WHY THIS MATTERS: The NAB is in a good digital position going into its show but it must remain vigilant about spectrum issues.
The national association of broadcasters has been on a roll in Washington, D.C. — momentum the group’s president and CEO Gordon Smith is carrying into this week’s NAB Show in Las Vegas.
Broadcasters are preparing to be interactive digital players, thanks to FCC approval of the NAB’s petition to roll out the ATSC 3.0 advanced TV transmission standard; TV stations getting more money for the post-auction repack already in progress, thanks to legislation the NAB pushed; and broadcasters now able to own more stations in more markets thanks to broadcast ownership deregulation last fall that the association has long promoted.
The NAB is also relieved at what didn’t happen, namely, eliminating the deductibility of ad expenses as part of the budget bill, which would have been a major downer for broadcasters.
Smith said he likes the current view from Washington and wants broadcasters in Vegas this week to recognize the giants of the past on whose shoulders they stand, and to look from that vantage toward a future in which they can invest and thrive.
One cloud on the horizon is the ongoing push by computer giant Microsoft to get its hands on more TV spectrum for unlicensed devices, such as computers — a push Smith suggested has more to do with shoe-horning signals into urban areas at the potential expense of broadcast reception than the rural-divide-closing branding Microsoft has applied to it.
Smith talked to B&C about those issues and more on the eve of the big show. An edited transcript follows.
Why is ATSC 3.0 so important to the future of broadcasting?
I think the secret to the longevity of broadcasting has been investment in the future, from black and white to color, analog to digital. ATSC 3.0 is an extension from high-definition to super high-definition, plus a future that links broadcasting and broadband together. That’s a future in which broadcasting can do more than survive; it can thrive.
Is 3.0 a next iteration or a game-changer?
Only time will tell, but I think it is a game-changer when you think of the potential of two-way [interactive] communication and linking broadcast to broadband.
Cable operators say broadcasters weren’t initially asking for more spectrum for ATSC 3.0, but now you seem to be.
We’re not asking for more spectrum. We’re simply asking to make sure we have space within our spectrum that is uncrowded and not subject to interference such as white space usage. In some areas of the country, [white spaces] don’t exist.
Microsoft is pushing for more channels for wireless broadband as a way to promote closing the rural divide, which the president and FCC chairman Ajit Pai have made priorities. You say setting aside channels is premature. Why?
I would say that in rural areas there is sufficient spectrum for them to proceed. There is not in their real targeted area, which is in urban spaces. It may be that the rural focus is a straw man to knock down to get to the urban?
Are you OK with them getting more spectrum after the repack and if everyone is taken care of?
If there is space, sure. We love rural at NAB. We want people to have more options. But we don’t want that option to be interference with the broadcast signal in urban areas.
Look, if Microsoft had wanted to do this, they certainly could have participated in the auction. One of the wealthiest companies in the world is now asking to get for free what they could have bought.
So, the FCC took some big steps to deregulate local ownership last fall. What more do they need to do?
As you know, the FCC is likely to take up the issue of ownership on a broader basis than they already have [there is an ongoing review of the national ownership cap and the UHF discount]. And our position is the work product of a special committee we established and our board approved, and is reflected in our filing at the FCC.
And that position would be to essentially double the [39%] national ownership cap by having a 50% discount for both UHF stations — as is currently the case — and VHF?
What is NAB’s position on the children’s TV rule review that FCC commissioner Michael O’Rielly is currently spearheading? Is NAB pushing to end the three-hour weekly mandate or the half-hour increment requirement?
We believe that the rules are due for updating to make them more effective and to give parents more choices. The market has changed somewhat and I think a little more flexibility is what we are calling for and which would be warranted, given the options that parents have for their children today.
But does that mean you want to get rid of the three-hour mandate?
No, not necessarily. It just means the broadcaster would have the option to provide children’s video at the times when children may watch as opposed to choosing some of the childrens’ offerings on other platforms.
Congress has freed up another $1 billion for the repack. Will that be enough?
Yes, it will.
Why hasn’t NAB weighed in on Locast, the service that is streaming local TV station signals in New York without permission, citing a copyright law carve-out for nonprofits? We understand there is some division among stations about how to proceed, and that the Motion Picture Association of America is likely waiting on NAB to take the lead.
We are awaiting guidance from our board and the broadcast networks.
What is your definition of fake news?
Our job at NAB is just to encourage our members to report the facts without fear or favor and let the chips fall where they may. Any survey we have ever seen shows that our local sources of news and information are highly credible. Since the founding of the republic, those with political power often don’t like reporting of news that isn’t favorable to them, so, nothing has changed. We will just keep going to work and reporting the facts as we can discover them.
You are coming into this show with a strong hand: ATSC 3.0, more money for the repack, ownership deregulation that NAB has been pushing for decades. To what do you attribute that success?
I have talked before about having all the tools in your toolbox to share the future as best we can. It was a highly talented government relations and legal staff at NAB, coupled with the grassroots of our state associations, then a unity of purpose and effort that brought about some of the biggest wins we’ve ever had.
With a little help from the FCC chairman.
In politics, timing is sometimes a better tool than luck. We saw the timing as favorable to many of our concerns, and we succeeded in winning those to our favor.
What do you hope is your next big success?
Obviously, as you chalk up wins in one Congress and in one FCC, you have to anticipate the future with an ever-changing political environment. STELA [the satellite license reauthorization bill that cable operators have wanted to use as a vehicle for retransmission consent ‘reform’] will be on the table again and we have to prepare for that. But I still think you can’t overstate how big a win we have had in this congress with the billion [repack] dollars, with staying out of the tax bill. Those could have been industry-damaging.
Remind us about your issue with the tax bill?
When President Trump and Congress were weighing the pros and cons of various budget pay-fors [finding new sources of money to pay for budget items], which are requirements of the budget rules and the reconciliation process, changing or getting rid of the deductibility of advertising expenses as an ordinary, necessary, business expense was a top 10 pay-for and we had to fight like banshees to [keep that] out of the bill.
We would have been having a very different conversation right now had we been a pay-for, given that advertising is 100% of the revenues to radio and probably 80% of the revenues to television.
Had that structure been eliminated or changed significantly, we would have significantly damaged localism and broadcasting, which is the great leveler of American democracy, the place to go for real news.
Do you have any concerns about the administration’s approach to media mergers given the effort to block AT&T-Time Warner?
Every merger has to be considered on its own merit. We rarely if ever take a position on them. But we are paying attention to what the administration is doing. It is more liberal in allowing mergers, but clearly there are some statutory limitations when it comes to antitrust.
Let’s turn to the show. Anything you are most interested in seeing on the floor or promoting as an association?
Well, obviously I think ATSC 3.0 is going to be exhibit A. But there are lots of wonderful exhibits where content comes to life [the show’s official theme]. We won’t just be celebrating the dramatic wins we’ve had this year; we will be preparing to make investments for the future.
Without giving away the punch line, what will the theme of your message to the NAB Show be?
The punch line is, ‘Standing on the Shoulders of Giants.’ It is a theme I came up with based on an experience I had when we had just moved to Washington and my little boy and I went to view the 1997 U.S. Open [golf championship] out at Congressional [Country Club] and he kept pleading for me to put him on my shoulders so he could see.
When I put him up there he could see farther than I could. So, the purpose of my speech is to point out that we are on the shoulders of giants, so, what do we see? And where will we invest?