Commentary
Uncapping The 39% TV Station Ownership Cap: Who Gets Tapped?
- by Wayne Friedman , Staff Writer, 6 hours ago
TV station groups are getting ready to rumble.
Who gets slammed to the ground -- and who climbs on the ring ropes with arms in the air declaring victory? Follow the money.
The Federal Communications Commission is examining the long-time rule on limiting TV station ownership -- that owning TV stations cannot collectively exceed 39% of U.S. television households. The FCC has strongly signaled that it wants to remove the rule.
The purpose of the rule -- which started up in 2004 -- was to keep then-powerful TV station owners in check from becoming too big and powerful. But now the rise of many new digital-first companies -- especially social media companies -- is changing business dynamics.
Social-media giants like Facebook, Instagram, TikTok and SnapChat and broader entertainment companies like YouTube, Spotify and others have no such household limitations. What will the near-term effects be?
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The biggest TV station groups Nexstar Media Group, Sinclair, Tegna, Gray Television and others, with the financial wherewithal, can grow to become ever faster and more competitive in pricing against digital competitors when it comes to local and regional ad time.
It is not only those independent TV station groups that would benefit, but broadcast TV network-owned station groups -- ABC, CBS, NBC and Fox.
That said, all this might be too little too late. The future internet/broadband world doesn’t need more TV station-antenna based signals as a foundational part of the TV ecosystem.
Who then gets hurt? Small and mid-sized TV station owners who would find it difficult to compete against major TV network-based companies or large TV station groups -- now ever stronger -- in pushing down ad prices to gain greater market share.
Does that mean a new wave of TV station ownership will hurt “localism” -- especially high-profile TV-station newscasts, where local/regional brands spend a lot of their media dollars?
Many would point to research that already shows over 60% of U.S. consumers already get some of their news content via social media -- a trend that seemingly keeps growing.
Small and midsized TV station owners would then be squeezed two ways -- digital-first companies that have better business outcome results and even bigger, stronger TV station groups.
GrowingTV companies would also have an easy path to create more national TV-type networks, which analysts say doesn’t sound too good for creating local broadcast journalism.
Still, the National Association of Broadcasters says new bigger TV-station companies would mean more advertising revenue, which could be reinvested in local TV news.
In other words, trickle-down economics coming to an already hard-pressed TV station near you.
Imagine how that news story ends.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
Wayne, most station ad revenues are attained from local, not national, advertisers and the problem the stations face is that their share of local ad revenues has declined with digital media capturing many of the ad buys --especially from the numerous small local advertisers. So if a station in some market gets bought by a large multiple station owner how does that translate into more ad dollars for that station in its own market? If the station lowers its CPMs is that enough to woo the small advertisers--I doubt it.
Also, the claim that larger station groups will be more "competitive" with the networks and other parties in acquiring better content--like what?--- exclusive rights to the NFL games, lots of first -run top quality dramas and sitcoms, Hollwood's top new films, etc? that sounds like a pipe dream. And will larger station groups really invest their supposedly larger local ad revenues in "better" local news content? What does that mean? What's wrong with what they are doing now?
I think that the stations could explore more realistic siolutions to their local ad revenue issues and I would start with their local ad selling operations. How effective are these in educating small advertisers about the values of broadcast TV and how to use it? Are the local small fry being called on and what are the sales people telling them? etc. Is a training program for the sales force needed?
I think this can only be good for local broadcast. Could you imagine iHeart competing with the large digital players theway they do, if they had built their empire on just the 40 stations Clear Channel owned prior to the Telecommunications Act of 1996, as oppoed to the 1200 iHeart owned in 2000, or the 850 they own now? There's something to be said for scale.
Indeed it may be too little too late. But I think the future of local broadcast is likely tied to next generation technology-- not least includiing ATSC 3.0, or "Next gen TV." Larger collections of stations are prpobably better positioned to support and deploy upgraded tech stacks, and to developp new product offerings across markets. for regional and national brands (and maybe if Next Gen unlocks addressability, they can take back some of the locally-originated money they've lost to the self-serve digital platforms.)