Executive Session with Andy Schwartzman

Comcast-NBCU Is Bad For Broadcasting

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If some of these companies have to go bankrupt, that's fine with me. Somebody else will buy it at a better price and do a better job.

In defending this and other ownership restrictions on legacy media, aren't you forgetting about the Internet? These local newspapers are up against a slew of local online media options. ESPN, for instance, is coming in with local sports sites that may siphon off sports readers and the revenue attached to them. It's very competitive out there.

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Newspaper publishing is a mature business. It is not a dying business. I don't see any reason to take away important protections against the excessive concentration of control in order to help out newspapers. They have to figure out how to monetize audiences on the Internet just as everybody else does.

What about the duopoly rules? Because of the loopholes, we have duopolies everywhere now -- big markets and small markets. Isn't it time to just get rid of the rules?

I certainly agree that the FCC staff has allowed widespread noncompliance to the duopoly rules, but to us the solution is to enforce those rules more thoroughly rather than abandon them. My friend Angela Campbell [of Georgetown Law School's Institute for Public Representation] has taken on shared services agreements in Honolulu. We certainly intend to call on the FCC to make adjustments in how the duopoly rules are enforced as part of its ownership review next year.

Why would you want to enforce the rule and prevent consolidation of station in small markets in light of the very real decline in television station revenue? Some markets may not be able to support more than one or two full-service TV stations.

Well, first of all, we don't know how much of the current problems facing broadcasters is cyclical and how much is secular. Historically, the advertising markets are more adversely affected by recessions than other lines of business. We had downturns in the early 1990s and broadcasting came back. I have no doubt that because of the Internet, the advertising revenues that TV stations have will not return to their prerecession levels, but they may very well go back close to them.

Shouldn't you be sure about that before you advocate for rules that could drive some stations out of business?

I certainly don't feel like making the public suffer with lost diversity and broad services on the basis of a set of assumptions that the world is coming to an end when there's no evidence that the world is coming to an end.

At the FTC workshop, what was your remedy for fixing what ails journalism?

I discussed the fact that the First Amendment requires governments to create a platform for civic discourse and debate and public expression of artistic, social and political ideas. I said, given that context, the FTC -- and presumably other agencies as well -- should be taking steps to create opportunities for new journalistic ventures to take place. It's important to have government subsidies for the creation of new media models and new forms of journalism.

Do you mean direct subsidies from the government?

Direct subsidies from the government to incubate startups and to provide assistance where the marketplace is not providing adequate sources of news and information.

Do you mean literally in places where, for instance, you determine that there is inadequate local news?

For nonprofits, it could be either a corporation for public media rather than now a Corporation for Public Broadcasting or it could be a grant mechanism like the NEA or the NEH.

For for-profits, I support cooperative ventures to create new systems of journalism that might be made available on a sharing basis somewhat along the lines of what GlobalPost is trying to do. I'm convinced that coming out of the wreckage of the recession, we're going to see new innovative ways of creating journalism, and this will apply to broadcasting as well as to other platforms.

What do you make of the plan floated by FCC broadband czar Blair Levin to reallocate the broadcast spectrum to wireless broadband access?

We are very skeptical about Blair's proposals to reshape the broadcasters' spectrum.

Why is that?

I am alterably opposed. While I don't agree with people like [Association of Maximum Service Television President] David Donovan that broadcasters are providing so much public service that that's a reason to leave them where they are, I do believe that the existing spectrum allocation system provides opportunity for new uses of spectrum through unlicensed mechanisms like the TV white spaces plan, which the FCC has adopted. I favor unlicensed spectrum for new broadband platforms rather than auctioning off the spectrum to the existing wireless companies.

The broadcasters will say allowing unlicensed users into the band will degrade the band by causing interference and some in government will say it will devalue the band for later auctioning.

