On NAB’s TV Agenda: Retrans, Auction, 3.0

As joint board chairman of the NAB, Dave Lougee has to balance the interests of TV and radio, making sure that both media benefit from the finite human and financial resources of the association.

But as a TV broadcaster — he is president of Tegna Media (formerly Gannett Broadcasting) — he undoubtedly has a deeper and more personal interest in Washington issues affecting TV broadcasting.

In this interview with TVNewsCheck Editor Harry A. Jessell, Lougee discusses the TV side of the NAB policy slate, warning that elimination of the exclusivity rules would tip retrans negotiations in favor the MVPDs, expressing concern about the cost and deadline of the post-auction repack and the FCC’s ”good faith” retrans proceeding, reaffirming NAB’s commitment to develop, if not implement, a new broadcast standard and more.

An edited transcript:

It looks like the FCC will go ahead and eliminate the exclusivity rules. Are you going to be able to turn the tide over there, save those rules?

We are putting the full-court press on at the commission and with members of Congress because from our perspective this is tipping the scales of a process that’s working. As you know, it’s something that’s being branded as being deregulatory, but in fact it’s regulatory.

When you say tip the scales, you mean the tipping in the scales of retransmission bargaining?

Absolutely. It’s to the MVPDs’ advantage.

So what are your prospects at the FCC? I don’t think [FCC Chairman] Wheeler would not have gone this far if he didn’t have the votes to do this.

I will just say there is that a groundswell of broadcasters and people who appreciate broadcasting that are making the case. And I can tell you it has not been hard to organize with the affiliate associations with the networks.

The big overarching issue of the past six years has been the incentive auction. The NAB lost its lawsuit challenging the repack. How do you feel about that repack now? Are the stations that don’t participate going to come out of this with their coverage areas intact?

I sure hope so. That’s been one of the primary concerns from the beginning. This is the most complex [reorganization of the TV band] that the country has ever had to execute. The digital transition really was a lot easier. Back when we did that, with our own station here in Washington, WUSA, the FCC’s well-intentioned modeling said we would need 9 or 12 kW to replicate our analog signal. Today, I think we are at 56 kW in order to do that. That was the big miss.

We are also concerned about the cost part. Everybody knows that the $1.75 billion [for stations’ channel-changing reimbursement] is not going to do it. It’s insufficient. Even Wheeler has acknowledged that, but he has provided no solution. And the other thing is the 39-month issue. There is no way we are going to repack as many as a 1,000 stations in 39 months. There is just no real way. Everybody knows it; it’s not going to happen. It’s physics, it’s labor and it’s the government’s inability to move fast.

So what is your proposed solution, first on the $1.75 billion and then on the 39 months?

We have been in front of the commission and members of Congress on that, but it appears that everybody seems to be punting that down the road to be dealt after the auction. My guess is, the current chairman is not going to have to be dealing with it. It will be somebody else’s issue to deal with.

At the CTIA convention the other day, Wheeler said not to worry, broadcasters are going to turn out in big numbers for the auction. I know, too, that there are quite a few broadcasters that are eager to sell. Are the rules for the reverse auction shaping up the way you want them to so that the selling broadcasters get the most they can from the auction?

There certainly have been some improvements, but I think the auction would have been easier for broadcasters if there had been more clarity early on. All participants on all sides have been scratching their heads at the lack of clarity, but we are in there working with them on a weekly and daily basis to make sure that broadcasters issues are represented.

There is kind of this sense that this is a binary world and people are either leaving the business or they are staying in and not participating in the auction. The channel sharing opportunity has been real for some time. There are those who want to channel share, take advantage of the proceeds of the auction as well as stay in as strategics.

What do you think of the auction numbers that the FCC has been throwing around so far, big numbers? Are those to be believed?

I will leave specifics to others to hypothesize about, but I think they have been a bit broad-brushed. There are markets that will see potentially tremendous amounts of proceeds and there are markets that may see none. The [Greenhill] report probably could have served the industry better if it had been more directionally honest about the smaller markets. In the case of a small market out in the middle of rural America that has no interference and a lot of channels open anyway, simple math says the FCC is going to need zero volunteers to meet goals.

So looking at the big picture, is the auction going to be the big success that Wheeler believes it is going to be?

