NAB Takes Middle Road On National TV Limits

Trying to balance the interests of its network and affiliate members, the NAB is asking the FCC to raise the effective national ownership cap of all station groups to 78% of TV homes.

Currently, the reach of groups is capped at between 39% and 78% depending on their mix of VHF and UHF stations. That’s because under current rules the reach of UHF stations is discounted by 50%.

The NAB proposal would bump the cap to 78% for all by keeping the nominal 39% cap, but discounting all stations — UHF and VHF — by 50%.

The NAB goes a lot farther than its TV network affiliate members, who, in a separate filing, called for a tighter cap on network-owned groups, and not as far Sinclair and Nexstar, which asked for a complete elimination of the cap.

The proposals came in response to a rulemaking the FCC launch last December to review the ownership limit.

In its comments, the NAB argued that easing the cap is warranted because of the increasingly tough competition broadcasters face from other TV media.

“Even comparatively large TV station groups are dwarfed by a number of pay-TV/broadband companies and online video providers, let alone the social media giants.

“Yet, unlike broadcasters, these massive companies, many with market capitalizations in the hundreds of billions of dollars, are not subject to national or local structural ownership rules.”

In joint comments, the Big Four network affiliates said the NAB proposal was acceptable for themselves — effectively 78% — but said that the networks should be limited to a true 39% by denying them discounts for either VHF or UHF stations.

The affiliates said they would not object to grandfathering networks that currently exceed the cap.

They claimed that taking the reins off networks would threaten localism; encourage networks to replace affiliates with their own stations in more markets; and give the networks undue leverage in negotiating reverse comp with affiliates.

“[The] imbalance between networks and local stations tilts increasingly in favor of the networks,” the affiliates said.

“A tiered ownership cap will restore some equilibrium to the steadily eroding network-affiliate dynamic and ensure that local stations have the opportunity to participate fully.

“With the commission’s recent liberalization of the local ownership rules, local stations now have the opportunity to begin to achieve, through consolidation, some of the same economies of scale and scope in local markets long enjoyed by the networks nationwide.

“Liberalizing the audience reach cap for non-network owned stations ultimately will benefit competition, diversity, localism — and local viewers.”

Having no apparent fear of the networks, Nexstar and Sinclair argued for no limits.

Eliminating the cap would put broadcasters on “equal footing with other media content providers, such as cable operators, satellite providers and Internet content providers — all of which are unimpeded by similar restrictions,” Sinclair said.

“The national cap is no longer justified to protect localism, competition or diversity, and the tangible benefits of eliminating the national cap far exceed the speculative harms.”

Nexstar delivered the same message: “To say, in the face of the multitudes of choices available to consumers and advertisers today, that a national television audience reach cap is necessary to protect diversity or competition is plainly illogical.”