NAB Hammers Charter–TWC - Broadcasting & Cable

NAB Hammers Charter–TWC

Underlying message on the merger: deregulate broadcasting
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The gloves are definitely off, big-time, in the battle between broadcasters and cable over the future of TV.

The rhetoric in the retrans wars has been heating up on both sides led by their respective stalking horses, the American Television Alliance and TV Freedom, which trade barbs and slams—cable service is bad and prices are too high, broadcasters are extorting retrans windfalls that pummel subs and account for those prices, etc.

And broadcasters have not been feeling the love lately from the FCC as chairman Tom Wheeler took aim at exclusivity rules, proposed prioritizing unlicensed spectrum over licensed broadcast spectrum and tightened JSA rules.

But the National Association of Broadcasters last week upped the ante, asking the commission to either deregulate broadcasting or put a moratorium on pay-TV mergers, period, starting with the Charter/Time Warner Cable deal.

The idea, said someone familiar with the petition, was to “billboard the disparity” between multichannel video programming distributors and broadcaster regulatory treatment when it came to ownership, rather than to read the FCC the riot act or necessarily block the deal.

If the FCC let broadcasters get bigger—by buying newspapers and owning more stations locally and nationally—the NAB would likely be OK with the deal since broadcasters would be in a better competitive position.

But the petition did talk up the size of the deal and its impact on competition, and asked for it to be put on hold. That would have been a harder stance for NAB back when Comcast and NBCU were merging, given that it involved a major NAB member, but there is no similar yellow light in the merger of three cable/broadband players.

Fight Game

The NAB was ready to rumble last week. While broadcasters have their own mergers that they have been asking the FCC to bless, they argue those are only attempts to achieve the economies of scale of their MVPD counterparts, attempts that will likely not succeed so long as the commission continues to limit its local ownership and cross-ownership opportunities.

They also argue that, say, a Nexstar–Media General is minuscule when compared to a Charter–Time Warner–Bright House.

In its petition to suspend the FCC’s vetting of the deal, the NAB did not confine itself to those parties alone, slamming what it signaled was open season for MVPD concentration while broadcasters continued to be under the thumb of FCC rules, which it called a disingenuous double standard.

One cable industry deal supporter who asked not to be quoted pointed out that broadcasters had their own mergers they wanted the FCC to approve, so wondered why the NAB seemed to be burning FCC bridges for little upside given that the commission was highly unlikely to act on what was in essence a billboard for the association’s disaffection with its regulatory policies.

A source familiar with NAB’s thinking agreed that it was time to make the point about disparate treatment a little more, well, pointedly, but did not view it as aimed at the FCC specifically or even the Charter deal per se.

The source said that NAB’s move was about suggesting the “glaring” disparity in treatment, and offering more of a nudge to the FCC than a shot.

The shot was, instead, clearly being aimed at cable operators, which the NAB in the petition characterizes as merging behemoths that dwarf broadcast groups and charge “inexorably rising” prices to consumers.

But some ammo was clearly aimed at the FCC for its “asymmetric” approach to the respective markets, allowing multi-billion dollar mergers on the MVPD side—AT&T/DirecTV, for example—while limiting the ad time one station can sell for another by making those joint sales agreements (JSAs) an attributable ownership interest.

The NAB has sued the FCC over its move to limit JSAs, so the source said it would be odd not to comment on a big merger being vetted while the FCC continues to rein in broadcast ownership. NAB is also trying to get the FCC not only to finish its overdue 2014 quadrennial review, but to do so by deregulating broadcasting.

Then there is the retrans proceeding, which could wind up helping MVPDs if the FCC takes aim at retrans impasses.

You can read the NAB’s entire petition at broadcastingcable.com/Oct19.

HILL HOTSHOTS BACK EXCLUSIVITY

FCC chairman Tom Wheeler’s plan to eliminate the broadcast exclusivity rules has run into even more pushback on Capitol Hill as a major lobbying effort by broadcasters continues against the move.

Eliminating the rules could allow cable operators to import duplicative programming into a market during retrans impasses, weakening broadcasters’ hand in those negotiations.

Fans of the move have argued it is a natural follow-up to the FCC’s elimination of the sports blackout rule, with both providing government backstops to exclusivity in marketplace contracts.

But while there were a pair of powerful legislators pushing for elimination of that sports rule—namely, Senators John McCain (R-Ariz.) and Richard Blumenthal (D-Conn.)—the Hill power has been massing on the other side for the issue in the case of the syndicated exclusivity and network nonduplication rules, which prevent the importation of distant TV station network and syndicated programming into local markets.

It has been two months since the chairman circulated the item for a vote, and a source close to one of the commissioners says they are still taking meetings and at presstime had not even begun to discuss it.

Once a majority of commissioners has voted, the other commissioners are on a time clock; after three weeks, it could be adopted even without other votes. But the item did not have those three votes at presstime.

Major Hill players have been voting with their pens, firing off letters to Wheeler making it clear they want the FCC to back off and work with Congress on the issue rather than take unilateral action.

In a town where bipartisanship is normally measured in angstroms, the Republican and Democratic chairs and ranking members of the Senate Commerce and Judiciary Committees, have weighed in officially to ask the FCC not to act until Congress comments on the compulsory copyright license.

That was Congress’ decision (back in 1976) to promote competition to broadcasting by giving cable operators access to programming through a blanket license, rather than making them negotiate for it separately.

If the government is going to get out of the business of backstopping exclusivity, as the argument goes, then it should get out of the business of guaranteeing access to programming at a government-supported price.

The gloves are definitely off, big-time, in the battle between broadcasters and cable over the future of TV.

The rhetoric in the retrans wars has been heating up on both sides led by their respective stalking horses, the American Television Alliance and TV Freedom, which trade barbs and slams—cable service is bad and prices are too high, broadcasters are extorting retrans windfalls that pummel subs and account for those prices, etc.

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