Killing Noncompetes Could Deliver A Body Blow To Broadcasters

Hank Price

If yesterday’s decision by the Federal Trade Commission to ban all noncompete agreements in business stands up to the inevitable legal challenges, it will be a kick in the teeth to television stations across the country. The decision also has the potential to lower anchor and reporter salaries, especially in larger markets.

Since the very beginning of television, anchors have been a primary reason viewers choose one station’s newscasts over another. That unique value is why most stations spend a fortune on everything from makeup and clothes to regular coaching. Successful anchors are, of course, also highly paid, but the investments stations make in the marketing and promotion of anchors can be even larger.

The building of anchor value is a two-way street that requires investment from both parties. Stations provide huge resources, including high salaries, over the long term. In return, anchors agree to contracts that stipulate that if an anchor chooses to leave the station’s employment, that person will wait a reasonable time before seeking work at another station in the same market.

If noncompetes did not exist, a major anchor could resign from one station on a Friday, then appear on a competing station on Monday. The massive investment the first station had made in that anchor would immediately transfer to the competing station, no strings attached.

Without noncompetes, every television station would be forced to re-think anchor compensation and benefits such as clothing allowances. Why pay huge salaries to a person who could move “across the street” at any time?

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The same situation applies to higher-paid reporters.

As for those low-level employees who make entry level salaries, they should probably not be put under contract in the first place. Their departure from a station creates no harm, so forcing them to abide by a noncompete seems unfair.

Unfortunately, the Federal Trade Commission is following in the steps of the FCC, which seems to have no concept of how business actually works.

If there is any hope in this radical decision, it is that the FTC is attacking not only broadcasting, but the entire business infrastructure of the nation, ensuring a massive legal battle. Let’s hope an appropriate court not only stays this misguided regulation but overturns it as well.

Hank Price spent 30 years leading television stations for Hearst, CBS and Gannett while concurrently building a career in executive education. He is the author of Leading Local Television and two other books.

Comments (17)

timeshavechanged says:

April 24, 2024 at 8:43 am

Please! The only companies that will be “dealt a body blow” from the loss of non-compete agreements are companies that treat their employees like crap.

AIMTV says:

April 24, 2024 at 9:28 am

100% hyperbole. Non-competes are undemocratic and un-American. Either we have a free market economy with guardrails, or we don’t. If a news anchor, reporter, or producer moving to another station puts broadcasters out of business, then broadcasters need a different business plan (and I’m not saying we don’t).

Former Producer says:

April 24, 2024 at 9:35 am

Killing non-competes will, of course, deliver a “body blow” to broadcasters. And that well-deserved gut punch is a long time coming.

I understand the original intent of non-competes. You, as a station owner, want to keep your highly-paid and highly-promoted news anchors from fleeing to the competition. But why are so many TV news employees under a non-compete these days? It’s no longer just the six-figure news anchors with faces on billboards. Non-competes now cover MMJs, producers, assignment editors, and digital media producers, among many. And they’re not making anywhere close to six figures. Some of them earn less than the person working the drive-thru at Starbucks. You say a situation like that is unfair, but it exists, and it exists in far too many newsrooms.

Guess what, Hank? Non-competes are not the magic keystone holding everything together. Today’s cost-cutting broadcasters are already re-thinking anchor compensation and benefits. Some companies have already cut salaries and ancillary benefits like clothing allowances, while keeping those non-competes firmly in place.

You also ask, “Why pay huge salaries to a person who could move ‘across the street’ at any time?” Perhaps it’s because those huge salaries will convince employees to stay? We all know why people job-hop in this business. They want better salaries and promotions their current stations do not offer. If broadcasters offer these better salaries, they give their employees one less reason to jump ship. The station wins by retaining well-known and well-versed journalists who build trust and credibility. But in TV news, this works in reverse: pay lower salaries and lock down employees with restrictive contracts.

I think the FTC and FCC know exactly how the TV news business actually works. Broadcasters went overboard with non-competes. The ban is necessary and I hope it survives any challenges.

Nick Lawler says:

April 24, 2024 at 9:44 am

Hank, the non-compete restriction could also have the opposite effect–stations could pay more to keep a top notch and well respected anchors in order to keep the competition from “stealing” those anchors. Seems to me if anchor and top reporter salaries are reduced, that is an invitation for another station to raid talent. As the TV Reporter often says: Time will tell.

