Part 2 of TVNewsCheck's annual roundup of the major news of the year (complete with links to earlier stories) covers business; regulatory/legal developments; syndicated and network programming; and new media. In Part 1, which appeared yesterday, you can review the year's happenings in local and broadcast network news. On Wednesday, in Part 3, we will recap the year's technology highlights. And Part 4 on Thursday morning will remember some of the electronic media luminaries who died during 2015. Read all of the 2015 Year in Review stories here.
The Year In Biz, DC, Programming, New Media
After a slow start, the station trading market picked up steam in the second half of this year, but the biggest broadcast deal of 2015 is, so far, one that hasn’t yet happened.
When Media General announced in early September it was acquiring Meredith for $2.4 billion ($3.1 billion, including debt), the big surprise was that the surviving entity would carry the Meredith name and its executive team would remain at the top.
In the space of one week, investors critical of the deal jumped on it, questioning why Media General, which had shed its publishing arm a couple of years ago, would want to get back into the print business.
Then, 20 days after the deal was announced, Nexstar submitted a considerably sweeter competing offer (roughly $14.50 a share) to acquire Media General. Included in that offer was the revelation that Nexstar had made a quiet bid for Media General in August. There was even a revelation within that revelation: Nexstar boss Perry Sook disclosed the August offer was not the first he’d made.
The M&A soap opera appears set to run through the holidays. After Media General rejected a $16.30 a share bid from Nexstar in early December, countering with $18.30, the spurned suitor ratcheted up the brinkmanship, threatening a proxy battle for board seats.
Meanwhile, the FCC spectrum auction and what’s likely to be a record political year in 2016 lubricated the deal gears in the second half. Sinclair, Tegna, Nexstar, Raycom and Gray all pumped up their portfolios. Gray’s $442.5 million Schurz acquisition in September boosts its U.S. reach to just under 10% and highlights an energetic two-year expansion.
Retrans — The new year foreshadowed what emerged as a rancorous 12 months of retrans talks with Gray Television dropping three stations from Cox cable systems even as Capitol Broadcasting’s WRAL and WRAZ returned to Dish Network systems after a two-week outage.
A number of blackouts followed and then the FCC doing a cannonball into the pool with its ruling that municipalities could no longer regulate cable system rates, leaving some to wonder whether the broadcast sector has hit peak retrans.
Transition Time — The Media General-LIN deal creating another mega-group hung a lot of its appeal on the digital business LIN brought to the party. Turns out, it’s been a bit of a disappointment as investors and analysts, including Wells Fargo’s Marci Ryvicker, started questioning the new company’s lackluster digital revenues.
The Scripps-Journal deal that turned Scripps into a pure-play broadcaster after more than a century as a mostly newspaper company closed April 1. The deal, which saw Scripps get Journal Communications’ broadcast properties while Journal got Scripps’ venerable publishing division, marks one of the last big television-newspaper divorces.
The other big move was Gannett’s split into two companies — the eponymous publishing arm and Tegna, the newest pure-play broadcaster on the block.
In another example of an industry in transition, Petry shuttered its rep business as broadcast consolidation trickled down to ancillary players.
Spectrum Auction — Chase Carey, 21st Century Fox boss, got everyone’s attention in January when he voiced Fox’s interest in the 2016 spectrum auction, saying estimates of spectrum values looked interesting. Fox has a numerous doubles in top markets, making it a top candidate to cash in on the auction.
Meanwhile, station groups with spectrum in desirable markets, and groups in adjacent DMAs, are running the numbers of different auction scenarios, including channel sharing, as the much maligned auction appears set to come off in 2016’s first quarter.
Momentum for auction participation built throughout the year but a report from the Congressional Budget Office that put the mid-range take for the government at $25 billion had a lot of politicos seeing dollar signs.
While the auction may happen early next year, the ripple effect will continue well into the future. One of those ripples is the spectrum repack, which is prompting handwringing among broadcasters concerned it could cost substantially more than the $1.75 billion Congress has allocated to pay for it.
Not all broadcasters are jumping on the auction bandwagon. Like Sinclair’s David Smith, Nexstar boss Perry Sook says he’ll hold onto spectrum. A lot of that has to do with the size of Nexstar’s markets and their low ranking on the spectrum appeal chart.
Preston Padden, a leading auction advocate, shut down his Expanding Opportunities for Broadcasters Coalition in September, saying he didn’t want members to chance running afoul of anti-collusion rules about to kick in and because the EOBC had done what it could to ensure broadcast-friendly rules.
