JESSELL AT LARGE

Wheeler’s Diversity Claim Is A Fantasy

The FCC chairman's contention that eliminating joint sales agreements will open up new opportunities for minority and women to become TV station owners ignores the fact that TV broadcasting is no longer a business for small operators, regardless of their gender or color. It's a business for behemoths with negotiating clout. On the other hand, if Wheeler called off the incentive auction tomorrow, there would be all kinds of TV stations available for all kinds of buyers, including minorities and women.

FCC Chairman Tom Wheeler this week told Congress why he is so gung-ho about outlawing the joint sales agreements that let broadcasters operate second stations or so-called sidecars in markets where FCC rules say they cannot outright own them.

The JSAs and companion shared services agreements undermine ownership of stations by minorities and women, he said. Such new entrants can’t outbid big established broadcasters who enjoy great efficiencies in running multiple stations in markets.

“One of the results [of his proposed JSA crackdown] … will be the opening up of broadcast licenses for minorities, women, small entrepreneurs, because they’re currently being sucked off the market,” the chairman said.

Wheeler is expected to make his move on Monday with the support of the two other FCC Democrats, Mignon Clyburn and Jessica Rosenworcel.

The minority angle sounds good and gives Wheeler’s initiative an ennobling quality. Who wouldn’t want to see more TV stations in the hands of women and minorities? They were shut out in the old days when the FCC was handing out licenses to white men for free.

Right now, I don’t believe African Americans own more than a handful (half a handful?) of the nation’s full-power commercial TV stations. But the notion that tightening up the ownership rules will free up stations that minorities and women will rush to buy and that broadcasting will experience a era of true programming diversity is pure fantasy.

BRAND CONNECTIONS

TV broadcasting is no longer a business for small operators, regardless of their gender or color. It’s a business for behemoths with dozens of stations and hundreds of millions in revenue. To deal with the MVPDs and the broadcast networks, you need muscle.

The industry is consolidating rapidly. Just last week, Media General and LIN Media announced they were getting together in a $1.6 billion deal. In a  conference call with security analysts, LIN CEO Vincent Sadusky emphasize the need for scale. The “industrial logic” is compelling, he said.

One of the stories behind the consolidation wave is that private equity firms are clearing out, making way for the strategic buyers — that is, the mega-groups like Sinclair that know a thing or two about broadcasting and have sufficient weight.

The business is rife with rumors of more deals to come, despite the hurdles that changes to the JSA rules may erect.

There may be no better-run station group than the Post-Newsweek Stations. But owner Graham Holdings spun off one station (WPLG Miami) two weeks ago and station trading insiders anticipate that Graham will eventually give in to the importuning of the bigger groups and sell its remaining five.

Why? Because it is just too small to sit at the negotiating table with programmers and cable distributors 10 times its size and compete with other TV groups three or four times its size.

Granted, if Wheeler wrecks all the existing JSA/SSA duopolies, the one-time sidecar stations might become available and some minority and women may take a shot at them. But such deals will be few and far between and they will be mostly in small markets.

The real obstacle to entering the broadcasting business is not the lack of stations to buy, but money. And I just don’t see investors and banks lining up to back new small entrants who think they can make a go of it. The business had gotten too tough.

Sidecar stations make a lot of business sense as sidecar stations. But as standalone operations, many are marginal at best.

Wheeler has suggested that the FCC may approve sharing arrangements going forward, if the parties can show that they contribute to “the diversity of voices” in some fashion. That’s a fine idea.

I suppose that one way that a broadcaster could demonstrate a commitment to diversity is to bring in minorities and women and set them up as owners of sidecar stations while preserving their say over programming matters.

Sinclair set up just such a deal with Armstrong Williams, an African-American entrepreneur and broadcaster. As part of its deal to acquire Allbritton Communications, Sinclair said it would spin off WMMP Charleston, S.C., to Williams, but keep it in the Sinclair family though a JSA and SSA.

Ironically, in any effort to save the Allbritton deal, Sinclair last week said it was terminating its deal with Williams and would sell the MNT affiliate to a completely independent party. So much for that little bit of diversity.

By the way, if Wheeler really believes that the availability of more stations would lead to greater diversity in ownership, he ought to rethink the incentive auction.

That policy’s goal is to eliminate as many TV stations as possible by encouraging their owners to sell their spectrum to wireless broadband carriers, which the FCC concluded five years ago will put the spectrum to better use.

Speculators like NRJ, OTA Broadcasting and Lotus have been going around buying up stations — most in or around big markets — and waiting for the day they can sell them for a fat profit in the FCC auction.

It’s safe to say that other broadcasters are keeping their stations off the trading block in hopes of an incentive auction payday.