Hopeyoumakeit says:

April 24, 2024 at 9:56 am

Yeah, except stations dont pay anchors big money like they did 20 years ago. You know why? Those big salaries cut into the incomes of the exponentially expanded administrative C-suite staff. When Deckerd owned Belo, He did not have 200 people in his corporate office. Decisions were made at the station level. When AL Howard went off on CBS, he did not have to report to anybody. I read a story on how David Letterman personally came down to lobby Al Howard on moving his show up to 1030pm CST. Corporations believe they can bully managers into running stations with a staff of people making 40 grand a year. ” Why do we have to pay them more than 40 grand ? They are not us ?”

April 24, 2024 at 9:57 am

why do I have to keep clicking on this robot box ?

BG says:

April 24, 2024 at 10:06 am

Dear Hank,
I thought it would be helpful if you could educate your readers and clarify that the FTC’s ban on non-competes only applies to workers making less than $151k.
The ban does not apply to senior executives in policy making positions making over $151k.
This is a big detail that your readers would probably want to know.
Below is a link from the FTC.
https://www.ftc.gov/news-events/news/press-releases/2024/04/fact-sheet-ftcs-proposed-final-noncompete-rule
BG

tvn-member-4966856 says:

April 24, 2024 at 10:16 am

Your vision of how contracts should work is dated. Write a contract that gives the company a period of time where they have the exclusive right to negotiate with the employee during the contract. Then another period of time with non exclusive right to bargain. No non compete. The employee is free to negotiate with any other potential employer once that window opens. I fail to see how talent salaries will go down under this arrangement. Also, an employer could offer a completion or signing bonus that is only retained or earned if the employee completes the agreement. As long as it is a meaningful sum many will finish their contract, thus giving the employer the opportunity to make an offer.

Cosmo says:

April 24, 2024 at 10:19 am

It’s always obvious why “Former Producer” is.

April 24, 2024 at 10:23 am

Our Federal Government. For the most part people who have never worked a real job telling people who do how to run their business.

Factsmatter says:

April 24, 2024 at 10:26 am

Non-compete agreements have become pervasive throughout all level of employees. Regardless if you are a janitor or a top tier anchor or reporter, you have a value. That value is based on the benefit the company gets from your being their employee. Employment contracts can still be written to the mutual benefit of the employer and employee. At the end of the contract, the parties get to decide what the employee is worth. With non-competes the employee is barred from working somewhere else for long periods of time in a large geographic area. That is not how someones worth is determined, this is an indentured servant. The company should not be able to “own” the employee after employment.

tvn-member-2551180 says:

April 24, 2024 at 10:45 am

Murph says:

April 24, 2024 at 1:16 pm

There is at least one major affiliate owner who forces non-competes on everyone, including the errant cockroach; some of these companies drop said non-competes in the lap of employees they have ‘acquired’ through a transaction that the employee had obviously zero say in.

How would you react if, after 20 years slinging spots at your local teevee station, a new bunch of suits showed up and basically said, “Sign this or you can leave”? I would hope that station owners would want employees who are vested in their communities – are you suggesting that faceless ownership groups should be able to tell Mary in South Bend that she has to leave her community, that her kids have to leave their school, that she has to walk away from all of her efforts in said community, just to be able to put food on the table?

I find it fascinating that pundits continue to use phrases like “attacking” when referring to the FCC and FTC. Can we for once have a conversation about what broadcasters, in their never ending quest to wow investors and improve on their 50% margins, have collectively done to what is left of the “news business”?

April 24, 2024 at 2:46 pm

“Murph says” thinks stations still operate at 50+% margins. :-)))) Proof of how behind-the-times most of the commenters are.

April 24, 2024 at 5:22 pm

You’re right, Cosmo – that 50% thing is totally my bad. The last annual report I could find for the non-compete-happy company I referenced earlier was 2022, where the “Margin %” was 44.8%. My apologies for being grossly out of touch.

OldSchool says:

April 24, 2024 at 6:40 pm

I thought this ban was for those earning $150,000 and less?? Non-compete agreements used to be for main anchors but now these corporations have MMJ’s and producers under non-competes but do not pay them what they are worth. Maybe this will work just the opposite and force some of these big guys to pay their people a decent living.

[email protected] says:

April 25, 2024 at 12:53 am

23 years ago WZZM Chef met signed with Wood TV from across the street in 2001 had no non-compete so Bill Steffen was free to be on Wood TV the following week a huge get for Wood TV Bill is now retired still does the blog on Wood TV. Jennifer Dowling worked for WWMT in 2011 then in 2012 she was on WXMI Fox17 for a few years before moving to Portland & now working for the Fox O&O in Seattle. I agree no-competes for those under $150K. Former Producer I disagree The FCC doesn’t know how the business works since their rulings have been out of touch thinking that it is still the 60s thinking that broadcast only is the game in town which isn’t the case as broadcast has competition with Big Tech, which The FCC clearly doesn’t get.