High-Stakes Duel In D.C.: NAB Vs. FCC
This Monday was a bad day for broadcasting at the FCC, and perhaps a worse one for the National Association of Broadcasters, the lobby that is supposed to make sure the industry doesn't have any bad days anywhere in Washington.
Despite the vigorous opposition of the NAB, the FCC closed loopholes in its local ownership rules that have allowed broadcasters to effectively operate multiple stations, sometimes two Big Four affiliates, in small and medium markets. It banned new joint sales agreements (JSAs) and ordered broadcasters to unwind existing ones within two years.
The agency also took steps that could undermine broadcasters’ ability to negotiate for higher retransmission consent fees from cable and satellite operators — revenue that broadcasters have been counting on to meet financial targets and keep pace with cable programmers.
It forbad stations from banding together to negotiate the retrans fees they charge cable and satellite for retransmitting broadcast TV signals. And it proposed eliminating its network nonduplication and syndicated exclusivity rules — bedrock regs that make it easier for broadcasters to protect the local exclusivity of their programming.
The NAB is "getting pounded" at the FCC, said one group TV station executive and NAB member, who asked not to be identified.
But the news out of the nation's capital is not all bad for NAB, according to communications policy players. The association is holding its own on Capitol Hill, where the battles may be fewer, but the stakes are considerably higher.
The NAB gets kudos in particular for quashing a proposed provision in a draft House satellite bill that would have eliminated the requirement that pay-TV operators carry broadcast signals on the basic programming tier.
“NAB started in a hole and came out smelling like a rose,” said Preston Padden, a former Disney lobbyist who is now representing station owners considering participating in the FCC incentive auction.
NAB's problems at the FCC come down to one man, Tom Wheeler. Since becoming the FCC chairman last November, he has proved hostile to many of broadcasters' interests and resistant to NAB's arguments.
Industry lobbyists say that Wheeler, a former lobbyist for the cable TV and wireless industries, believes broadcasters are hogging spectrum that he feels they really don’t need to continue providing TV service, and that some of that spectrum should be repurposed for wireless services and new technology. He has, they say, little interest in protecting or encouraging the medium.
Wheeler's prime mission at the FCC is to recover a great swath of TV spectrum through a so-called incentive auction, in which the FCC would buy spectrum from broadcasters and turn around and sell it to wireless carriers.
“Sometimes policymakers conflate the age of technology with the inefficiency of the technology,” said David Honig, president of the Minority Media and Telecommunications Council. “They [NAB] are facing a perfect storm of disruptive technology, regulatory and political excitement about all the shiny new things. That gives them a headwind to fight against.”
As Wheeler sees it, the curtailing of JSAs was needed to prevent broadcasters from routinely making end-runs around an agency rule that bars one company from owning more than one TV station in smaller markets.
But as broadcast lobbyists see it, he is simply promoting the anti-media consolidation agenda of Democratic liberal watchdog groups. Wheeler’s appointment to his job was due in large part to his success in raising large sums of money for the campaigns of America's top Democrat, President Obama, they point out.
It has hurt NAB that Sinclair Broadcast Group has been one of the industry’s most aggressive proponents of JSA sidecar deals, and that the Baltimore-based station group has been a long-time booster of conservative GOP causes.
Among other things, Sinclair’s conservative politics have made it difficult for NAB to recruit Democratic leaders on Capitol Hill willing to tell their fellow Democrat at the FCC — Wheeler — to back down, broadcast lobbyists say.
Some broadcasters say Wheeler wants to hammer broadcast station values, thereby encouraging broadcasters to participate in the incentive auction.
“When you’ve got an FCC chairman who is dismissive of broadcasting and wants to push TV stations into an auction by diminishing their value and punish David Smith [Sinclair CEO], it’s tough to win,” says one broadcast industry source.
“Baloney,” said Wheeler, after Monday’s vote in response to a reporter’s question about whether he was attempting to hurt broadcasters financially to drive them into the auction.
Broadcasters also believe that Wheeler is far too cozy with cable operators, whom he represented in Washington in the 1980s as president of their principal lobby, the National Cable & Telecommunications Association.
One example of his continuing relationship with cable executives: Wheeler met privately with NCTA board members at the cable association’s Washington headquarters on Feb. 27, sources say. NCTA and FCC spokesmen declined comment on the topics discussed during the off-the-record session.