https://www.rbr.com/big-four-tv-affiliates-want-two-tiered-national-owner-cap/
‘Big Four’ Affiliates Want ‘Two-Tiered’ National Owner Cap
March 20, 2018
In a 96-page filing complete with three exhibits made Monday with the
Commission, the affiliate associations for ABC, CBS, NBC and Fox Broadcasting
collectively urge the FCC to modify the national audience reach cap as it
applies to non-Big-Four network-owned stations while retaining the current 39%
cap as it applies to the networks — creating a “necessary” two-tiered national
owner reach limit.
They also seek a “keep and tweak” approach to the “UHF discount.”
Why are the networks suggesting the two-tiered approach?
“Such a tiered cap is necessary to ensure that the Commission’s ownership rules
continue to serve their intended purpose: to protect and promote localism by
maintaining an appropriate balance of power between national networks and
local, non-network-owned stations,” the affiliate groups say.
The ownership rules, the Big Four affiliate groups believe, “guarantee that the
economies of scale and scope enjoyed by the networks in the centralized
production of programming of national or regional significance are
appropriately counterbalanced by local stations’ ability to create, select, and
distribute programming of particular interest and value to audiences in local
television markets, including the high-quality local news, sports, weather,
public affairs, entertainment, and other programming that form the core of
local stations’ public service obligation.”
The Commission, they say, “must jealously guard that balance to ensure that the
core economic impulse of networking does not override localism interests.”
It should be noted that the affiliate groups largely own non-“Big Four”
stations, in addition to affiliates that provide local markets programming from
either ABC, NBC, CBS and Fox. Thus, stations airing programming from The CW,
MyNetwork TV, iON, and any Spanish-language network would be lumped into the
modified reach cap.
This still could raise eyebrows, as the affiliate groups certainly want to
protect their “Big Four” affiliates but could also expand while gobbling up any
other commercial property; in most markets non-“Big Four” stations are not
ranked in the top four, thus negating any need to query about waivers with the
Commission.
To bolster their argument, the affiliate groups point to the “dramatic and
significant change” to the video programming and distribution marketplace since
2004, when Congress last directed the FCC to modify the national ownership
reach cap.
“Local television stations face unprecedented and growing competition for the
attention of local viewers and for the advertising revenues that
follow—revenues that remain essential to the production of high-quality local
programming,” the affiliate groups say. “And with every passing day, the
balance of power continues to shift further in favor of the
networks, who capitalize on economies of scale and scope in the production and
distribution of their programming and who assert ever-increasing control over
their affiliates in terms of access to network programming and channels of
distribution.”
Despite those mounting pressures, the groups add, “local stations compete with
vigor and remain committed to airing programming of particular interest and
value to their local communities.” They note that network programming is often
preempted for local news, weather and other alerts.
“Local stations likewise lead the way in the production of award-winning local
news and investigative journalism,” they add. Further, local stations have
“taken the lead” with the voluntary roll-out of the “next gen” broadcast TV
standard known as ATSC 3.0.
“As the pace of change in the marketplace accelerates, the imbalance between
networks and local stations tilts increasingly in favor of the networks,” the
affiliate groups say. “A tiered ownership cap will restore some equilibrium to
the steadily-eroding network-affiliate dynamic and ensure that local stations
have the opportunity to participate fully. With the Commission’s recent
liberalization of the local ownership rules, local stations now have the
opportunity to begin to achieve, through consolidation, some of the same
economies of scale and scope in local markets long enjoyed by the networks
nationwide. Liberalizing the audience reach cap for non-network owned stations
ultimately will benefit competition, diversity, localism—and local viewers.”
UHF DISCOUNT: STAY AND PLAY
So, what about the “UHF discount,” which many have assailed for being an
outdated rule that made more sense when Mookie Wilson played for the New York
Mets and Dallas was a top-rated program for CBS?
Keep it and tweak it, the affiliate groups ask.
“The UHF discount should be retained for non-network-owned stations but
modified to apply to both UHF and VHF stations,” they request. “Although the
technical foundation for the discount no longer exists following the digital
transition, the Affiliates Associations urge the Commission to leave the
discount in place for local, non-network-owned stations and, going forward, to
calculate their coverage compliance by accounting for both UHF and VHF stations
at 50% of their theoretical reach in the market, in light of local stations’
significant reliance interests and expectations.”
In explaining its reasoning for the UHF/VHF modification and the 50% market
reach suggestion, the affiliate associations say, “When the Commission
implemented the discount more than 30 years ago, local broadcasters began to
build their businesses, authorize investments, and make ownership and
operational decisions with the UHF discount in mind. Today, those business
decisions and strategies are well entrenched, and the continued existence of
those businesses may well depend on maintaining the discount. If the
Commission’s intent is to preserve—or, better yet, restore—the
network-affiliate balance of power, it should not upset those settled
expectations.”
The NAB agrees, and in separate comments filed with the FCC on Monday (3/19)
lead counsel Rick Kaplan, Jerianne Timmerman, Erin Dozier, Patrick McFadden and
Emmy Parsons wrote, “The realities of the modern digital marketplace have
eroded the traditional bases underpinning a broadcast-only national TV
ownership rule. The FCC therefore would have no factual or legal basis for
adopting in this proceeding a more restrictive national cap. NAB urges the FCC
to retain the current 39% limit and calculate compliance with that cap by
accounting for all TV stations at a more rational and equitable 50% of their
presumed reach. Accounting for stations in this manner still overstates their
effective competitive reach in today’s highly fragmented video marketplace and
would be a conservative method of accounting for TV stations under a 39% cap.
NAB’s approach also would prevent any unnecessary disruptions for broadcast
stations and their millions of viewers.”
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