FCC Not Expected to Take Up National Cap Before 2020 Election, Say Broadcast Execs
The current FCC is unlikely to consider the national TV ownership cap or further relax broadcast ownership rules, said Gray Television Chief Legal and Development Officer Kevin Latek on a panel of broadcasting executives Thursday at S&P Global's Kagan Media Summit. The agency will “accomplish essentially nothing” between now and 2020, Latek said. Things could be different “next time” if the Republicans retain the White House, Latek said in New York, though “we'd probably need a new chairman.” The FCC didn't comment.
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The agency is considered unlikely to make significant moves after June 2020 because of proximity to the presidential election, said Wolfe Research analyst Marci Ryvicker. But Latek said big rule changes are also unlikely before then. This FCC is focused on maintaining the status quo, Latek said. Though Ryvicker noted the current commission restored the UHF discount, Latek countered not “a lot of bravery” was involved since the discount had only recently been revoked. “I don't see this FCC going out on a limb to make hard decisions,” Latek said. It does have a history of media deregulation in the December after a presidential election, said Wilkinson Barker broadcast attorney David Oxenford.
Legal and political issues that make it difficult for the agency to address the national TV ownership cap may not keep it from acting to loosen radio ownership rules, Oxenford said, agreeing action on the national ownership cap before the election is unlikely. “Radio ownership is something that could be done by itself,” Oxenford said. That could depend on how the regulator fares in Prometheus IV in the 3rd U.S. Circuit Court of Appeals (see 1906130052), Oxenford said. If the court rules the agency didn't sufficiently weigh the effect on diversity of previous ownership deregulation, it would likely be a monkey wrench for relaxing radio subcaps, he said. “If we don't get a level playing field, free over-the-air radio is significantly jeopardized,” said Jeff Warshaw, CEO of Connoisseur Radio.
Nexstar still believes its buy of Tribune will close in Q3, Nexstar Broadcasting President Tim Busch said in an interview. “We've hit all the regulatory marks.” Sinclair CEO Chris Ripley said his company remains “very much interested” in buying TV stations. Ripley said in an interview he doesn't agree an attempted station purchase by Sinclair would face difficulty over allegations raised in the Sinclair/Tribune hearing designation order (see 1903050075). The HDO is over, Ripley told us. Ryvicker told us she sees Sinclair's interest in stations as a long-term focus, and Ripley has a fiduciary duty not to rule possible deals out. Ripley said Sinclair was involved in bidding on recent broadcast properties.
The entrance of mutual fund Apollo Global Management into broadcasting (see 1905290052) is a positive for incumbents, Ripley said. Though involvement could cause prices to rise, it “made all of our assets more valuable,” he said. Fox is open to buying stations that fit its particular requirements and are connected with sports markets, said Fox Television Stations Chief Financial Officer Mike Nelson. Meredith Local Media President Patrick McCreery said his stations aren't for sale, though they have many suitors. “We're the shiniest red apple in the bunch,” he said.
Sinclair's recent buy of regional sports networks was the culmination of a five-year plan to focus on sports (see 1905030059), said Ripley. He noted the increasing prevalence of legalized sports gambling and the accompanying advertising buys, he said. Sports gambling increases viewer engagement in sports, he said, though he described the industry as currently in a “land grab.”
Broadcasters here were united in having big expectations for political advertising revenue during the 2020 presidential election. “Everywhere we look, we get excited,” said Latek. The large number of Democratic presidential candidates means that many states are in play, he said. President Donald Trump is expected to have a huge war chest and be focused on winning the popular vote and winning again in states he won in 2016, Busch said. Candidates are expected to “have more money than anyone we've ever seen,” Ripley said. The parties in the 2020 campaign are expected to focus on conventional political ad buying rather than a repeat of the 2016 race, which featured decreased buys, Ripley said.
ATSC 3.0 is expected to be available in 61 markets by the end of 2020, said S&P Global analyst Justin Nielson. The new standard is expected to start generating money in 2021, Ripley said, saying it's likely to be “a ramp.” ATSC 3.0 isn't yet being considered in valuations of broadcasters because it's too far off, said Deutsche Bank Securities Technology, Media and Telecom Director Vaibhav Lohiya. “Nobody is giving them credit for it.” That could change if the standard becomes successful, he said. Next-generation TV and 5G are “complementary” technologies that will be used together, Ripley said.