The Gleanings Of My NAB Week In Las Vegas

At the end of FCC Chairman Ajit Pai’s speech at the NAB Show Tuesday, the audience of several hundred instantly rose as one to a standing ovation.

It wasn’t so much what he said or even how he said it that brought the broadcasters to their feet, it was their own belief that they finally had someone running the agency who would be looking out for them, who believes that broadcast TV, FM and even AM are worth preserving.

The prior two Democratic FCC administrations under Julius Genachowski and Tom Wheeler treated broadcast stations like wrecked cars in a salvage yard to be stripped of spare parts for the newer, cooler medium of wireless.

The Obama appointees may not have been flat-out hostile to broadcasting, but they certainly were no champions of it as Pai has repeatedly declared himself to be.

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The news of the speech was that on May 18 the FCC would commence a review of all media rules aimed at simplifying some and eliminating others that are “no longer needed or counterproductive.”

That sounds good. There is always a lot of what we used to call “regulatory underbrush” that needs to be cleared.

But broadcasters should be a bit wary until we see exactly what Pai has in mind. In this speech, the chairman really said no more than that he wanted to cut down the current 1,000 pages of regs covering not only broadcasting, but also cable and satellite TV.

Keep in mind that a lot of media rules are beneficial to broadcasters, specifically the rules around must carry, program exclusivity and retransmission consent. The last thing broadcasters need is a proceeding that would give cable and satellite another opportunity to bend those rules more in their favor.

On Thursday, the FCC released the public notice as part of the May 18 meeting agenda. It contains an appendix outlining the rules that are up for review. And, sure enough, it includes the carriage and program exclusivity rules.

This proceeding could be a classic can of worms.

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The next big date on the repack calendar is July 12. That’s when broadcasters who have to move to new channels and affected cable operators have to submit their cost estimates if they want to get reimbursed by the FCC.

At the Wiley, Rein reception on Monday, I ran into two smart fellows who have been analyzing repack costs for at least a couple of years now and I asked for their best guesses on how those individual cost estimates would add up to. One said $2.4 billion; the other, $2.5 billion.

Those estimates are in line with what I have been hearing and they underscore that the $1.75 billion the government is setting aside to reimburse broadcasters and cable operators will be inadequate.

Hearing the same thing as I, the NAB has already put Congress and the FCC on alert that more may be needed for reimbursement. If my cocktail party sources are correct, the tabulation of the July 12 submission should trigger a full-scale lobbying campaign for a fatter fund.

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Congress is giving broadcasters 39 months to complete their moves to new channels. But, repeating what he and other FCC officials have said in the past, Chairman Pai told the assembled on Tuesday that no station has to worry about getting knocked off the air “due to circumstances outside of its control.”

That’s reassuring. But that’s not something that that the FCC can really promise. The 39-month deadline is basically statutory. So, again, the FCC needs to get some wiggle room from Congress so that Pai can keep his promise. And the sooner, the better.

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As you would expect, there was a lot of talk at NAB about Next Gen TV, aka ATSC 3.0. With the new broadcasting standard almost locked down and Pai promising once again to authorize its use on a voluntary basis by the end of the year, much of the talk is now focused on putting 3.0 to work and making money from it.

For reasons they have never fully and publicly aired, the Big Four broadcast networks have yet to endorse the new standard or say they would implement it, although NBC and Fox have been particularly active in developing the standard.

But the word in Vegas was that the networks were warming up to 3.0. I saw CBS top tech Bob Seidel at our Women in Technology reception on Tuesday evening so I was able to take his temperature on 3.0. He wasn’t yet ready to give CBS’s blessing to 3.0, but it was clear he has been seriously thinking about the standard and he was far from dismissive.

His chief concern now seems to be backward compatibility. The 3.0 proponents say not to worry. For the transition, they say, they will create a lighthouse channel that will simulcast their programming in the current 1.0 standard so that nobody will lose service.

But Seidel told me that in the wake of the incentive auction there may not be enough spectrum in larger markets to accommodate the planned simulcast channels. And even if there is, it will probably only be enough to broadcast in SD, not HD.

These are good points. I wouldn’t want to be told one day that I will have to buy a new 3.0-ready set if I want to continue to watch my local CBS affiliate in HD.

Without a solid transition plan, broadcasters’ big problem will not be the CBS and the other networks, but the American public and their Washington representatives.

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As if one industry fissure over 3.0 isn’t enough, another seems to be another forming among 3.0 proponents.

In one camp are Sinclair and Nexstar. They are gung-ho on datacasting, convinced that there is a market for sending great masses of data to devices. The key is assembling a national footprint. The best example I get from them is transmitting geo-positioning and other data to automobiles scattered about the country.

At the Noble financial conference on Tuesday, Nexstar CFO Tom Carter urged other station groups to join them. “It’s about forward thinking,” he said.

However, according my sources, the Pearl group of major station groups has determined that datacasting is lousy business, that it has — or will have — no edge over wireless in the wholesale data distribution business. Pearl thinks the first order of business should be targeted advertising.

Now, I don’t know how serious this schism is, but with the networks hanging back, I would think that it is absolutely critical for the 3.0 proponents to be aligned on the initial business model so they can concentrate all their financial, technical and promotional resources.

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It’s good to see that NBC and ABC have settled their differences with their affiliates over the distribution of the affiliates’ signals on OTT streaming platforms like DirecTV Now and Sony PlayStation Vue.

ABC announced at NAB a “clearinghouse” that allows its affiliates to opt into pre-negotiated agreements in dealing with the OTT outlets. NBC announced a similar arrangement the week before the convention.

The affiliates had been resisting networks acting as their proxes in their OTT negotiations, fearing that they would come up short on the carriage fees the outlets pay.

But ABC and NBC affiliates with whom I spoke at NAB this week say they are pleased with their end of the money in the network deals, one saying it was “very comparable” to what they are getting in net retrans from cable and satellite.

Now, CBS and Fox need only follow suit.

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

Read all of TVNewsCheck‘s NAB 2017 news here.