This could be a lethal blow

I’ve been telling you for years about the cracking foundation of the world of local broadcasting. Well, new FCC Chairman Tom Wheeler is asking his fellow Commissioners to vote March 31st on a proposal from him that would stick a rather large knife in the side of broadcast companies. TVNewsCheck describes it this way:

FCC Chairman Tom Wheeler will ask his fellow commissioner to vote March 31 on a proposal that will ban joint sales agreements and joint TV station retransmission consent negotiations, a senior FCC official told reporters Thursday.

The JSA and retransmission consent bans will become effective immediately, assuming a majority of the agency’s commissioners vote in support of the regulations, an FCC source says.

A senior FCC official also says the JSA crackdown will apply to pending station transactions at the FCC, and provide up to two years for existing JSAs to unwind.

The official also says Wheeler is proposing to adopt an expedited waiver review process under which broadcasters will be able to seek waivers for JSAs.

If a broadcaster can show that a particular JSA serves the public interest, it may be able to get a waiver to continue a joint sales sharing deal, the FCC said.

You need to go read the link, because the reaction in the comments and at the end of the article are worth much.

Here’s my take. Between Joint Service Agreements, Local Marketing Agreements, Shared Service Agreements, Transitional Service Agreements, shadow corporations and probably a host of others I can’t recall, it’s really hard to tell who owns the network affiliate down the street. These things have  so changed the face of broadcasting — by reducing the number of faces on the air in many, many markets — that the real losers have been the same public that broadcast spectrum is given to these people in the first place to serve. It’s all corporate doings nowadays, which makes the whole industry seem like greedy Wall Street monsters. Many more people will lose jobs, because these corporations exist to line the pockets of those who run them. Nothing wrong with that, of course, but it’s not, I suspect, what that spectrum was originally intended to create.

The upside is that this move will put pressure on broadcasters to participate in spectrum auctions, which will grow the mobile Web, while will continue to advance what Jay Rosen calls “The Great Horizontal.” One to one communications, without middlemen, is one of the beauties of the network, and broadcasters’ one-to-many model is increasingly archaic. Ahead lies a reworking of everything, including many laws that were created for the days of one-to-many, and frankly, I can’t wait. Broadcasting will continue, at the very least as cable channels, but this proposal, if approved on March 31st, means a major blow to certain groups of people who thought their money tree had permanent roots.

And think about it, one potential end to this is the irrelevance of Aereo, which requires broadcast signals in order to justify its business model.

The Obama Administration supports broadcasters against Aereo and then turns around and says, “We’ll eliminate your ownership loopholes and end consolidated retransmission negotiations.” Frankly, broadcasters would have preferred it to be the other way around.

Honestly, let the future in, people. Let the future in.

Comments

  1. Terry, thanks for the red flag on this, which I would never ever have noticed. But you know so much more about this than, well, almost anyone that I need a little help.

    The JSA’s et al. resulted in a media consolidation that reduced the number of faces on TV, right? But, you’re saying, ending the JSA’s et al. won’t increase the number of faces. Rather, it will result in stations cutting back or going off the air. Do I have that right?

    And here’s a really dumb question: Why will ending the JSA’s et al. put pressure on broadcasters to participate in spectrum auctions, and why would that grow the mobile Web? I can take a guess, but you know what they say: Guessing makes a Gu out of ess and ing.

    Some of us need them baby steps, my friend!

  2. Any crackdown is likely to backfire to some degree, thanks to technology. You won’t let me run two transmitters? Fine. I’ll put all of my signals on digital subchannels of one transmitter and sell off the other “station.”

    The good news is that “selloff” could leave behind some valuable media real estate for someone looking to try something new.

  3. David, most of these (like, nearly all) were simply corporate manipulation where a stronger corporation took over a weaker one. So if these are dismantled, what will happen to those weaker ones? In today’s market, it’s highly problematic to suggest that the rescue posse would be riding in to pick up the slack. Remember, in most of these cases, the news is done by the stronger company and carried on both (or more).

    The action is seen as a boon to the cable and wireless industries, the latter because there’s LOTS of money to be made in release of spectrum, and those “strong” corporations will use the opportunity if they can’t maintain the JSAs, SSAs, etc.

    I’ve seen a lot of commentary since the announcement was made, and many people believe the FCC should just drop the rules about ownership and let the market figure it out instead of enforcing rules that are detrimental to the “industry.” This is typical private sector ranting about how the government needs to leave them alone.

    But remember, this is a double-barreled ruling in that it also challenges these corporations from consolidating all their assets (via these “agreements”) in retransmission license negotiations, and it’s here where broadcast corporations — with their fiduciary responsibility to shareholders — belie themselves as disingenuous in stating they exist for the public’s interest. Who do you think pays for those cable increases?

  4. just so i get this straight… the loophole b’casters use to circumvent the rules is just fine, but the one aereo uses is not.

    check.

  5. Steve, here’s why the Aereo loophole is not okay. While it’s true that TV stations “give” their signals away free over the air, Aereo is making money from those signals. Local TV can be free, but Aereo will not give it to you free. If Aereo is going to make money from selling my product, I should get a cut of that profit.

    From a free market standpoint, TV stations are at a competitive disadvantage if they can’t get retrans fees from cable, satellite and over-the-top providers like Aereo. If you subscribe to cable, every other channel on the dial gets money from you every month whether you ever watch the channel or not. That “subscriber fee” can range from a few cents to six dollars or more–every month. For the cable channels, all of that money adds up quickly–and in many cases is more than they bring in in advertising. (Check the annual reports of some of the companies that own several channels.)

    If over-the-air broadcasters can’t find a way to even the playing field, they won’t be able to invest in programming that’s as good as what’s on cable channels, more sports programming will become cable-only, and ultimately, your cable bill–for those channels you may or may not watch–will go up even faster.

    Many people say TV stations can charge more because they have a larger potential audience–meaning viewers who get their signal over the air. It’s not really a fair comparison, since those OTA-viewers only account for about 15% of households. Remember from above how cable companies can make more from subscriber fees than from advertising. A 15% increase in audience isn’t going to make up for a 50% or more loss in potential revenue.

    Now, I have my own ideas on how local TV stations ought to brace for the future. (You can click my name if you’d like to read more about that. And maybe hire me.) But the bottom line is, if local TV stations lose that retrans money, their bottom lines will suffer, your local news will suffer and you’ll HAVE to pay to see your local sports teams on TV.

  6. Michael Zander says:

    Let me get this straight; local broadcasters want to be paid even if I watch the channel or not? Seems contrary to what they tell their advertising clients, and a clear case of having one’s cake and eating it too.

    If locals want to be paid, turn in the spectrum. Period. It’s far more valuable than a place to show weekend and late-night binges of infomercials. The stones it takes to expect people to pay for that kind of “service” is quite frankly, offensive.

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