Broadcast Executives Endorse FCC 3rd Circuit Appeal
NEW YORK -- The FCC appeal of the media ownership ruling at the 3rd U.S. Circuit Court of Appeals is the right move, said Nexstar CEO Perry Sook, Gray co-CEO Pat LaPlatney and Meredith Local Media Group President Patrick McCreery on a panel at NAB Show New York Wednesday (see 1909250064). The executives also discussed transaction prospects, ATSC 3.0 and prospects for a recession. There isn't anything the broadcast industry can do that would appease the 3rd Circuit, Sook said. “It's the only choice,” he said. “Two judges in Philadelphia have setting media policy for the whole country for 20 years.”
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There's “probably not” much chance of a change to the national broadcast ownership cap soon, conceded Sook. Though he pushed for abolishing ownership limits, Sook would settle for the FCC “codifying” the current effective ownership limit, which includes the UHF discount. It's almost “a First Amendment issue” that stations operate under a cap competitors don't, he said. With an election year approaching, prospects for change dim, Sook said.
In interviews, McCreery and LaPlatney hoped for a policy shift from DOJ on whether broadcasters compete with digital advertisers but don't expect one. “Not in an election cycle,” McCreery told us.
FCC grant of Gray's top-four duopoly in Sioux Falls, South Dakota, isn't likely a sign it will approve more such combinations, Sook said. That approval “was so highly conditioned, so specifically written,” it can't be seen as an endorsement of top-four combos, he said. More top-four mergers “would make sense” in many smaller markets, LaPlatney said.
Broadcast consolidation has meant fewer groups are left to be bought, Sook said in response to a question about deal prospects. McCreery said Meredith is a potential buyer, and countered industry perception his company would be a seller. Gray's concentrating on absorbing Raycom, LaPlatney said. There are prospects for more interest from investors outside the industry like Apollo Global Management, the executives said. “There are probably more coming,” McCreery said.
The cost of not pursuing ATSC 3.0 is more expensive than the transition, Sook said. Without the ability to improve their technology to handle innovations such as 4K, broadcasters would be consigning themselves to being “second-class citizens,” he said. ATSC 3.0 will enhance the value of broadcasting, he said.
The broadcasting industry is better able to weather a possible recession than in 2007-08 because it's less dependent on advertising for revenue, the broadcasters said. Though the auto industry is an important advertiser for TV stations and vulnerable to decline in recessions, other ad sectors are on the rise, they said. Attorney marketing has become a leader in several markets, Sook and LaPlatney said. Broadcaster commercials should shift from being assessed by ratings to being assessed by impressions, the executives said.
Growth in ad sales is traditionally driven by creating a new category of business, said Sook, saying he doesn't feel sports betting qualifies yet. A possible area of growth could be cannabis and CBD (cannabidiol) products, though that's hindered by a lack of clarity on product legality, McCreery said. Sook said his company turned down cannabis ad buyers. “We're a federally regulated entity,” he said. Federal officials should give broadcasters “relief” by allowing them to pursue cannabis product advertising, McCreery said. There's “money waiting at the door,” Sook said.