ATSC 3.0 — A new broadcast standard — one that could enable broadcasters to make a bunch of money off spectrum without auctioning it off — gained traction in the first quarter as notables including Sinclair’s David Smith pushed development. While some worry about the cost of implementing the next-gen standard, momentum is building in the direction of potential benefits justifying the initial investment.
Programmatic Selling — Call it what you want — programmatic selling, automated sales — the trend to automate ad buying and selling gained traction in 2015 as more groups adopted the practice.
Financial Results — If many station groups’ financial results during the first half highlighted tepid core advertising growth (or no-growth in some cases), retrans continued to be a bright spot.
Meanwhile, broadcasters are facing up to the reality that the old gray mare of core advertising revenues just ain’t what she used to be and, thanks to digital, OTT and mobile, likely won’t ever be again. Glass half empty or half full? Advertisers as well as broadcasters are trying to figure that out.
Digital — If you didn’t already know digital is an important emerging revenue stream for broadcasters, Sinclair confirmed it with the launch of its Digital Ventures division in March. Sinclair’s initiative intends to mine digital’s potential well beyond station websites. — Price Colman
Ending 2015 on a high note for broadcasters, Congress approved a major funding bill for the federal government in December that included a provision that grandfathers broadcast joint sales agreements for 10 years.
The National Association of Broadcasters-backed legislative rider permits JSAs in effect as of March 31, 2014, to continue rather than having to unwind by the end of 2016 as the FCC had required.
Also during 2015, FCC Chairman Tom Wheeler put on hold a controversial proposal to eliminate the network non-duplication and syndicated exclusivity rules — thanks in part to congressional opposition encouraged by the NAB.
But in responding to letters from key congressional leaders, Wheeler made clear that he continues to believe that the regs are anti-consumer.
Wheeler originally circulated his proposal to delete the regs to his fellow commissioners in August but was unable to persuade a majority of his fellow commissioners to support the proposal at the time.
During a recent congressional hearing, Wheeler said the agency will continue considering the proposal as part of an ongoing agency proceeding intended to ensure retransmission consent deals are negotiated in good faith.
The network non-dupe and syndicated exclusivity regs make it easier for broadcast TV networks and stations to protect the exclusivity of programming in local markets. The NAB is concerned that elimination of the rules would undermine broadcasters during retransmission consent negotiations by making it easier for cable operators to import distant broadcast signals with similar programming.
Also during 2015, the FCC fine-tuned many of the final details for the agency’s upcoming incentive auction.
The auction itself, in which the agency hopes to buy spectrum from broadcasters to resell for smart phones and other wireless services, is scheduled to begin early in 2016. Broadcasters who want to participate in the auction are supposed to sign up at the agency by Jan. 12, 2016.
On another key front, the FCC proposed to set aside up to two UHF channels in every TV market for Wi-Fi and other unlicensed wireless services — an initiative that broadcasters say could interfere with their ability to switch to next-gen ATSC 3.0 broadcast transmission technology and make it even harder for low-power stations to find new homes after the incentive auction next year.
Also during the year, WDBJ Roanoke, Va., challenged a $325,000 FCC indecency fine.
The commission imposed the fine, the maximum permitted under agency indecency rules, after the Schurz Communication-owned CBS affiliate broadcast an image of “an erect penis being stroked” during a July 12, 2012, evening news story about a former adult porn star who had joined a local volunteer rescue squad.
The station said the fleeting image was inadvertent, occupied only 1.7% of the screen area and had slipped by the report’s producer and other station reviewers. — Doug Halonen
If you followed the ratings and rankings in syndication in 2015, you might have not known what year it was.
In so many categories, the leaders remained the same as they’ve been for years — CBS Domestic Television Distribution’s Judge Judy, highest-rated court show and highest-rated syndicated show overall; CDTD’s Dr. Phil, the No. 1 talk show, followed by Disney-ABC Domestic Television’s Live with Kelly & Michael, Warner Bros. Domestic Television Distribution’s Ellen and NBCUniversal’s Steve Harvey; CDTD’s Wheel of Fortune and Jeopardy, ranked one and two, respectively, among game shows (with Debmar-Mercury’s Family Feud with Steve Harvey nipping at their heels ); and CDTD’s Entertainment Tonight and Inside Edition, first and second among magazine shows.
With so many long-time leaders still maintaining their positions, new entries found it difficult to make headway. NBCU’s Meredith Vieira struggled in its first season, rebooted itself for season two in September and went nowhere, averaging a 0.9 rating each week.
