FCC to examine whether consumers and advertisers are harmed by the joint advertising sales of pay TV providers.

Calling the advertising practices of pay TV “collusive,” the NAB Wednesday urged the FCC to explore whether joint advertising sales of pay TV providers hurt consumers and advertisers.

“We believe that collusion in the pay-TV advertising business deserves better oversight from the FCC,” says NAB President & CEO Gardon Smith. “This deeply troubling practice would appear to allow the largest pay-TV companies in the country to game the advertising sales market and set above-market ad rates for local and national businesses.”

The NAB’s comments were included in a filing submitted to the FCC, which, according to the NAB, includes documents showing collusive television advertising selling arrangements by pay TV’s largest players. The “interconnect” advertising activities by cable, satellite and telephone companies allow companies like Time Warner Cable, DirecTV, DISH, Verizon and AT&T to jointly commission one person to sell TV advertising across multiple pay-TV platforms, the NAB says.

The NCTA, however, calls the NAB’s actions “a misguided attack.”

“NAB’s latest attack is an unfortunate and desperate attempt to divert attention from examination of discrete broadcast ownership issues,” says NCTA President & CEO Michael Powell. “This collateral attack on pay TV providers should be seen for what it is – a transparent stunt to muddy the waters and confuse the issue.”  

The NAB’s request for the review comes as the FCC is reviewing joint sales agreements”of free and local TV stations.

BRAND CONNECTIONS

“Heavily regulated local broadcasters in smaller markets are being scrutinized by the FCC for a practice that involves one local TV station selling ads for another local TV station,” Smith says. “Yet the heavily consolidated pay-TV industry, unshackled by any ownership rules, is free to engage in this most collusive of advertising sales practice on a massive scale in multiple markets.”

Using a company called NCC Media (formerly known as National Cable Communications), multiple pay-TV providers in a given market hire a single sales employee to sell local and national advertising that later appears on the local cable system, on satellite TV companies DirecTV and DISH, and on telephone video providers such as Verizon FIOS and AT&T U-Verse, according to the NAB.

NCC’s brochure “The Essential Guide” to interconnects describes how the top pay-TV providers jointly sell advertising. “Interconnects make it easy to plan and buy cable in local markets. With only one buy, one commercial and one invoice, an advertiser can reach an entire market full of cable homes with one call. …NCC is your single-source connection to all interconnects, and all cable homes, throughout the U.S.,” it says. “Leading cable operators have significantly expanded local market ad penetration, by incorporating DirecTV, Verizon FIOS, and AT&T U-Verse subscriber homes into their offerings.”


Comments (6)

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Don Thompson says:

March 19, 2014 at 11:18 am

All Sook Up: Looks Like Nexstar’s ‘Rolling M&A Thunder’ Is In Big Trouble
Please follow me on Twitter: @TedatACA

Ellen Samrock says:

March 19, 2014 at 3:35 pm

Yes, the opportunities for abuse of JSAs is far greater with MVPDs then broadcast. But the NAB needs to build a stronger case, with specific examples, to get the FCC to look into it…especially with Tom the Cable Guy at the helm. But with a strong case, the Republican commissioners might just take it and run with it.

Gene Johnson says:

March 19, 2014 at 4:24 pm

One problem with all this is that it probably is beyond the FCC’s jurisdiction to investigate the MVPD’s joint advertising sales operation, and it more likely falls within FTC/DOJ jurisdiction. Of course, that’s probably not why the filing was made with the FCC compared to making the point about the FCC’s ill-considered looming action on JSA’s, and perhaps setting the table for legal arguments against the looming FCC action once taken. Absent cable system ownership caps (thrown out by the courts a few years ago), and questions of attribution, there would seem little the FCC can do about NCC Media (which as a separate entity is not quite the same as arrangements in JSA’s).

Don Thompson says:

March 20, 2014 at 8:33 am

NAB’s retrans oligarchs are Putin on quite show ahead of 3/31 FCC vote to send JSAs to Title 47 CFR Siberia.
Please follow me on Twitter: @TedatACA

Maria Black says:

March 20, 2014 at 8:41 am

The NCTA can call shenanigans all it wants, it doesn’t change the fact that the whole practice is sketchy.

Gene Johnson says:

March 20, 2014 at 4:48 pm

Hard to believe Ted used to be a journalist.


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