In comments on the FCC’s ownership review, the trade group submitted a study that found, among other things, that duopoly broadcast TV markets do not lead to higher ad rates. It also found no evidence that in markets where broadcasters are engaged in a joint sales agreement or shared service agreement are broadcasters able to charge higher advertising rates than in markets without these arrangements.
FCC OWNERSHIP REVIEW
NAB: FCC Ownership Rules Lack Rationale
The rationale underlying several decades-old media ownership rules that broadcast television stations only compete against themselves in local markets is simply not true, the National Association of Broadcasters said in comments filed Wednesday with the FCC.
NAB said the commission “should adjust its rules to better reflect today and tomorrow’s marketplace that features competition from rival industries as it weighs relaxing ownership restrictions.”
In its comments submitted to the FCC for its 2014 Quadrennial Ownership Review, NAB included an economic study by Economists Incorporated that tested the Department of Justice Antitrust Division’s position that broadcast TV stations do not face competition from cable and other media sources for local advertising revenue. The study found no evidence that in local markets where broadcasters are engaged in a joint sales agreement (JSA) or shared service agreement (SSA) are broadcasters able to charge higher advertising rates than in markets where these arrangements are not present.
“The presence of JSAs and SSAs is not statistically associated with increased advertising prices in local markets,” concluded the study, which was conducted by economists Hal J. Singer and Kevin W. Caves. “There is even some evidence that markets with JSAs and SSAs have prices approximately 16 percent lower than other markets, suggesting that these arrangements benefit consumers by lowering costs.”
The study, which analyzed pricing data from the past 10 years in 210 local markets, also found that in markets with a duopoly television station owner do not have higher advertising prices than in markets without a duopoly. “Increases in local television broadcast station concentration do not appear to have any effect on the advertising rates that broadcasters are able to charge,” the study concluded. That result “is consistent with the conclusion that local broadcasting prices re disciplined by non-broadcast alternatives,” the study found.
NAB also highlighted a number of other broadcast ownership rules that can no longer be rationally maintained in today’s marketplace. Crossownership rules that prevent common ownership of a radio station and TV station or broadcast entities and newspapers in the same market do not promote the commission’s localism, competition or diversity goals, NAB said in its comments.
BRAND CONNECTIONS
“The newspaper-broadcast cross ownership rule, in particular, should have been eliminated years ago,” said NAB. “Failure to do so has likely led to the hastened diminishment of the newspaper industry and should serve as a warning to the Commission of what can happen to the marketplace when it ignores its deregulatory mandate and waits too long to adjust its rules.”
Barriers that restrict access to capital are the cause of depressed female and minority ownership of broadcast radio and TV stations, NAB said. Ownership restrictions have not led to an increase in female and minority entities owning broadcast stations and in fact limit their ability to obtain sufficient capital to purchase and operate stations.
“Purposefully depressing the value of broadcast stations through ownership limitations only makes it more difficult for current licensees to maintain operating capital in order to compete or for possible new entries to secure funding,” said NAB. “It simply has not worked. The time has come for the commission to consider better incentives-based alternatives.”
Comments (3)
Gene Johnson says:
August 7, 2014 at 10:42 am
It may be true that “ownership restrictions have not led to an increase in female and minority entities owning broadcast stations,” but that does not mean that the corollary – that the current rules allowing considerable consolidation of station ownership, particularly in radio, has not led to a reduction in female and minority ownership. As for the current ownership restrictions limiting the ability of female and minority entities to obtain sufficient capital, I don’t see a logical connection between current ownership restrictions and barriers to capital. Capital certainly seems available for some of the very large transactions taking place. It’s always been harder to find capital for smaller transactions, and when fewer stations are available, and those that are may be less attractive options for economic reasons, it’s understandable why capital may be harder to find for such transactions. But that would mean that the consolidation of ownership that has reduced the availability of stations is more likely relevant to limited capital access than are the current ownership restrictions. That is not to say the rules are not in need of reform, particularly the broadcast-newspaper ownership restrictions which long ago outlived their usefulness and were never based on evidence of actual harm. The current radio rules allow a company to have more than enough stations in a market or nationwide, arguably too much local control (at least in some markets). TV is the more difficult situation due to the much higher operating costs, particularly in smaller markets with far lower revenue availabilities.
Maria Black says:
August 7, 2014 at 11:01 am
Would JSA’s and SSA’s have helped Roberts Broadcasting? They were able to have them, and they went down. I think the question of women owning TV stations should be put against the number of women in the industry outside of on-air roles. If you have an industry of people where so few of them have experience in the business, you’re not going to see a high number running their own piece of that industry. I’m not saying there are no women, but count up the women and minorities in stations across the country that are in management, and you’ll have a small number of individuals.
Ellen Samrock says:
August 7, 2014 at 12:26 pm
JSAs and SSAs aside, the facts show that minority and women ownership of broadcast properties is alive and well in the LPTV community. A recent survey showed that 45% of low power TV stations are either owned or partly owned by a minority and 60% are either owned or partly owned by women. Incomprehensibly, the FCC has never bothered to factor in LPTV when addressing the question of broadcast station ownership and assumes minorities and women have been mostly shut out. But the 2009 rural low power TV window was a huge success in attracting underserved groups and first timers. This is what makes the UHF spectrum auction even more of travesty as many of those stations will either be squeezed out in the repack or forced into a untenable financial situation that will render them dark. This is why I have often accused the FCC of paying only lip service to the goal for diversity in ownership. It exists now but Obama’s and Wheeler’s anti-broadcaster position will soon snuff out what has actually been a success for the Commission…one of its few and one they’ve never bothered to track.