The National Association of Broadcasters has had a challenging last year or so, and still has plenty of work to help its members survive and thrive in tough times that only seem to be getting tougher.
The NAB pushed hard against the XM/Sirius merger, and against allowing unlicensed devices to use the “white spaces” in the TV band, only to see the FCC approve both. The FCC proposed “enhanced disclosure” despite NAB efforts to fight it. DTV transition plans were upset after the government couldn't provide sufficient funding for its digital-to-analog converter box coupon program, causing millions in additional transmission costs for broadcasters already hit hard by the falloff in advertising.
Cable trumps broadcasters
And even while getting props from Washington over its DTV education campaign, numerous sources say NAB missed an opportunity to gain more points with the Obama transition team. During a meeting late last year over the status of the transition, it was the cable industry that volunteered to coordinate a DTV call-center operation, collecting plaudits from Washington.
That was clear two weeks ago when members of the NAB and the National Cable & Telecommunications Association were in town for some face time with legislators and regulators, who praised cable operators and NCTA President Kyle McSlarrow for stepping up. Asked whether it was a political misstep not to take ownership of the DTV call centers, NAB President David Rehr says that depends on whom you talk to. “We set up the infrastructure for which the cable centers use the automated system,” he notes. “We have not been out there pounding our chest over everything we've done.”
Rehr says he has also moved past XM/Sirius, and has not conceded defeat on either white spaces or enhanced disclosure. The NAB has challenged the white spaces decision in court, and Rehr says enhanced disclosure “hasn't become the law of the land that our stations have to live under yet.” He says the NAB is still “prepared to do battle.”
The good news for broadcasters is that the FCC may be more focused on rolling out broadband than regulating Rehr's industry. While the economic free fall has hit some broadcasters hard, particularly given some of their debt loads, the upside is that Democratic legislators and regulators will need to factor jobs and economic stimulus into their decision-making. Rehr says that could provide an opportunity to push for loosening of duopoly rules or for more local management agreements.
That is part of the reason behind the softening stances on newspaper-broadcast cross-ownership and merging media. Former Obama adviser Larry Irving and House members Rick Boucher and Nancy Pelosi have indicated that the ill health of some in the newspaper and broadcast businesses requires rethinking a hard-line stance about mergers and competition.
“With the newspaper industry in such dire straits, people started thinking, well, maybe we need to relax the newspaper-broadcast cross-ownership rules,” says Toni Cook Bush, partner in the communications practice of Skadden Arps and a former Hill staffer. “And I think the same thing for stations. It is going to force Congress and regulators to acknowledge the fact that the industry has changed and that we really need to rethink whether 1970s regulations fit in this century.”
An X-factor could be incoming FCC chair Julius Genachowski. When he eventually takes over the FCC, he will come with a White House communications priority list that includes media/ownership diversity, but also with the new-tech experience to recognize that broadcasting may no longer be the center of the program delivery universe.
Former Republican FCC chairman Dick Wiley agrees with Bush's assessment. “You have to recognize that broadcasting's competitive posture has changed,” Wiley says, “and therefore it has to be reconsidered in a regulatory context as well.” And he is hoping the new Democratic chairman agrees: “When people are being hurt and hurt badly in the marketplace, I think a smart guy like Julius Genachowski is going to be hesitant to dump new regulations on them.”
Broadcasters' fate is partly in the hands of the courts, Wiley points out, including the NAB's challenge of the white spaces decision. The Supreme Court will also decide Fox's indecency challenge any day now, and certainly before the end of its term in June. In addition, the Third Circuit must eventually rule on the myriad challenges—from both sides—to the FCC's decision on newspaper-broadcast cross-ownership, though last week it agreed to delay a ruling to give the FCC a chance to take another look if it wants to.
Overall, Rehr says broadcasting has to change, but that its brands remain strong and margins are still good relative to those in some other businesses. He tells B&C that the prospects for mobile are tremendous: “We are in the middle of doing a lot of cool new things, but they are not all throwing revenue off yet….We persevere. We make the tough choices. We do the right thing to invest in tomorrow. And then when we get lifted out of this, which we will as we have in past cycles, we will be stronger.”
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