\n\tThe fundamental issue in front of the FCC? The ownership cap, which limits the ability of station owners to reach more than 39 percent of the country. A joint filing at the FCC Aug. 22 from the affiliate groups, the National Association of Broadcasters, Nexstar, Sinclair, E.W. Scripps, Fox, Paramount Skydance and Disney outlined the problem they claim to be facing: \u201cIn a marketplace dominated by the likes of Google\/YouTube, Amazon, Meta, and Netflix, no justification exists for broadcasters \u2013 and only broadcasters \u2013 to remain subject to this antiquated and harmful restriction.\u201d<\/p>\n
\n\t\u201cThis restriction skews the media and advertising markets in favor of digital advertising behemoths, increasingly consolidated pay TV\/broadband providers, and unregulated global streaming platforms, at the expense of the only video service offering increasingly rare local journalism, emergency information, and popular entertainment and sports programming to communities across the nation at no cost to the public,\u201d they continued (the inclusion of pay-TV and broadband providers may explain why NBCUniversal, owned by Comcast, was not a signee).<\/p>\n
\n\t\u201cScale wins in today\u2019s broadcast industry, and we intend to lead that consolidation,\u201d Sinclair\u2019s Ripley told shareholders earlier this month.<\/p>\n
\n\tLocal broadcasters are wary of the national media companies, but it is the tech giants that they reserve much of their loathing for, with their ad sales supremacy and digital dominance.<\/p>\n
\n\t\u201cWe expect declines in the number of pay TV subscribers will continue to shrink linear television\u2019s revenue potential and threaten the existence of the broadcast distribution model as a whole,\u201d Morningstar analyst Matthew Dolgin wrote Aug. 20, warning that consolidation among local station owners may not be enough. \u201cWhile an acquisition of Tegna would allow Nexstar to retain a larger portion of the pay TV pie, the firm\u2019s scale doesn\u2019t change the secular challenge.<\/p>\n
\n\t\u201cBroadcast television station owners like Nexstar will continually fight over a decreasing amount of advertising sales as marketers are continually directed away from broadcast TV and toward larger and more targetable audiences in digital advertising,\u201d he adds.<\/p>\n
\n\tBut while Nexstar and Sinclair have made no secret of their desire to roll up enough stations to achieve national scale in a bid to take on Big Tech, if the FCC does raise or remove the cap, other filings suggest that the national networks may be eyeing deals of their own.<\/p>\n
\n\tFox, Paramount and ABC were all signees to the broadcast letter calling for reforming the ownership cap, but both Fox and NBCUniversal submitted separate letters of their own with another request: If the FCC does adjust the cap, it should not distinguish between the independent station owners, and the national networks that also own local stations.<\/p>\n
\n\t\u201cNetwork owned or affiliated stations are not merely similarly situated to other stations in this context, they are identically situated, facing the same competitive pressures from the same roster of Big Tech competitors,\u201d Fox wrote Aug. 22. \u201cLikewise, singling out affiliates of the \u2018big four\u2019 networks (ABC, CBS, NBC, and FOX) for different treatment from affiliates of other networks (e.g., CW, Univision, ION Television), also would require drawing arbitrary distinctions with no rational relationship to the National Cap.\u201d NBC raised essentially identical concerns in its letter.<\/p>\n
\n\tThe rationale? Fox owns 29 local TV stations, CBS owns 28, NBC owns a dozen or so, and ABC owns 8. Every network owns their New York and Los Angeles stations, representing the two biggest TV markets, and every company owns others in key markets, but if the ownership cap is lifted, there are plenty of appealing markets that could become up for grabs, and they may want in.<\/p>\n
\n\tAnd to be certain, it is not a hypothetical. Recent years have already seen creative dealmaking within the confines of FCC limitations. In 2019 Fox acquired stations in Seattle and Milwaukee from Nexstar, while selling its stations in Charlotte to the local TV giant.<\/p>\n
\n\tAnd earlier this year CBS engaged in a bit of clever dealmaking with Gray TV, renewing its affiliation agreement in 52 of 53 markets, but turning what had been an independent Paramount-owned station in Atlanta (itself a critical TV market) into a fully owned and operated CBS station.<\/p>\n
\n\tThere is a method to the madness, multiple sources say. Of course, broadcasters want stations in states that are competitive politically, which would allow for political ad dollars to flow in election years, but equally important (especially for Fox and CBS) are stations with NFL teams, which allow them to bolster their ad sales by securing ad dollars at both the national and local level. It\u2019s no coincidence that Fox\u2019s deal with Nexstar and CBS\u2019 Atlanta move took place in established NFL markets.<\/p>\n
\n\tAnd the national scale could enable cost savings across the local divisions, in technology, backend office roles or other areas. The broadcasters have taken great pains to reassure the FCC that if they are allowed to grow, they could continue to invest in local news.<\/p>\n
\n\tOf course, not everyone buys that argument. NABET-CWA, which represents broadcast employees across the country, filed its own letter, arguing that broadcasters are profitable and don\u2019t face the apocalyptic risk from tech giants that they claim to be facing, and that they would likely pull back on local programming if allowed to expand, instead pooling resources regionally or nationally.<\/p>\n
\n\tIn fact, the independently-owned affiliate groups of NBC, CBS, ABC and Fox had perhaps the most eyebrow-raising argument of all, calling the threats they face a \u201cbreak the glass moment\u201d while also throwing their network \u201cpartners\u201d under the bus (quotation marks theirs), derisively dismissing them as \u201cBig Media Conglomerates.\u201d<\/p>\n
\n\t\u201cShackling broadcast television with decades-old structural ownership limits and expecting them to continue serving their local communities in the face of competition from the biggest, wealthiest titans of the tech and media industries simply makes no sense, and doing so is particularly illogical so long as it remains federal policy that local broadcasters should serve local communities,\u201d the affiliate groups wrote to the FCC Aug. 4. \u201cThe Big Media Conglomerates centered in New York and Los Angeles that compete with local broadcasters for audience and advertising do none of this. They have no interest in serving local communities or becoming a vital part of the fabric of America\u2019s cities and towns, nor are they incentivized to do so because they have been free to grow to gargantuan size, all while local broadcasters have been forced to abide by Depression-era ownership limits.\u201d<\/p>\n
\n\tCarr, for what it\u2019s worth, could agree. He has active investigations into Disney and Comcast, and the investigation into CBS over the 60 Minutes news distortion complaint remains open. President Trump meanwhile has called for ABC and NBC to have their broadcast licenses revoked, certainly a signal that it may be difficult for those companies to pursue new deals.<\/p>\n
\n\tIf the conglomerates get their way, however, they may become more of a presence in those towns across the country, as the broadcast station landgrab accelerates.<\/p>\n
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