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.”
RBR+TVBR
