78% Cap Proposal Would Give Nexstar More Room, Says Sook
The 78 percent national TV-station ownership reach cap proposal supported by Nexstar, several other such owners and NAB would create additional room for the company above the current rules, though it’s being couched as maintaining the status quo, CEO Perry Sook Tuesday. With a baseball cap touting “78 percent” sitting on the podium, Sook backed the threshold and discussed ATSC 3.0, Nexstar buying Tribune and DOJ’s definition of broadcast competition. “It is in our national interest to allow a regulated industry such as ours to compete on a level playing field serving our video content, at least domestically, with the virtually unregulated companies that do so,” Sook told a Media Institute lunch.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
The proposal advocated by Sook and NAB would apply a 50 percent discount of the 39 percent ownership cap to both UHF and VHF stations. Supporters argue it isn’t a change to the status quo because a broadcaster that owned only UHF stations could grow to reach 78 percent of the country under current rules, but the proposal would allow owners of VHF stations additional growth, Sook said in response to our question. The plan “would create additional room for me” and for other broadcasters, Sook said. He wouldn't discuss nuances of how the proposal affects UHF and VHF stations, saying broadcasters would benefit from more regulatory certainty. NAB, a backer of the plan, later posted his remarks.
Sook called the limit he seeks a “compromise proposal,” saying he still would prefer no cap. Regulators should let broadcasters “effectively compete against the unregulated behemoths that have unfettered access to 100 percent of the households in the U.S., not just 39 percent or even 78 percent,” Sook said. “Even 78 percent doesn't go far enough to protect the existence of local TV and local journalism," he said.
With an increased cap, Nexstar would still “create opportunities” for minority buyers, Sook said. Nexstar announced earlier this month a proposal to divest stations from Nexstar/Tribune to minority-owned Circle City Broadcasting (see 1904080046). That followed a lawsuit against Nexstar from a previous minority-owned divestiture partner, Marshall Broadcasting, which accused Nexstar of acting in bad faith in that deal and plotting to reacquire the divested stations. Nexstar disputed those allegations (see 1904030071).
Tribune would put Nexstar against the current national cap, with the rules not allowing opportunities to increase its footprint, Sook told an audience that included FCC Commissioner Mike O’Rielly, aides to O’Rielly and Commissioner Brendan Carr, and Media Bureau Video Division Chief Barbara Kreisman. “Our growing size and scale will enable us to focus additional resources on serving our local markets,” Sook said.
Sook said he hopes an upcoming May DOJ workshop on broadcast competition (see 1904120013) could be the start of regulators acknowledging the competitive environment faced by broadcasters. It would be “a long process,” Sook conceded. Advertisers that buy spots on Nexstar stations also spend their advertising budgets on digital ads, Sook said. TV advertising isn’t irreplaceable, he said. At NAB 2019, DOJ Antitrust Division Chief Makan Delrahim said broadcasters provide a “unique” product (see 1904080066).
Broadcasters should keep an open mind about how ATSC 3.0 will be monetized, Sook responded to a question about whether 3.0 chips will make it into smartphone handsets. He compared ancillary use of broadcast spectrum to landowners in his home state of Texas profiting on their mineral rights. As it took years to develop techniques to extract oil from shale, so it could take many attempts to figure out the future of the new standard, he said. “We believe the flexibility of the platform will enable broadcasters to provide future services not conceived today.”