I am not going to handicap that. We have said all along that we are in favor of a successful auction as long as it is operated correctly and the issues that we have talked about in the backend are dealt with. I think successful means that the ecosystem is protected and that the objectives are reached for the government as well. It needs to be successful all the way around and that’s why obviously the NAB is working so hard to make sure broadcasters’ interests are appropriately represented.

Getting back to the retransmission consent, the FCC by congressional mandate has got another proceeding going looking at the good faith bargaining obligation of the parties. What’s your level of concern with that?

The FCC’s authority on retransmission is very limited, but we are generally concerned about this current chairman’s engagement on retransmission issues. There is a bit of a disconnect. On one hand, in the FCC’s mind, we are the most important part of the subscriber-fee ecosystem and if a broadcaster comes off the air for a day it’s a major issue of public policy. On the other hand, there is a spectrum policy that seems to say that stations can go off the air because broadband is of higher and better use. There seems to be a little bit of a philosophical inconsistency there.

We are also concerned about this particular chairman. Between non-dupe and syndex and this ruling, he seems to be very much engaging in the middle of a marketplace in favor of the MVPD side of the world.

Let’s just be clear. Our members have an incredible track record of good-faith negotiations. There has never been a fine against us. Ironically, on the issue of blackouts, the FCC, by showing any kind of intent of getting involved in these issues, is actually encouraging the MVPDs to have blackouts because it would appear to be helping their case politically. So one of the best ways to avoid blackouts is not to get involved.

Preston Padden has got his day job, which is to represent his spectrum speculators in the auction, but his other one, one that he does for fun, is campaigning to get rid of the compulsory license and retransmission consent so that broadcasters will have to rely on conventional copyright laws as the cable networks do. What are your thoughts on that?

I understand his strong point of view. It’s an interesting conversation, but it’s a nuanced one that needs to be handled carefully in the interest of all parts of the system. We don’t want to get to a place where we put the small operators and the system itself into any type of chaos.

Well, if you start knocking at parts of that whole compulsory license regime like the exclusivity rules, don’t you really have to take a hard look at whether the whole thing can stand?

I am not accepting your premise that we are going to have those first few parts knocked out.

Let’s just say they do. Then isn’t it time for the whole thing has to go?

That’s a conversation only if that happens and hopefully we will never have that call.

Another big issue hanging out there are the FCC’s new JSA rules that could force broadcasters to undo many of their duopolies. The NAB is challenging those rules in court and pushing for legislation to at least grandfather existing JSAs. Where does that legislation stand?

There are bills in both the House and Senate and we strongly support them. By the way, Wheeler talks about getting rid of what he sees as outdated rules and yet, when it comes to media ownership rules, the FCC hasn’t been doing its job under the quadrennial review and looking at some very outdated ownership rules. Obviously, broadcasters feel there is a whole list of rules that need to be looked at.

Are you feeling pretty good about that legislation, though? Are you going to get that?

I think we are hopeful.

What about the next-gen ATSC 3.0 standard? Most affiliates, I would say, are behind the 3.0 effort, but the networks are not, which I think is going to hold the NAB back from fully engaging with the FCC and Congress on implementing the standard.

First of all, I am not acknowledging your premise there. I am not stipulating that all the networks are not supporting it. I am not going to be able to speak for our board members. I think that is a bit of a broad statement.

You don’t agree with that?

Answering your question, I am not stipulating to what you said as a fact.

Are you denying it then?

I am saying no more than what I said and I am not going to speak for any of our board members. Now there are obviously lots of different points of view around ATSC 3.0 at the NAB and other organizations and I am not going to speak for any of the members.

But I think the NAB and the members are really pleased at the progress that we are making with ATSC right now. We are looking at a final candidate standard for the first quarter of next year. A lot of great work frankly has been done. At one point in time, there was concern that broadcasters’ needs from a new standard weren’t being well represented. I think the NAB has done a really good job rallying the membership to get to a good standard.

And so the next steps after that would be to bring in the FCC and Congress to help implement this thing, right?

I am not going to speak to what the next steps would be. These are conversations we have with our board and no decision from the standpoint of the board on next steps or strategy one way or another on ATSC will be made without the full input from the board.