NAB Tells FCC: Local TV Business Is Weakening

This isn’t what you usually hear from broadcast execs — and it certainly doesn’t jibe with the industry’s message to Wall Street. But the National Association of Broadcasters NAB logotakes the bearish view in a new filing at the FCC that responds to a Justice Department attack on arrangements that enable a TV station to handle ad sales, programming, and other chores for rivals in the same market. The FCC is poised to restrict these widely used deals. That would be dangerous, the NAB says, because stations need help: “Largely as a result of marketplace fragmentation and the growing number of options for advertisers (including online), television broadcasters’ revenues and profits have fallen significantly,” it says. Ad sales were lower in 2012 than they were in 2004, and a forecast from SNL Kagan shows that they “will not reach the level of revenues earned in 2004 until the year 2020.” Broadcast lobbyists are singing the blues to counter the Justice Department’s claim in a recent filing that shared services agreements make stations less competitive and diverse. Although the deals are supposed to protect both goals, by propping up weak stations, “our investigations have revealed that these ‘sidecars’ often exercise little or no competitive independence from the other station.” But the NAB says the argument lacks “direct evidence” and its proposal “would harm consumers and the public interest.” The collaborations “have become vital to local station operations.” They need economies of scale and scope to justify “large capital investments in broadcasting equipment, [and] production facilities” as well as outlays for “a wide range of informational and other public interest programming, including increased local news.”

NAB also says that cable and satellite systems benefit from similar collaborative ad sales agreements via the industry’s NCC Media. “They allow advertisers to purchase local advertising in many markets and on many channels from multiple [distributors] through a single contract.”

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