Making TV Great Again

Pai and Trump Breathing New Life into Broadcast

Amidst the denials, distractions and dysfunction of Donald Trump’s early days in office, there is at least one promising sign. The President’s policies are breathing new life into some of the nation’s most important legacy industries—coal, communications, manufacturing, steel, oil and gas. With both deliberation and definiteness, the new Administration is on course to change the economic landscape for decades to come.  

Trump’s deregulatory agenda is well underway with Republicans controlling the House, Senate and thirty-three state governors. Whereas Obama’s rules were anti-business, Trump’s decisions favor unfettered free enterprise.  The old order is on the way out, and business in America is back.  Partisan politics aside, this comes as welcome news to American broadcasters, who, within a few short months, have seen Obama’s punitive policies undone, and a new promise for relief in the future.

As one of the nation’s most regulated industries, broadcasters contend that historically restrictive rules have disadvantaged them in today’s hyper competitive market for viewers and advertisers. They point to the public interest obligations, reporting requirements, and other responsibilities required of free, over-the-air, broadcasting. Rules against owning newspapers and radio stations, restrictions on certain advertising, and content regulation, in contrast, do not apply to pay television providers—a competitive imbalance not lost on the Trump Administration.

The UHF Discount and Ownership Caps

Last week’s decision by the FCC to reinstate the UHF Discount is one such example.  Heralded by broadcasters as a move favoring competition, the discount was panned by public interest groups as being unnecessary and promoting consolidation to the detriment of the little guy.  The emotional appeal of the argument is compelling, but it flies in the face of market realities.

The largest broadcast groups – Sinclair Broadcasting and Nexstar Media Group – have market capitalizations of $4 billion and $3.25 billion respectively.  By contrast, the largest two pay television providers, Comcast and Charter have market capitalizations of $181 billion and $103 billion, respectively.  Google, with a market capitalization of $587 billion, has just launched YouTube TV, and a rash of skinny bundle offerings are already in the market.  All of which are plusses for the average consumer, who has many, many choices.

While broadcasters are limited to serving no more than 39% of the American viewing public under the media ownership cap, their competitors have no such limitations.  If free, over-the-air broadcasting is to survive, it will need scale to compete against much larger video providers for the eyeballs of viewers and dollars of advertisers.  Today, there are still 21% of Americans who rely exclusively on free, over-the-air television.  Many are minority and elderly. Whether by choice or chance, broadcast is their only option. Federal policy intended to preserve American television advances the public interest.  It should be applauded, not attacked.

As leading Wall Street media analyst Marci Ryvicker wrote recently: “How is it that a certain MVPD (Multichannel Video Programming Distributor) can operate multiple cable networks, two broadcast stations and the internet pipe in a single market; while a broadcast company cannot own a television station or newspaper operation in L.A., or Baltimore, or wherever? In today’s world, with the amount of choice and the growing number of distribution platforms, continuing to depend on legislation dating back to the 1990’s just doesn’t make a whole lot of sense.”

Next Generation Television

Another promising beacon for broadcasters is the FCC’s plan to authorize the “Next Generation” television standard.  This “Next Gen TV”, as it is called, was developed and advanced by a blue-ribbon group of engineers under the banner of the Advanced Television Systems Committee (ATSC).   The new standard – ATSC 3.0 – gives broadcasters the ability to use their TV channels to provide broadband viewing and Internet-like information delivery methods for free and the ability to hyper-localize news and advertising.

The virtues of ATSC 3.0 are manifold.  The new standard promises enhanced innovations for consumers, including ultra-high definition pictures, immersive audio, more localized content and an improved emergency alert system, not only on televisions, but also on mobile devices and TV receivers without antennas.  With pinpoint local accuracy, anyone with a mobile device can be warned of breaking weather emergencies, hurricanes, tornadoes, floods; terrorist attacks, active shooters; fires; Amber alerts and other crises. If wireless or online communications are interrupted, as with Hurricane Sandy or 9-11, broadcast signals will still work.

While the Administration seeks to authorize Next Generation TV as an optional standard to be used on a voluntary basis, it encourages local simulcasting of both the existing standard and the new standard.  Reportedly, there will be no cost to government or taxpayers for these new capabilities, although cable and telephone companies want to make sure they are not burdened with new carriage obligations or costs for these 3.0 transmissions.

There are others who want to see a mandatory “public safety” chip in cell phones, citing the precedent of the mandatory V-chip required of TV manufacturers since 1999.  The U.S. government may set the pace by considering government phones to be so-equipped, and that could provide a unique and valuable tool for governors, mayors, first responders and emergency alert systems throughout the country at a time when crises are becoming more commonplace. But these appear to be a long way away.  For now, the clearest signal will be the FCC’s decision later this year to authorize the Next Gen TV standard for use.

Taken together these policies can bolster the broadcast industry at just the right time. As video competition increases year-by-year, broadcasters face heightened challenges, including the view espoused by former FCC Chairman Tom Wheeler that it is old technology. Although the quality of television programming may be at its height—including the satire from Saturday Night Live—broadcast can use all the help it can get, including regulatory relief.

Although many have written it off as a dying industry, the Administration’s policies could make TV great again.

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Hoffman is chairman of Business in the Public Interest.  He is also an adjunct professor at Georgetown University and served as chief of staff and senior legal advisor at the FCC from 2013 to 2015.