And yet, at least one newcomer to syndication this past September — WBDTD’s Crime Watch Daily — was being cautiously declared a rookie-year success as 2015 came to a close with that same 0.9 average.
Despite the difficulties of breaking in, three new daytime talk shows emerged in 2015 for fall 2016 — Harry Connick, from NBCU (but sold in a surprise deal this fall to Fox Television Stations; Ice & Coco (starring actor/rapper Ice T and his wife) from WBDTD; and T.D. Jakes, produced by and for the Tegna Media stations, with hopes of distributing it — without an outside syndicator — to other stations and station groups.
With production and distribution of T.D. Jakes both controlled by Tegna, the rollout of this show will be closely watched in the syndication business in 2016.
BROADCAST NETWORK PROGRAMMING
A generational changing of the guard in latenight TV had its final act when David Letterman retired from CBS last May at age 68. The shift had been under way since February 2014 when Jay Leno, then 63, relinquished The Tonight Show on NBC to Jimmy Fallon. After Letterman left, the only late-night host with comparable roots in the broadcast industry of the late 20th century was Conan O’Brien, 52, now seen on cable, on TBS.
The younger generation completed its takeover of the latenight time period. James Corden, 37, began hosting the CBS Late Late Show last March. Stephen Colbert, 51, took over The Late Show in September. The shift extended to cable’s latenight: Jon Stewart, 53, left The Daily Show, and was replaced by Trevor Noah, 31.
Broadcast network programming in 2015 could best be described as tepid, although one show — Fox’s Empire — emerged last winter as the year’s most talked-about show, and one of its highest-rated too.
Still, an increasing number of shows on cable (primarily AMC, FX, HBO and Showtime) and SVOD (streaming video on demand) drew the attention of critics and viewers for whom “regular” TV — both broadcast and most of cable — seemed to become less and less important during 2015, continuing a trend from the last few years.
As a result, broadcast viewership continued to erode, although a handful of live events performed strongly — most notably primetime football (Sundays on NBC and Thursdays on CBS) and a live musical, The Wiz Live on NBC in December.
NBC experimented with another kind of live-event programming when it aired a live, weekly variety show hosted by Neil Patrick Harris this fall. It was the most talked-about of all of the new fall shows on the networks, but its eight episodes had an average audience of a little over 5 million and it was soon forgotten (and later canceled). — Adam Buckman
Publishers came face to face with the distributed publishing phenomenon in 2015. This presented them with the prospect of putting their own content natively on outside social platforms (rather than just linking back to their own sites) in exchange for a revenue share on ads sold against it and the opportunity to reach a broader — and younger — audience. Facebook’s Instant Articles, Snapchat’s Discover and Apple News have emerged as the top platforms vying for content, while Google is readying Accelerated Mobile Pages for early 2016.
The prospect has conflicted publishers. Some have embraced it (The Washington Post has gone all in with its content), while others have pushed back, forcing the platforms to make some concessions on ad sales flexibility. Meanwhile, smart broadcasters are watching what happens here: pressure to participate will extend to them in 2016. Also, if platforms are further successful in habituating visitors to stay on rather than linking out for media content, it may force a paradigm shift and a serious disruptive effect for TV.
Live streaming apps made a splashy debut in early 2015, with Twitter’s Periscope quickly beating out rival Meerkat in user adoption. The apps allow any user to stream video in real time, and the news implications are considerable, particularly as the 2016 election ramps up and “gotcha” moments become more coveted.
Perhaps most significantly for broadcasters and cable, over-the-top (OTT) video proliferated with a rapidity beyond all expectations in 2015. EMarketer now predicts that by 2019, over 72% of U.S. Internet users will be using OTT services, and a race is on to challenge Netflix, Hulu and Amazon for their early-mover advantages in the space. Major players like AT&T and Turner are now preparing to launch OTT services, and a platform war seems imminent. Linear television outside of sports, meanwhile, is an almost-certain loser as on demand becomes simply de rigueur.
Further out on the periphery, major media outlets including The New York Times, Gannett Co., The Economist and ABC News have already begun experimenting with virtual reality journalism. Affordable VR consumer tech is now hitting the market, and it’s getting a huge drive from Facebook, which owns VR giant Oculus and is readying its own VR app (though it didn’t wait on that to start selling VR ads). With Frontline now working on a VR journalism best practices guide via a Knight Foundation grant, look for this to be a space where news outlets will need to at least dip a toe in 2016. — Michael Depp
Read all of the 2015 Year in Review stories here.