If Wheeler called off the incentive auction tomorrow, stations now heading for auction would become available to all kinds of buyers, including minorities and women.

It doesn’t seem right, does it?

For the sake of diversity, Wheeler is willing to disrupt broadcast operations in dozens of markets, upset carefully drafted business and financial plans and devalue broadcast stocks. But diversity counts for nothing when weighed against his pet project.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.


Comments (10)

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none none says:

March 28, 2014 at 3:52 pm

Harry, all I can say is I hope Wheeler reads TVNewsCheck! Bravo.

Liz Sidoti and Bob Lewis says:

March 28, 2014 at 4:02 pm

Bravo, indeed, Harry! Thanks for being the voice of reason against a tide of pro-cable, pro-broadband bureaucrats.

Brian Bussey says:

March 28, 2014 at 4:09 pm

I can program a local station in any market without syndicated programming. That is what is wrong with local television. It is not local. Syndicated programming is just another crutch for rich broadcasters. This is also why people like Ted Cruz get elected. Where is the news and political fact checking ? It seldom makes it on screen. Local stations do not want to hire people. That would cut into their fat management salaries. Anybody counted the # of VPs at some of these giant media groups.? I am also sick of people telling me that my department is safe. Those are human beings being replaced by software and hubs. Robot newscasts look like plastic and dont work during storms and hurricanes. I have seen a robot newsvcast crash and start 20 minutes late in a top 10 market. Bust up the monolopies. They do serve 2% of America very well

none none says:

March 28, 2014 at 4:21 pm

I am sure you can program it – only problem is NO ONE WILL WATCH.

Duncan Brown says:

March 28, 2014 at 4:32 pm

TW and Comcast /NBC can merge but two stations in a 100+ market cannot because it will destroy broadcasting. Priceless.

Maria Black says:

March 28, 2014 at 4:59 pm

And this is where Mr. Wheeler, after reading this article, goes and purchases some cream for the awesome burn administered by Mr. Jessell. The skillfully-crafted, scathing criticism of this whole dust-up is excellent.

Jaclyn Hansen says:

March 28, 2014 at 5:33 pm

I’m with HopeUMakeIt. Massive station groups would have worked in 1960, too, but instead stations were prohibited from getting too big, and there was enforced market diversity. If you look up in the sky at lousy airlines–three dominant ones–you see far, far less service, and enormously less concern for the customer. Ditto broadcasting. In broadcasting, massive size eliminated distinctive radio stations–they’re all alike and listeners like that, you think?–and TV newscasts that are parodies and have no sense of the market they’re in. TV once even had local children’s TV. It’s everybody’s fond memory, in large part BECAUSE it was local. TV gave it all up for syndicated programming that is mindless–seriously, what is lower than Jerry Springer? The ugly fact is now television is such scorched earth it makes ugly sense that now would be the time minorities would finally get a crack at get in on it. In on what? The best of it has been de-regulated away and big-businessed away. If weather wasn’t so bad, there would be no reason for most people to ever turn on local television news. So thank god for climate change. In most communities, local news could disappear tomorrow and people wouldn’t care. As Randy Newman sang about old rock stars: As they are now, TV stations are dead and they don’t know it.

Joe Jaime says:

March 28, 2014 at 6:15 pm

Sorry …HopeUMakeit an GetReal…you may no think local television are just cookie cutter businesses .. but Nelisen says otherwise. I can only imagine what local television would look like without large amounts of operating cash to generate programming….good luck…watch youtube and you’ll get the picture.

Ellen Samrock says:

March 28, 2014 at 6:21 pm

Harry, this is a broadside fusillade against the magical thinking and fecklessness of Tom Wheeler. As a former businessman, I thought he would be smarter then this. Guess not. Undoubtedly, one of the easiest ways for a minority or woman to become a broadcast station owner is through LPTV and many who own LPTV stations are either minorities or women or both (my wife who is both a woman and Chinese-American is part owner of our station and handles some of its operation). If Tom is really interested in seeing that these groups have easy access to owning broadcast properties then he needs to make sure that the LPTV service is preserved in the repacking. As it is and owing to some dishonesty on the part of the FCC as to what constitutes secondary status, the service is slated to be sacrificed to the fat god of wireless broadband.

Drew Borst says:

March 31, 2014 at 9:21 am

This seems to happen every decade or so.1) FCC cries about minority/women ownership. 2)minority/women broadcasters given the inside track for licenses, 3) minority/women station owners sell properties for massive profits. 4) Now rich minority/women owners fill the coffers of politicians who engineered this opportunity. This is just another cash grab opportunity for a supportive constituency at the expense of all Broadcasters


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