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Comments (7) -

RustbeltAlumnus2 Nickname posted over 2 years ago
If vertical integration is so bad, why haven't any planets collided since the early 1990s when it blossomed under the watch of a Democratic White House? It seems to me that the media are doing fine and the audience have no complaints. It's hard to feel sorry for the Government. It seems to be large and in charge, firing executives of companies it has nationalized. Maybe it should nationalize all the media and put Andy Schwartzman in charge as the czar.
HopeUMakeit Nickname posted over 2 years ago
consolidation is much more dangerous than vertical integration. Local stations in small markets can be very profitable is they just focus on being small stations in small markets. They do have to be WCBS or WABC. They just have to be relevant to the viewers in their DMA. Here in Houston, I would never dream of looking at a national weathercast for this DMA.
GuyFawkes Nickname posted over 2 years ago
Afraid you're wrong. The small-market (and not-so-small market) stations are becoming less and less profitable every year. Simple fact that is almost certain to continue barring major change. Best hope for stations is complete or at least major local-market deregulation, or union elimination... or both. The argument that all broadcasters' problems can be solved by "just being more local" is awfully tired at this stage. Everyone's already doing it and it's not stanching the slide in retained earnings, which is what you need to continue an operation viably.
HowardMBurgers Nickname posted over 2 years ago
Sorry Rusty, this has nothing to do with Democrats or Republicans, this is a business deal. Look, this deal will go one of two ways; either after five years it will be deemed the AOL-Time Warner of 2010 with both NBC and Comcast stock being relegated to junk status or worse, or Comcast will operate the business for a few years then divest itself of NBC at the time window when GE will be looking for a buyout of their shares. By that time Comcast will have enough of a content track record to stand on it's own without NBCU, or will strip parts or the group they want and spin the rest. Comcast has to do a deal like this or Wall St. will start looking at cable as just as much a dinosaur as traditional broadcast is viewed. What confounds me is how much in debt Comcast will be to pull this off. With cable margins hovering around 5-10%, what lenders today would finance a speculative play like this without some HEAVY restrictions and lending covenants? (Much like the Time Warner AOL deal)
Kevin Quinn posted over 2 years ago
First off, I don't understand how Andy can claim there's a need for more "new and interesting programmers to get carriage". I pay for more than two hundred cable channels that I don't even watch, so please don't pretend like we need one more stinkin' cable channel. The only new channel that's missing is one on how to knit and it's probably in the works. Secondly, if Andy has any concerns at all about local stations, then he wouldn't be worried about the lack of TV shows on the internet. That has only helped the networks at the expense of the local stations. Why watch it on your local affiliate if you can watch it on the network's site or some third party site? There have been some series that I've only seen on the web and never on my local affiliate. At first it made sense that you were attracting viewers to watch a show on a regular basis by letting them catch a missed episode or be introduced to a show. But where the viewer formerly was confined to a small computer screen, now they can hook up their internet to a regular sized TV and watch all episodes with no local commercials. I can't believe that I used to think that it would be the DVR that would hasten the demise of local TV as we all know it. The day is coming quickly when stations will just be another web site providing mostly local news. Someone has got to figure out a way to put the lid back on Pandora's box now and I don't think Andy is that person.
PSIPthing Nickname posted over 2 years ago
I was thinking back about "Andy" and his three decades of "activism." I was wondering what he had actually accomplished. (Not that I think Comcast buying NBC is a good thing for broadcasting.) His "accomplishments" seem to be limited to delyaing deals and writing pleadings before the FCC that are either fatuous or ultimately -- at best -- put a new layer of lipstick on a pig. Now, Pluria Marshall, at least he built a few radio stations while taking what amounted to payoffs.
GuyFawkes Nickname posted over 2 years ago
I can tell you one thing Andy managed to do -- scare all investment capital away from the TV station business by single-handedly court-shopping the case that stymied the FCC's reasonable attempt at local-media deregulation in 2003. Broadcasters can thank Andy for a lot of the headaches they're faced with today. Andy, thanks but no thanks on your efforts to "help" broadcasters with the Comcast-NBC situation. You want to help broadcasters this time? Then get out of the way of local-media deregulation. You've done enough harm.

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